10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended November 30, 2005

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                                  to                     

Commission File Number 1-8399

WORTHINGTON INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)

Ohio	31-1189815
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
200 Old Wilson Bridge Road, Columbus, Ohio	43085
(Address of principal executive offices)	(Zip Code)

(614) 438-3210

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

YES  x  NO  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act (Check one):

Large accelerated filer  x Accelerated filer  ¨ Non-accelerated filer  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES  ¨  NO  x

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the Issuer’s classes of common stock, as of the latest practicable date.

As of December 30, 2005, 88,309,754 of the registrant’s common shares, without par value, were outstanding.

TABLE OF CONTENTS

Safe Harbor Statement		ii
Part I. Financial Information
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets – November 30, 2005, and May 31, 2005	1
	Condensed Consolidated Statements of Earnings – Three and Six Months Ended November 30, 2005 and 2004	2
	Condensed Consolidated Statements of Cash Flows – Six Months Ended November 30, 2005 and 2004	3
	Notes to Condensed Consolidated Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	26
Part II. Other Information
Item 1.	Legal Proceedings	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 3.	Defaults Upon Senior Securities (Not applicable)	28
Item 4.	Submission of Matters to a Vote of Security Holders (Not applicable)	28
Item 5.	Other Information (Not applicable)	28
Item 6.	Exhibits	29
Signatures		30
Index to Exhibits		31

i

SAFE HARBOR STATEMENT

Selected statements contained in this Quarterly Report on Form 10-Q, including, without limitation, in “PART I – Item 2. – Management’s Discussion and Analysis of Financial Condition and Results of Operations”, constitute “forward-looking statements” as that term is used in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based, in whole or in part, on management’s beliefs, estimates, assumptions and currently available information and can often be identified by the words “will”, “may”, “designed to”, “outlook”, “believes”, “should”, “plans”, “expects”, “intends”, “estimates” and similar expressions. These forward-looking statements include, without limitation, statements relating to:

• future estimated or expected earnings, charges, capacity, working capital, sales, operating results, earnings per share or the earnings impact of certain matters;

• pricing trends for raw materials and finished goods;

• anticipated capital expenditures and asset sales;

• projected timing, results, costs, charges and expenditures related to facility dispositions, shutdowns and consolidations;

• new products and markets;

• expectations for customer inventories, jobs and orders;

• expectations for the economy and markets;

• expected benefits from new initiatives, such as the Enterprise Resource Planning System;

• the effects of judicial rulings; and

• other non-historical trends.

Because they are based on beliefs, estimates and assumptions, forward-looking statements are inherently subject to risks and uncertainties that could cause actual results to differ materially from those projected. Any number of factors could affect actual results, including, without limitation:

• product demand and pricing, changes in product mix and market acceptance of products;

• fluctuations in pricing, quality or availability of raw materials (particularly steel), supplies, utilities and other items required by operations;

• effects of facility closures and the consolidation of operations;

• the ability to realize cost savings and operational efficiencies on a timely basis;

• the ability to integrate newly-acquired businesses and achieve synergies therefrom;

• capacity levels and efficiencies within facilities and within the industry as a whole;

• financial difficulties of customers, suppliers, joint venture partners and others with whom we do business;

• the effect of national, regional and worldwide economic conditions generally and within major product markets, including a prolonged or substantial economic downturn;

• the effect of adverse weather on suppliers, customers, markets, facilities and shipping operations;

• changes in customer inventories, spending patterns and supplier choices;

• risks associated with doing business internationally, including economic, political and social instability and foreign currency exposure;

• acts of war and terrorist activities;

• the ability to improve processes and business practices to keep pace with the economic, competitive and technological environment;

• deviation of actual results from estimates and/or assumptions used by us in the application of our significant accounting policies;

• level of imports and import prices in our markets;

• the impact of judicial rulings and governmental regulations, both in the United States and abroad; and

• other risks described from time to time in our filings with the Securities and Exchange Commission.

Any forward-looking statements in this Quarterly Report on Form 10-Q are based on current information as of the date of this Quarterly Report on Form 10-Q, and we assume no obligation to correct or update any such statements in the future, except as required by applicable law.

ii

PART I. FINANCIAL INFORMATION

Item 1. - Financial Statements

WORTHINGTON INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)

	November 30, 2005		May 31, 2005
ASSETS
Current assets:
Cash and cash equivalents	$	108,722	$	57,249
Short-term investments		95,254		—
Receivables, net		348,820		404,506
Inventories:
Raw materials		208,508		227,718
Work in process		88,505		97,168
Finished products		92,491		100,837
		389,504		425,723
Deferred income taxes		19,190		19,490
Prepaid expenses and other current assets		37,618		31,365
Total current assets		999,108		938,333
Investments in unconsolidated affiliates		145,140		136,856
Goodwill		175,690		168,267
Other assets		41,190		33,593
Property, plant and equipment		1,086,740		1,071,696
Less accumulated depreciation		541,920		518,740
		544,820		552,956
Total assets	$	1,905,948	$	1,830,005
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	314,696	$	280,181
Current maturities of long-term debt		142,899		143,432
Other current liabilities		123,141		121,830
Total current liabilities		580,736		545,443
Other liabilities		52,602		56,262
Long-term debt		245,000		245,000
Deferred income taxes		118,211		119,462
Minority interest		41,085		43,002
Shareholders’ equity		868,314		820,836
Total liabilities and shareholders’ equity	$	1,905,948	$	1,830,005

See notes to condensed consolidated financial statements.

