Note N – Segment Data

Our operations are managed principally on a products and services basis and include three reportable business segments: Steel Processing, Pressure Cylinders and Engineered Cabs, 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 reportable segment consists of the Worthington Steel business unit and Worthington Steelpac Systems, LLC (“Packaging Solutions”), which designs and manufactures reusable custom steel platforms, racks and pallets for supporting, protecting and handling products throughout the shipping process. Worthington Steel also includes three consolidated joint ventures: Spartan, TWB and WSP. Spartan operates a cold-rolled hot-dipped galvanizing line and TWB operates a laser welded blanking business. WSP serves primarily as a toll processor for U.S. Steel and others. Its services include slitting, blanking, cutting-to-length, laser blanking, laser welding, tension leveling and warehousing. Worthington Steel is an intermediate processor of flat-rolled steel. This operating segment’s processing capabilities include cold reducing, configured blanking, coil fed laser blanking, cutting-to-length, dry-lube, hot-dipped galvanizing, hydrogen annealing, laser welding, pickling, slitting, oscillate slitting, temper rolling, tension leveling, and non-metallic coating, including acrylic and paint coating. Worthington Steel sells to customers principally in the aerospace, agricultural, appliance, automotive, construction, container, hardware, HVAC, lawn and garden, leisure and recreation, office furniture and office equipment 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. The percentage of our consolidated net sales generated by Steel Processing was approximately 69%, 65% and 63%, in fiscal 2017, fiscal 2016 and fiscal 2015, respectively

Pressure Cylinders: The Pressure Cylinders reportable segment consists of the Worthington Cylinders business unit and the Company’s consolidated joint venture in Turkey, Worthington Aritas. Worthington Aritas is a manufacturer of cryogenic pressure vessels for LNG and other gas storage applications. The percentage of our consolidated net sales generated by Pressure Cylinders was approximately 28%, 30% and 30% in fiscal 2017, fiscal 2016 and fiscal 2015, respectively.

Pressure Cylinders manufactures and sells filled and unfilled pressure cylinders, tanks, hand torches, and oil and gas equipment along with various accessories and related products for diversified end-use market applications. The following is a description of these markets:

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Industrial Products: This market sector includes high pressure and acetylene cylinders for industrial gases, refrigerant and certain propane gas cylinders, hand torch cylinders and joining products such as solder and brazing rods, cryogenic equipment, and systems and services for handling liquid gasses, and other specialty products. Cylinders in this market sector are generally sold to gas producers, cylinder exchangers and industrial distributors. Industrial cylinders hold fuel for uses such as cutting, brazing and soldering, 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 barbeque grills, recreational vehicle equipment, residential and light commercial heating systems, industrial forklifts and commercial/residential cooking (the latter, generally outside North America). Cryogenic equipment and systems include LNG systems for marine and mining applications, liquid nitrogen storage freezers and shipping containers for organic specimens in healthcare markets, and tanks, trailers, and regasification plants for liquefied nitrogen, oxygen, argon, hydrogen, and natural gas. Specialty products include a variety of fire suppression and chemical tanks.

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Consumer Products: This market sector includes propane-filled cylinders for torches, camping stoves and other applications, hand held torches and accessories, and Balloon Time^® helium-filled balloon kits. These products are sold primarily to mass merchandisers and distributors.

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Alternative Fuels: This market sector includes composite and steel cylinders used to hold CNG and hydrogen for automobiles, buses, and light-duty trucks, and to hold propane/autogas for automobiles and light- and medium-duty trucks, as well as CNG fuel systems for heavy duty, refuse and other trucks.

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Oil & Gas Equipment: This market sector includes steel and fiberglass storage tanks, separation equipment, controls and other products primarily used in the energy markets, including oil and gas and nuclear. This market sector also includes hoists and other marine products which are used principally in shipyard lift systems. This market sector also leverages its manufacturing competencies to produce pressure vessels, atmospheric tanks, controls and various custom machined components for other industrial and agricultural end markets.

