Note M — Segment Data

In connection with the acquisition of Angus, as more fully described in “NOTE N – Acquisitions,” we established a new operating segment, Engineered Cabs, which is considered a separate reportable segment.

Our operations are managed principally on a products and services basis and include four reportable business segments: Steel Processing, Pressure Cylinders, Engineered Cabs and Metal Framing, each of which is comprised of a similar group of products and services. Factors used to identify reportable business segments include the nature of the products and services provided by each business, the management reporting structure, similarity of economic characteristics and certain quantitative measures, as prescribed by authoritative guidance. A discussion of each of our reportable business segments is outlined below.

Steel Processing: The Steel Processing operating segment consists of the Worthington Steel business unit, and includes Precision Specialty Metals, Inc., a specialty stainless processor located in Los Angeles, California, and Spartan, a consolidated joint venture which operates a cold-rolled hot dipped galvanizing line. Worthington Steel is an intermediate processor of flat-rolled steel and stainless steel. This operating segment’s processing capabilities include pickling; slitting; cold reducing; hot-dipped galvanizing; hydrogen annealing; cutting-to-length; tension leveling; edging; non-metallic coating, including dry lubrication, acrylic and paint; and configured blanking. Worthington Steel sells to customers principally in the automotive, construction, lawn and garden, hardware, furniture, office equipment, electrical control, tubing, leisure and recreation, appliance, agricultural, HVAC, container and aerospace markets. Worthington Steel also toll processes steel for steel mills, large end-users, service centers and other processors. Toll processing is different from typical steel processing in that the mill, end-user or other party retains title to the steel and has the responsibility for selling the end product. Toll processing revenues were immaterial for all periods presented.

Pressure Cylinders: The Pressure Cylinders operating segment consists of the Worthington Cylinders business unit and WNCL, a consolidated joint venture based in India that manufactures high-pressure, seamless steel cylinders for compressed natural gas storage in motor vehicles as well as cylinders for compressed industrial gases. Our Pressure Cylinders operating segment manufactures and sells filled and unfilled pressure cylinders and various accessories for a diversified number of end-use market applications. The following is a detailed discussion of these markets:

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Retail: These products include liquefied petroleum gas (“LPG”) cylinders for barbecue grills and camping equipment, propane accessories, hand held torches and accessories including fuel cylinders, and Balloon Time^® helium balloon kits. These products are sold primarily to mass merchandisers, cylinder exchangers and distributors.

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Alternative fuels: The sector includes Type I, II, and III cylinders for containment of compressed natural gas and hydrogen for automobiles, buses, and light-duty trucks, as well as propane/autogas cylinders for automobiles.

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Industrial and Other: This market sector includes industrial, refrigerant, and certain LPG cylinders, as well as other specialty products. Cylinders in these markets are generally sold to gas producers and distributors. Industrial cylinders hold fuel for uses such as cutting, welding, breathing (medical, diving and firefighting), semiconductor production, and beverage delivery. Refrigerant gas cylinders are used to hold refrigerant gases for commercial, residential and automotive air conditioning and refrigeration systems. LPG cylinders hold fuel for recreational vehicle equipment, residential and light commercial heating systems, industrial forklifts and commercial/residential cooking (the latter, generally outside North America). Specialty products include air reservoirs for truck and truck trailers, which are sold to original equipment manufacturers, and a variety of fire suppression and chemical tanks.

Engineered Cabs: This operating segment designs and manufactures high-quality, custom-engineered open and closed cabs and operator stations for a wide range of heavy mobile equipment in a range of industries. Engineered Cabs also manufactures other specialty weldments, kits, accessories, and cab components. The segment’s core capabilities are organized into two categories: 1) design and engineering and 2) manufacturing. Design and engineering capabilities consist of filling key project management roles from the initial design phase, prototyping and through final manufacturing and delivery of the finished product. Manufacturing capabilities are facilitated by computer-aided design and manufacturing systems as well as a variety of technologically advanced cutting, bending, forming, welding and painting equipment. Products and services are sold principally to original equipment manufacturers located primarily in the United States.

Metal Framing: The Metal Framing operating segment consists of the Dietrich Metal Framing business unit. As more fully described in “Note A – Summary of Significant Accounting Policies,” on March 1, 2011, we contributed certain assets of Dietrich to ClarkDietrich, an unconsolidated joint venture. We retained seven of the 13 metal framing facilities, which continued to operate in support of the joint venture. , The financial results and operating performance of the retained facilities have been reported within the Metal Framing operating segment through August 31, 2011, the date by which all of the retained facilities had ceased operations and actions to locate buyers had been initiated. The contributed net assets, which were deconsolidated effective March 1, 2011, have been reported within Metal Framing on a historical basis.