1

WORTHINGTON INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)

(In thousands, except per share)

	Three Months Ended November 30,						Six Months Ended November 30,
	2005			2004			2005			2004
Net sales	$	699,516		$	745,168		$	1,393,663		$	1,514,508
Cost of goods sold		596,108			620,650			1,214,903			1,230,346
Gross margin		103,408			124,518			178,760			284,162
Selling, general and administrative expense		53,747			56,130			101,554			120,961
Impairment charges and other		—			—			—			5,608
Operating income		49,661			68,388			77,206			157,593
Other income (expense):
Miscellaneous income (expense)		(163	)		(2,873	)		195			(6,332	)
Interest expense		(6,555	)		(5,652	)		(13,282	)		(11,374	)
Equity in net income of unconsolidated affiliates		14,175			11,740			27,387			25,036
Earnings before income taxes		57,118			71,603			91,506			164,923
Income tax expense		18,090			23,980			24,071			59,441
Net earnings	$	39,028		$	47,623		$	67,435		$	105,482
Average common shares outstanding - basic		88,194			87,654			88,082			87,420
Earnings per share - basic	$	0.44		$	0.54		$	0.77		$	1.21
Average common shares outstanding - diluted		88,986			88,665			88,729			88,389
Earnings per share - diluted	$	0.44		$	0.54		$	0.76		$	1.19
Cash dividends declared per share	$	0.17		$	0.16		$	0.34		$	0.32

See notes to condensed consolidated financial statements.

2

WORTHINGTON INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

	Three Months Ended November 30,						Six Months Ended November 30,
	2005			2004			2005			2004
Operating activities:
Net earnings	$	39,028		$	47,623		$	67,435		$	105,482
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		15,749			14,448			30,109			28,507
Impairment charges and other		—			—			—			5,608
Other adjustments		(5,659	)		(12,891	)		(9,151	)		(35,090	)
Changes in assets and liabilities:
Accounts receivable		2,214			61,737			59,914			53,821
Inventories		(19,120	)		(16,963	)		36,219			(99,127	)
Accounts payable		54,854			2,040			33,078			(12,726	)
Other changes		(2,719	)		(16,269	)		(11,729	)		(15,831	)
Net cash provided by operating activities		84,347			79,725			205,875			30,644
Investing activities:
Investment in property, plant and equipment, net		(12,137	)		(7,847	)		(25,013	)		(19,331	)
Acquisitions, net of cash acquired		(6,770	)		(64,889	)		(6,770	)		(64,889	)
Investment in unconsolidated affiliate		—			(1,500	)		—			(1,500	)
Proceeds from sale of assets		1,848			1,844			2,782			83,804
Purchases of short-term investments		(175,254	)		—			(243,253	)		—
Sales of short-term investments		117,999			—			147,999			—
Net cash used by investing activities		(74,314	)		(72,392	)		(124,255	)		(1,916	)
Financing activities:
Principal payments on long-term debt		23			(167	)		(490	)		(2,018	)
Dividends paid		(14,970	)		(13,986	)		(29,920	)		(27,901	)
Other		888			7,031			263			10,357
Net cash used by financing activities		(14,059	)		(7,122	)		(30,147	)		(19,562	)
Increase (decrease) in cash and cash equivalents		(4,026	)		211			51,473			9,166
Cash and cash equivalents at beginning of period		112,748			10,932			57,249			1,977
Cash and cash equivalents at end of period	$	108,722		$	11,143		$	108,722		$	11,143

See notes to condensed consolidated financial statements.

3

WORTHINGTON INDUSTRIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three and Six Month Periods Ended November 30, 2005 and 2004

(Unaudited)

NOTE A – Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of Worthington Industries, Inc., its subsidiaries and certain of its joint ventures (collectively, the “Company”) and have been prepared in accordance with accounting principles generally accepted in the United States of America (“United States”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended November 30, 2005, are not necessarily indicative of the results that may be expected for the fiscal year ending May 31, 2006 (“fiscal 2006”). For further information, refer to the consolidated financial statements and notes thereto included in the Annual Report on Form 10-K of Worthington Industries, Inc. for the fiscal year ended May 31, 2005 (“fiscal 2005”).

Short-term Investments: At November 30, 2005, the Company held $83,475,000 of auction rate municipal bonds classified as available-for-sale securities. The investment in these securities is recorded at cost, which approximates fair market value due to their variable interest rates, which typically reset every 7 to 35 days, and despite the long-term nature of their stated contractual maturities, the Company has the ability to quickly liquidate these securities. As a result, the Company has no cumulative gross unrealized holding gains (losses) or gross realized gains (losses) from these short-term investments. Certificates of deposit of $9,800,000, maturing in April 2006, and other miscellaneous investments of $1,979,000 are also included as short-term investments.