Engineered Cabs: The Engineered Cabs reportable segment consists of the Worthington Industries Engineered Cabs business unit, a non-captive designer and manufacturer of high-quality, custom-engineered open and enclosed cabs and operator stations and custom fabrications for heavy mobile equipment used primarily in the agricultural, construction, forestry, military and mining industries. Engineered Cabs’ product design, engineering support and broad manufacturing capabilities enable it to produce cabs and structures used in products ranging from small utility equipment to large earthmovers.

Other: The Other category includes the Worthington Energy Innovations operating segment, as it does not meet the quantitative thresholds for separate disclosure. Certain income and expense items not allocated to our operating segments are also included in Other, including costs associated with our captive insurance company. The Other category also includes the results of our former Construction Services operating segment, on a historical basis, through May 31, 2016.

Worthington Energy Innovations: WEI is a 75%-owned consolidated joint venture with Tom E. Kiser (20%) and Stonehenge Structured Finance Partners, LLC (5%) (together referred to as “WEI Partners”), with offices in Fremont and Columbus, Ohio. WEI is an Energy Services Company that develops cost-effective energy solutions for entities in North America and Asia. Once these solutions are implemented, WEI monitors, verifies and guarantees these energy saving solutions.

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)	2017			2016			2015
Net sales
Steel Processing	$	2,074,869		$	1,843,661		$	2,145,744
Pressure Cylinders		829,846			844,898			1,001,402
Engineered Cabs		101,388			121,946			192,953
Other		8,005			9,209			44,135

Total net sales	$	3,014,108		$	2,819,714		$	3,384,234

Operating income (loss)
Steel Processing	$	170,481		$	112,001		$	108,707
Pressure Cylinders		54,098			28,375			58,113
Engineered Cabs		(7,685	)		(19,331	)		(97,260	)
Other		(3,773	)		1,007			(9,003	)

Total operating income	$	213,121		$	122,052		$	60,557

Depreciation and amortization
Steel Processing	$	42,861		$	38,523		$	34,526
Pressure Cylinders		31,052			32,403			34,953
Engineered Cabs		5,197			6,205			10,184
Other		7,683			7,568			5,426

Total depreciation and amortization	$	86,793		$	84,699		$	85,089

Impairment of goodwill and long-lived assets
Steel Processing	$	-		$	-		$	3,050
Pressure Cylinders		-			22,962			11,911
Engineered Cabs		-			3,000			83,989
Other		-			-			1,179

Total impairment of goodwill and long-lived assets	$	-		$	25,962		$	100,129

Restructuring and other expense (income)
Steel Processing	$	1,828		$	4,110		$	72
Pressure Cylinders		3,411			392			6,408
Engineered Cabs		1,219			3,570			(332	)
Other		(47	)		(895	)		779

Total restructuring and other expense	$	6,411		$	7,177		$	6,927

Total assets
Steel Processing	$	882,863		$	819,853		$	829,116
Pressure Cylinders		766,611			787,786			804,799
Engineered Cabs		62,141			75,124			94,506
Other		613,729			378,501			353,884

Total assets	$	2,325,344		$	2,061,264		$	2,082,305

Capital expenditures
Steel Processing	$	40,775		$	42,063		$	34,546
Pressure Cylinders		24,798			29,916			35,872
Engineered Cabs		755			6,945			8,951
Other		2,058			18,112			16,886

Total capital expenditures	$	68,386		$	97,036		$	96,255

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


(in thousands)	2017		2016		2015
North America	$	2,805,182	$	2,662,196	$	3,239,123
International		208,926		157,518		145,111

Total	$	3,014,108	$	2,819,714	$	3,384,234

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


(in thousands)	2017		2016
North America	$	501,776	$	515,263
International		68,713		67,575

Total	$	570,489	$	582,838