Other: Included in the Other category are operating segments that do not meet the applicable aggregation criteria and materiality tests for purposes of separate disclosure as reportable business segments, as well as other corporate-related entities. Through May 9, 2011, these operating segments included Automotive Body Panels, Steel Packaging, and the Global Group. On May 9, 2011, in connection with the contribution of our automotive body panels subsidiary, Gerstenslager, to the newly-formed joint venture, ArtiFlex, and resulting deconsolidation of the contributed net assets, we no longer maintain a separate Automotive Body Panels operating segment. Accordingly, subsequent to May 9, 2011, the operating segments comprising the Other category consist of Steel Packaging and the Global Group. Each of these operating segments is explained in more detail below. We will continue to report the historical financial results and operating performance of our former Automotive Body Panels operating segment on a historical basis through May 9, 2011. This former operating segment has historically been reported in the “Other” category for segment reporting purposes, as it has not met the applicable aggregation criteria or materiality thresholds for separate disclosure. Accordingly, this organizational change did not impact the composition of our reportable segments.

Steel Packaging: This operating segment consists of Worthington Steelpac Systems, LLC (“Steelpac”), which designs and manufactures reusable custom platforms, racks and pallets made of steel for supporting, protecting and handling products throughout the shipping process for customers in industries such as automotive, lawn and garden and recreational vehicles.

Global Group: This operating segment consists of our Mid-Rise Construction business unit, which designs, supplies and builds mid-rise light-gauge steel framed commercial structures and multi-family housing units; our Military Construction business unit, which is involved in the supply and construction of metal framing products for, and in the framing of, single family housing, with a focus on military housing; and our Commercial Stairs business unit, which will cease operations in fiscal 2013. Also included within the Global Group are the recently-formed Global Development Group and Worthington Energy Group business units. The Worthington Energy Group business unit includes the recently-acquired operations of PSI Energy Solutions, LLC (“PSI”), a services firm that develops cost-effective energy solutions for public and private entities throughout North America. The purpose of the Global Group is to provide new organic growth platforms by applying our core competencies in markets that have high growth opportunities.

The accounting policies of the reportable business segments and other operating segments are described in “Note A – Summary of Significant Accounting Policies.” We evaluate operating segment performance based on operating income (loss). Inter-segment sales are not material.

The following table presents summarized financial information for our reportable business segments as of, and for the fiscal years ended, May 31:


(in thousands)	2012			2011			2010
Net sales
Steel Processing	$	1,578,509		$	1,405,492		$	988,950
Pressure Cylinders		770,101			591,945			467,572
Engineered Cabs		104,272			-			-
Metal Framing		4,402			249,543			330,578
Other		77,417			195,644			155,934

Total net sales	$	2,534,701		$	2,442,624		$	1,943,034

Operating income (loss)
Steel Processing	$	71,578		$	77,671		$	51,353
Pressure Cylinders		45,108			48,954			30,056
Engineered Cabs		4,878			-			-
Metal Framing		(3,913	)		(7,530	)		(10,186	)
Other		(16,041	)		5,261			(49,260	)

Total operating income	$	101,610		$	124,356		$	21,963

Depreciation and amortization
Steel Processing	$	26,843		$	27,632		$	26,290
Pressure Cylinders		20,407			14,734			12,936
Engineered Cabs		3,540			-			-
Metal Framing		765			9,623			14,591
Other		4,318			9,069			10,836

Total depreciation and amortization	$	55,873		$	61,058		$	64,653

Pre-tax restructuring and other expense (income)
Steel Processing	$	-		$	(303	)	$	(488	)
Pressure Cylinders		52			-			309
Engineered Cabs		-			-			-
Metal Framing		-			1,387			3,892
Other		5,932			1,569			530

Total pre-tax restructuring and other expense	$	5,984		$	2,653		$	4,243

Pre-tax impairment of long-lived assets
Steel Processing	$	-		$	-		$	-
Pressure Cylinders		-			-			-
Engineered Cabs		-			-			-
Metal Framing		-			-			-
Other		355			4,386			35,409

Total pre-tax impairment of long-lived assets	$	355		$	4,386		$	35,409

Joint venture transactions
Steel Processing	$	(2,102	)	$	-		$	-
Pressure Cylinders		-			-			-
Engineered Cabs		-			-			-
Metal Framing		1,952			(1,810	)		-
Other		-			(8,626	)		-

Total joint venture transactions	$	(150	)	$	(10,436	)	$	-

Total assets
Steel Processing	$	703,336		$	742,838		$	674,953
Pressure Cylinders		575,250			481,361			393,639
Engineered Cabs		199,594			-			-
Metal Framing		7,688			37,069			203,072
Other		391,929			405,981			248,683

Total assets	$	1,877,797		$	1,667,249		$	1,520,347

The following table presents net sales by geographic region for the years ended May 31:


(in thousands)	2012		2011		2010
United States	$	2,333,575	$	2,256,579	$	1,832,286
Canada		29,097		32,891		39,751
Europe		150,458		116,071		70,997
Other		21,571		37,083		-

Total	$	2,534,701	$	2,442,624	$	1,943,034

The following table presents property, plant and equipment, net, by geographic region as of May 31:


(in thousands)	2012		2011		2010
United States	$	371,269	$	337,894	$	459,174
Canada		1,270		1,368		1,055
Europe		59,209		49,627		45,934
Other		11,329		16,445		-

Total	$	443,077	$	405,334	$	506,163