4

NOTE B – Industry Segment Data

Several changes occurred during this quarter in the Company’s internal organizational and reporting structures. The Automotive Body Panels operating segment, consisting of The Gerstenslager Company, which was previously combined with Steel Processing in the Processed Steel Products segment, was moved to the “Other” category, and the Processed Steel Products segment was renamed Steel Processing. The Construction Services operating segment was formed and consists of Dietrich Building Systems, Inc. (previously included in the Metal Framing segment), Dietrich Residential Construction, LLC (which is now wholly-owned, see Note I), and a research and development project in China. Construction Services will also be reported in the “Other” category. The “Other” category now includes Automotive Body Panels, Construction Services and Steel Packaging operating segments and income and expense items not allocated to the operating segments. Summarized financial information for the Company’s reportable segments is shown in the following table. All prior period financial information has been restated to reflect the changes mentioned above.

	Three Months Ended November 30,						Six Months Ended November 30,
In thousands	2005			2004			2005		2004
Net sales
Steel Processing	$	364,458		$	436,158		$	716,085	$	866,290
Metal Framing		192,197			190,685			397,519		428,073
Pressure Cylinders		106,463			94,482			213,516		167,708
Other		36,398			23,843			66,543		52,437
	$	699,516		$	745,168		$	1,393,663	$	1,514,508
Operating income
Steel Processing	$	24,661		$	34,571		$	33,027	$	70,554
Metal Framing		13,857			26,100			24,252		80,208
Pressure Cylinders		11,214			8,827			19,168		12,017
Other		(71	)		(1,110	)		759		(5,186	)
	$	49,661		$	68,388		$	77,206	$	157,593
							November 30, 2005		May 31, 2005
Total assets
Steel Processing							$	723,712	$	781,049
Metal Framing								459,031		496,155
Pressure Cylinders								270,643		268,862
Other								452,562		283,939
							$	1,905,948	$	1,830,005

Total assets for the Other category increased $168,623,000 primarily as a result of the increase in cash and cash equivalents and short-term investments.

5

NOTE C – Comprehensive Income

The components of other comprehensive income, net of tax, were as follows:

	Three Months Ended November 30,					Six Months Ended November 30,
In thousands	2005			2004		2005			2004
Net earnings	$	39,028		$	47,623	$	67,435		$	105,482
Foreign currency translation		(1,673	)		4,274		(1,832	)		4,752
Cash flow hedges		4,421			2,898		6,955			1,749
Other		26			49		862			68
Total comprehensive income	$	41,802		$	54,844	$	73,420		$	112,051

NOTE D – Stock-Based Compensation

At November 30, 2005, the Company had stock option plans for employees and non-employee directors. The Company accounts for these plans under the recognition and measurement principles of Accounting Principles Board Opinion (“APB”) No. 25, Accounting for Stock Issued to Employees, and related interpretations. No stock-based employee compensation cost is reflected in net earnings, as all options granted under the plans had an exercise price equal to the fair market value of the underlying common shares of Worthington Industries, Inc. on the date of the grant. Pro forma information regarding net earnings and earnings per share is required by Statement of Financial Accounting Standards (“SFAS”) No. 123, Accounting for Stock-Based Compensation (“SFAS 123”), as amended by SFAS No. 148, Accounting for Stock-Based Compensation – Transition and Disclosure.

In December 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 123 (revised 2004), Share-Based Payment (“SFAS 123(R)”). SFAS 123(R) is a revision of SFAS 123 and it supercedes APB No. 25 and amends SFAS No. 95, Statement of Cash Flows. Generally, the approach in SFAS 123(R) is similar to the approach described in SFAS 123. However, SFAS 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. Pro forma disclosure will not be an alternative. SFAS 123(R) is effective for all fiscal years beginning after June 15, 2005, and thus will become effective for the Company in fiscal 2007. Early adoption will be permitted in periods in which financial statements have not yet been issued.

SFAS 123(R) permits public companies to choose between the following two adoption methods:

1. A “modified prospective” method in which compensation cost is recognized beginning with the effective date (a) based on the requirements of SFAS 123(R) for all share-based payments granted after the effective date and (b) based on the requirements of SFAS 123 for all awards granted to employees prior to the effective date of SFAS 123(R) that remain unvested on the effective date.

2. A “modified retrospective” method which includes the requirements of the modified prospective method described above, but also permits entities to restate based on the amounts previously recognized under SFAS 123 for purposes of pro forma disclosures either (a) all prior periods presented or (b) prior interim periods of the year of adoption.

The adoption of SFAS 123(R)’s fair value method will have an impact on the Company’s result of operations, although it will have no impact on the Company’s overall financial position. Stock option expense after the adoption of SFAS 123(R) is not expected to be materially different than the expense reported in the table below, but this will not be known until a full analysis of the impact of SFAS 123(R) is completed. The impact will largely depend on levels of share-based payments granted in the future.

On March 29, 2005, the Securities and Exchange Commission (“SEC”) issued Staff Accounting Bulletin No. 107 (“SAB 107”). SAB 107 provides interpretations expressing the views of the SEC staff regarding the interaction between SFAS 123(R) and certain SEC rules and regulations, and provides the staff’s views regarding

6

the valuation of share-based payment arrangements for public companies. SAB 107 does not modify any of SFAS 123(R)’s conclusions or requirements.

The following table illustrates the effect on net earnings and earnings per share if the Company had accounted for stock option plans using the fair value method, as required by SFAS 123, for the periods indicated:

	Three Months Ended November 30,				Six Months Ended November 30,
In thousands, except per share	2005		2004		2005		2004
Net earnings, as reported	$	39,028	$	47,623	$	67,435	$	105,482
Deduct: total stock-based employee compensation expense determined under fair value based method, net of tax		590		439		1,177		878
Pro forma net earnings	$	38,438	$	47,184	$	66,258	$	104,604
Earnings per share:
Basic, as reported	$	0.44	$	0.54	$	0.77	$	1.21
Basic, pro forma	$	0.44	$	0.54	$	0.75	$	1.20
Diluted, as reported	$	0.44	$	0.54	$	0.76	$	1.19
Diluted, pro forma	$	0.44	$	0.54	$	0.75	$	1.19

NOTE E – Employee Pension Plans

The following table summarizes the components of net periodic pension cost for the Company’s defined benefit plans for the periods indicated:

	Three Months Ended November 30,						Six Months Ended November 30,
In thousands	2005			2004			2005			2004
Defined benefit plans:
Service cost	$	243		$	196		$	486		$	392
Interest cost		246			170			493			340
Expected return on plan assets		(199	)		(153	)		(398	)		(305	)
Net amortization and deferral		81			89			162			177
Net pension cost on defined benefit plans	$	371		$	302		$	743		$	604

The Company funded its pension obligations with a $2,659,000 payment in fiscal 2006.

NOTE F – Income Taxes

Income tax expense for the first six months of fiscal 2006 and fiscal 2005 reflects an estimated annual effective income tax rate of 31.4% and 36.3%, respectively. Management is required to estimate the annual effective tax rate based upon its forecast of annual pre-tax income for domestic and foreign operations. To the extent that actual pre-tax results differ from the forecast estimates applied at the end of the most recent interim period, actual tax rate recognized in fiscal 2006 could be materially different from the forecast rate as of the end of the second quarter.

7

Income tax expense for the first six months of fiscal 2006 was reduced by the following: $4,568,000 due to an adjustment to reduce deferred tax liabilities as a result of the new Ohio corporate tax legislation enacted June 30, 2005; $683,000 to decrease accrued income taxes for the first 20% phase out of the Ohio franchise tax; $1,396,000 to decrease deferred income taxes due the non-US earnings repatriation issue discussed below; and $1,528,000 to decrease other liabilities due to favorable tax audit settlements and related developments.

Income tax expense for the first six months of fiscal 2005 was reduced by $1,735,000 to decrease other liabilities due to favorable tax audit settlements and related developments.

On October 22, 2004, the President of the United States signed the American Jobs Creation Act of 2004 (the “Act”). The Act provides a deduction for income from qualified domestic production activities, which will be phased in from fiscal 2006 through fiscal 2011. Under the guidance of FAS 109-1, the deduction will be treated as a special deduction as described in FAS 109. As such, the special deduction will have no effect on deferred tax assets and liabilities existing as of the enactment date. Rather, the impact of this deduction is reflected in the estimated annual effective income tax rate discussed above.

The Act also provides an 85% dividends-received-deduction on qualifying dividends from controlled foreign corporations. On December 21, 2004, the FASB issued FASB Staff Position No. 109-2, Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004, which provides relief concerning the timing of the SFAS No. 109 requirement to accrue deferred taxes for unremitted earnings of foreign subsidiaries. The FASB determined that the provisions of the Act were sufficiently complex and ambiguous that companies may not be in a position to determine the impact of the Act on their plans for repatriation or reinvestment of foreign earnings or the corresponding deferred tax liability. Accrual of any deferred tax liability is not required until companies have the information necessary to determine the amount of earnings to be repatriated and a reasonable estimate can be made of the deferred tax liability.

During the second quarter ended November 30, 2005, the Worthington Armstrong Venture (50% owned joint venture) received dividends from certain of its foreign subsidiaries. These dividends are expected to qualify for the 85% dividends-received-deduction. As such, the Company reduced its estimated deferred tax liabilities by $1,396,000 for the excess deferred tax liabilities previously accrued on the earnings of indirectly owned foreign subsidiaries.

The Company is still evaluating the potential effect this provision will have should it decide to repatriate earnings from its directly owned foreign operations. This evaluation will be completed in fiscal 2006. Depending on the outcome of this evaluation, the Company could repatriate up to $70,300,000, representing all of its foreign earnings in directly owned operations. Total repatriation of these foreign earnings would increase tax expense by $3,700,000.

8

NOTE G – Investments in Unconsolidated Affiliates

The Company’s investments in unconsolidated affiliated companies, which are not controlled through majority ownership or otherwise, are accounted for using the equity method. These equity investments and the percentage interest owned consist of Worthington Armstrong Venture (50%), TWB Company, LLC (50%), Acerex, S.A. de C.V. (50%), Worthington Specialty Processing (50%), Aegis Metal Framing, LLC (60%), and Viking & Worthington Steel Enterprise, LLC (49%). Dietrich Residential Construction, LLC’s (50%) results are included in the amounts below before the acquisition date (see Note I).

The Company received distributions from these affiliated companies totaling $18,568,000 during the six months ended November 30, 2005.

Combined financial information for these affiliated companies is summarized in the following table:

In thousands	November 30, 2005		May 31, 2005
Cash	$	102,324	$	111,070
Other current assets		191,325		204,239
Noncurrent assets		130,961		142,065
Current maturities of long-term debt		3,158		56,000
Other current liabilities		98,238		99,894
Long-term debt		36,304		33,362
Other noncurrent liabilities		6,246		3,061
	Six Months Ended November 30,
	2005		2004
Net sales	$	412,781	$	363,945
Gross margin		87,340		79,310
Depreciation and amortization		9,850		10,052
Interest expense		1,993		1,542
Income tax expense		2,291		1,639
Net earnings		53,080		48,782

NOTE H – Debt

On September 29, 2005, Worthington Industries, Inc. amended and restated its $435,000,000 long-term revolving credit facility. The amendment provides for an extension of the facility commitments to September 2010; replaces the leverage ratio (debt-to-EBITDA) financial covenant with an interest coverage ratio (EBITDA-to-interest expense) financial covenant of not less than 3.25 times; and reduces the facility fees payable. The proceeds of the amended and restated facility may be used to fund general corporate purposes including working capital, capital expenditures, acquisitions and dividends. The facility was unused at November 30, 2005.

9

NOTE I – Acquisitions

During October 2005, the Company acquired the remaining 50% interest in Dietrich Residential Construction, LLC (“DRC”) from its partner, Pacific Steel Construction, for $3,770,000 cash and debt assumption of $4,153,000. The acquisition was recorded using the purchase accounting method, and the results of DRC, which were previously reported as an unconsolidated joint venture, have been included in the consolidated results of the “Other” category since the date of acquisition. The excess of the purchase price over the historical book value has been allocated to goodwill pending final asset valuations.

During November 2005, the Company acquired the remaining 40% interest in Dietrich Metal Framing Canada, Inc. (“DMF”) from our minority partner, Encore Coils Holdings Ltd. for $3,000,000 cash. The acquisition was recorded using the purchase accounting method, and 100% of the results of DMF, which were previously reduced by the minority interest, have been included in the consolidated results of the Metal Framing segment since the date of acquisition. The excess of the purchase price over the historical book value has been allocated to goodwill pending final asset valuations.

Pro forma results, including the acquired businesses since the beginning of the earliest period presented, would not be materially different than actual results.

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Item 2. - Management’s Discussion and Analysis of Financial Condition and Results of Operations

Selected statements contained in this “Item 2. – Management’s Discussion and Analysis of Financial Condition and Results of Operations” constitute “forward-looking statements” as that term is used in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based, in whole or in part, on management’s beliefs, estimates, assumptions and currently available information. For a more detailed discussion of what constitutes a forward-looking statement and of some of the factors that could cause actual results to differ materially from such forward-looking statements, please refer to the “Safe Harbor Statement” in the beginning of this Quarterly Report on Form 10-Q.

Overview

The following discussion and analysis of the financial condition and results of operations of Worthington Industries, Inc., together with its subsidiaries (collectively, “we,” “our,” “Worthington,” or the “Company”), should be read in conjunction with our consolidated financial statements included in “Item 1. – Financial Statements.” Our Annual Report on Form 10-K for the fiscal year ended May 31, 2005 (“fiscal 2005”), includes additional information about our Company, our operations and our financial position, and should be read in conjunction with this Quarterly Report on Form 10-Q.

Worthington is a diversified metal processing company that focuses on value-added steel processing and manufactured metal products. As of November 30, 2005, excluding our joint ventures, we operated 49 manufacturing facilities worldwide, principally in three reportable business segments: Steel Processing, Metal Framing and Pressure Cylinders. We also held equity positions in 7 joint ventures, which operated 16 manufacturing facilities worldwide as of November 30, 2005.

To better understand the markets in which each of our business segments operate and their performance, we monitor certain national and industry data. During the three months ended November 30, 2005, domestic GDP continued to trend upward and was up 3% over the preceding year and 1% over the previous quarter. In construction, which is approximately 37% of our sales, the U.S. Census Bureau’s Index of Private Construction Spending was 7% above last year’s second fiscal quarter. Activity in our largest construction market sector, office buildings, improved 8% above last year. The automotive industry, that represents approximately 33% of our sales, had mixed results. North American vehicle production was 5% higher, but “Big Three” automotive (collectively, DaimlerChrysler AG, Ford Motor Co. and General Motors Corp.) production was down 1% compared to last year. Our tons shipped to the Big Three increased 37%. Our total automotive volumes increased 1% for the second quarter of the fiscal year ending May 31, 2006 (“fiscal 2006”) compared to the second quarter of fiscal 2005.

During the last two fiscal years, the steel industry experienced unprecedented steel price fluctuations. Early in this two-year period, the People’s Republic of China (“China”) was a net importer of steel as its demand for steel exceeded its production capabilities, increasing the demand for steel in the worldwide market and reducing the availability of foreign steel in the United States. Further reducing the supply of imports to the United States was a weaker U.S. dollar and higher transportation costs making foreign steel more expensive than domestic steel. As China increased its production capabilities, it required more steel-making raw materials, especially coke and scrap steel. This resulted in shortages of these key raw materials fueling further increases in steel prices. Finally, the consolidation of the steel industry within the United States reduced the availability of steel. All of these factors combined during this period of time to cause an unprecedented increase in steel prices.

Steel prices peaked in September 2004 and continued to decline until the end of our fiscal 2006 first quarter. China increased steel production significantly, contributing to global supply and placing significant downward pressure on prices. In addition, excess inventories and lower production from automotive and other key metalworking sectors reduced demand. However, since August 2005, prices have increased 23% reflecting improved order levels as the automotive sector demand increased from customer incentives drawing down inventories, constrained domestic supply caused by mill maintenance shutdowns, and energy and supply problems from the recent hurricanes. Prices were stable during October and November 2005.

The recent hurricanes that hit the Gulf Coast states during the first six months of fiscal 2006 had no direct impact on our facilities. However, some Metal Framing customers’ plants, representing 2-3% of Metal Framing’s business, were shut down. We estimate that recovery may take a year or more, but a significant rebuilding period should follow that would benefit this segment. An indirect impact from the recent hurricanes has been increased

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zinc, energy and transportation costs, but because we were able to pass along some of these increases and have hedged others, this impact has not been material to our consolidated financial position or results of operations.

We have focused over the last several years on improved returns on capital by investing in growth markets and products, consolidating facilities and divesting non-strategic assets or other assets that were not delivering appropriate returns. We have also added products and operations, including joint ventures, which we believe complement our existing business and strengths. Because of our success with joint ventures, we continue to look for additional opportunities where we can bring together complementary skill sets, manage our risk and effectively invest our capital. Some of these joint ventures have served as entry points into markets not previously served and have resulted in later buyouts of partners.

During October 2005, we acquired the remaining 50% interest in Dietrich Residential Construction, LLC (“DRC”) from our partner, Pacific Steel Construction for $3,770,000 cash and debt assumption of $4,153,000. The acquisition was recorded using the purchase accounting method, and the results of DRC, which were previously reported as an unconsolidated joint venture, have been included in the consolidated results of the “Other” category since the date of acquisition.

During November 2005, we acquired the remaining 40% interest in Dietrich Metal Framing Canada, Inc. (“DMF”), from our minority partner, Encore Coils Holdings Ltd. for $3,000,000 cash. The joint venture was formed in November 2004 as a platform to provide our Metal Framing segment’s light gauge steel framing, proprietary products, building systems and services to the Canadian construction market. The acquisition was recorded using the purchase accounting method, and 100% of the results of DMF, which were previously reduced by the minority interest, have been included in the consolidated results of the Metal Framing segment since the date of acquisition.

Several changes occurred during this quarter in our internal organizational and reporting structures. The Automotive Body Panels operating segment, consisting of The Gerstenslager Company, which was previously combined with Steel Processing in the Processed Steel Products segment, was moved to the “Other” category, and the Processed Steel Products segment was renamed Steel Processing. The Construction Services operating segment was formed and consists of Dietrich Building Systems, Inc. (previously included in the Metal Framing segment), DRC, and a research and development project in China. Construction Services will also be reported in the “Other” category. The “Other” category now includes the Automotive Body Panels, Construction Services and Steel Packaging operating segments and income and expense items not allocated to the operating segments. All prior period financial information has been restated to reflect the changes mentioned above.

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Results of Operations

Second Quarter - Fiscal 2006 Compared to Fiscal 2005

Consolidated Operations

The results of our operations are mainly driven by two factors, demand and the spread between average selling price and material cost. Our inventory costing methods approximate a first-in, first-out (“FIFO”) inventory flow and can significantly affect the spread. In a rising steel-price environment, our reported income is often favorably impacted as inventory acquired during the two to three previous months at lower prices flows through cost of goods sold and our selling prices increase to meet the rising cost of steel. In a decreasing steel-price environment, the inverse often occurs as higher-priced inventory on hand flows through cost of goods sold and our selling prices decrease. This results in what we refer to as inventory holding gains or losses. We strive to limit this impact by controlling inventory levels.

The extreme fluctuation in steel prices over the last few years has magnified the impact of the inventory holding gains and losses. This continues to be a major factor when comparing our results against the prior year. Average hot-roll prices were 24% lower during the second quarter of fiscal 2006, versus the comparable quarter of fiscal 2005, and 16% higher than the quarter ended August 31, 2005. The quarter ended November 30, 2005, was positively impacted by an inventory holding gain estimated at $3.0 million. The quarter ended November 30, 2004, contained an estimated inventory holding gain of $32.0 million.

The following table presents consolidated operating results for the periods indicated:

	Three Months Ended November 30,
	2005							2004
In millions, except per share	Actual			% of Net Sales		% Change		Actual			% of Net Sales
Net sales	$	699.5		100.0	%	-6	%	$	745.2		100.0	%
Cost of goods sold		596.1		85.2	%	-4	%		620.7		83.3	%
Gross margin		103.4		14.8	%	-17	%		124.5		16.7	%
Selling, general and administrative expense		53.7		7.7	%	-4	%		56.1		7.5	%
Operating income		49.7		7.1	%	-27	%		68.4		9.2	%
Other income (expense):
Miscellaneous expense		(0.2	)	0.0	%	-93	%		(2.9	)	-0.4	%
Interest expense		(6.6	)	-0.9	%	18	%		(5.6	)	-0.8	%
Equity in net income of unconsolidated affiliates		14.2		2.0	%	21	%		11.7		1.6	%
Earnings before income taxes		57.1		8.2	%	-20	%		71.6		9.6	%
Income tax expense		18.1		2.6	%	-25	%		24.0		3.2	%
Net earnings	$	39.0		5.6	%	-18	%	$	47.6		6.4	%
Average common shares outstanding - diluted		89.0							88.7
Earnings per share - diluted	$	0.44				-19	%	$	0.54

Net earnings decreased $8.6 million, to $39.0 million for the second quarter of fiscal 2006, from $47.6 million for the comparable quarter of fiscal 2005. Diluted earnings per share decreased $0.10 per share to $0.44 per share from $0.54 per share for the prior fiscal year. Net earnings for the second quarter of fiscal 2006 were positively impacted by a $5.3 million reduction in insurance reserves, or $0.04 per diluted share. We maintain self-insurance reserves for estimated workers’ compensation, general liability, property damage and other claims. These reserves are supported by a third party actuarial analysis of our loss history. Due to facility consolidations, focus on and investment in safety initiatives, and an emphasis on property loss prevention and product quality, our loss

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history has improved significantly. This improvement was reflected in the recent actuarial analysis of our loss history and resulted in this favorable reduction to our reserves.

Net sales decreased 6%, or $45.7 million, to $699.5 million for the second quarter of fiscal 2006 from $745.2 million for the comparable quarter last fiscal year. Lower selling prices reduced sales by $88.5 million, reflecting the lower steel prices that prevailed during the second quarter of fiscal 2006 versus the comparable period of fiscal 2005. However, an increase in volumes, primarily due to improved demand in the Metal Framing and Pressure Cylinders segments, increased sales by $42.8 million.

Gross margin decreased 17%, or $21.1 million, to $103.4 million for the second quarter of fiscal 2006 from $124.5 million for the comparable quarter last fiscal year. An unfavorable pricing spread accounted for $35.1 million of the decrease, but was partially offset by a $13.6 million volume increase. Collectively, these factors decreased gross margin as a percentage of net sales to 14.8% for the second quarter of fiscal 2006 compared to 16.7% for the comparable quarter of fiscal 2005.

Selling, general and administrative (“SG&A”) expense decreased 4%, or $2.4 million, to $53.7 million for the second quarter of fiscal 2006 from $56.1 million for the comparable quarter of the prior year. As a percentage of net sales, SG&A increase increased slightly to 7.7% for the second quarter of fiscal 2006 from 7.5% for the comparable quarter of the fiscal 2005.

Miscellaneous expense decreased $2.7 million in the current quarter compared to the second quarter of fiscal 2005. This was due to an increase in and higher returns on cash and short-term investments and the reduced minority interest elimination for our consolidated joint ventures due to lower earnings of those joint ventures.

Interest expense increased $1.0 million due to higher rates and borrowings.

Equity in net income of unconsolidated affiliates increased to $14.2 million for the second quarter from $11.7 million, primarily due to improved results at our Worthington Armstrong Venture (“WAVE”) joint venture. The unconsolidated joint ventures generated $208.1 million in sales during the second quarter of fiscal 2006.

Income tax expense decreased 25%, or $5.9 million, due to lower earnings and adjustments to our estimated income tax liabilities. We estimate that our effective tax rate will be 31.4% for fiscal 2006 compared to 37.8% for fiscal 2005. The main reason for the difference is the impact of the one-time adjustment to deferred taxes from the changes in the tax laws for the State of Ohio.

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Segment Operations

Steel Processing

The second quarter of fiscal 2005 was the best second quarter in the history of this segment with the second quarter of fiscal 2006 being the second best. The results of the segment for the second quarter of fiscal 2006 were well below the same period a year ago, but improved over the results of the first quarter of fiscal 2006. The spread between average selling price and material cost widened dramatically in fiscal 2005, only to fall significantly during the first quarter of this fiscal year and then somewhat improve during the second quarter of fiscal 2006.

The following table presents a summary of operating results for the Steel Processing segment for the periods indicated:

	Three Months Ended November 30,
	2005						2004
Dollars in millions, tons in thousands	Actual		% of Net Sales		% Change		Actual		% of Net Sales
Net sales	$	364.5	100.0	%	-16	%	$	436.2	100.0	%
Cost of goods sold		318.8	87.5	%	-15	%		376.0	86.2	%
Gross margin		45.7	12.5	%	-24	%		60.2	13.8	%
Selling, general and administrative expense		21.0	5.8	%	-18	%		25.6	5.9	%
Operating income	$	24.7	6.8	%	-29	%	$	34.6	7.9	%
Tons shipped		919			2	%		905
Material cost	$	264.2	72.5	%	-18	%	$	320.5	73.5	%

Operating income decreased 29%, or $9.9 million, to $24.7 million, or 6.8% of net sales, for the second quarter of fiscal 2006 from $34.6 million, or 7.9% of net sales, for the comparable period of fiscal 2005. Net sales decreased 16%, or $71.7 million, to $364.5 million from $436.2 million, primarily due to lower selling prices, as volumes were up 2%. A narrower spread between average selling price and material cost decreased gross margin by $14.0 million. This was the primary reason for the 24%, or $14.5 million, decline in gross margin to $45.7 million, or 12.5% of net sales, for the second quarter. This compared to gross margin of $60.2 million, or 13.8% of net sales, for the comparable period of fiscal 2005. Manufacturing expenses were down slightly compared to the prior year as increases in freight, zinc and natural gas expenses were offset by a decrease in profit sharing and bonus expense and lower comparative expenses at our Decatur facility. SG&A expenses decreased $4.6 million for the second quarter primarily due to a decrease in bad debt expense of $3.3 million compared to the prior year. Bad debt expense in the prior year was higher reflecting the increased collection risk of certain customers.

Metal Framing

The Metal Framing segment’s customers have finished a nearly year long period of destocking, and demand has generally improved. Year over year volumes were up 18%, enough to offset the impact of lower pricing on sales. The quarter was adversely impacted by weather events reducing the number of available shipping days and delaying project schedules, with multiple hurricanes in the south and unseasonably early winter storms in the north.

Effective November 1, 2005, Dietrich Metal Framing acquired the remaining 40% equity interest in Dietrich Metal Framing Canada, Inc. from our joint venture partner, Encore Coils Holdings Ltd. This acquisition, occurring twelve months after a multiple greenfield start up, provides Metal Framing a Canadian market share base of approximately 20% from which to expand.

The following table presents a summary of operating results for the Metal Framing segment for the periods indicated:

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	Three Months Ended November 30,
	2005						2004
Dollars in millions, tons in thousands	Actual		% of Net Sales		% Change		Actual		% of Net Sales
Net sales	$	192.2	100.0	%	1	%	$	190.7	100.0	%
Cost of goods sold		160.4	83.5	%	10	%		145.7	76.4	%
Gross margin		31.8	16.5	%	-29	%		45.0	23.6	%
Selling, general and administrative expense		17.9	9.3	%	-5	%		18.8	9.9	%
Operating income	$	13.9	7.2	%	-47	%	$	26.2	13.7	%
Tons shipped		171			18	%		145
Material cost	$	120.0	62.4	%	9	%	$	110.2	57.8	%

Operating income decreased $12.3 million to $13.9 million, or 7.2% of net sales, for the second quarter from $26.2 million, or 13.7% of net sales, for the comparable period of fiscal 2005. Net sales were $192.2 million for the second quarter compared to $190.7 million for the comparable period of fiscal 2005 due to an increase in volume of $39.3 million offset by lower pricing of $37.8 million. Gross margin decreased $13.2 million, to $31.8 million, from $45.0 million and, as a percentage of net sales, was 16.5% compared to 23.6% for the comparable period in the prior year, primarily due to a narrower spread between selling prices and material cost partially offset by the increase in volume. SG&A expense decreased slightly mainly due to lower profit sharing and bonus expense from the lower earnings.

Pressure Cylinders

This segment had an increase in net sales and improved operating performance for the second quarter of fiscal 2006 compared to the same period in the prior year. North American net sales increased $7.1 million primarily from the operations comprised of the net assets of the propane and specialty gas cylinder business of Western Industries, Inc. (“Western Cylinder Assets”), acquired on September 17, 2004. Improved volumes and increased selling prices at the Austrian and Czech Republic facilities resulted in a $4.8 million increase in revenues from the European operations.

The following table presents a summary of operating results for the Pressure Cylinders segment for the periods indicated:

	Three Months Ended November 30,
	2005						2004
Dollars in millions, units in thousands	Actual		% of Net Sales		% Change		Actual		% of Net Sales
Net sales	$	106.5	100.0	%	13	%	$	94.5	100.0	%
Cost of goods sold		84.6	79.4	%	10	%		76.6	81.1	%
Gross margin		21.9	20.6	%	22	%		17.9	18.9	%
Selling, general and administrative expense		10.7	10.0	%	18	%		9.1	9.6	%
Operating income	$	11.2	10.5	%	27	%	$	8.8	9.3	%
Units shipped*		12,005			34	%		8,987
Material cost	$	50.3	47.2	%	14	%	$	44.3	46.9	%

* Excluding the units from the Western Cylinder Assets from both periods, units shipped were 3,069 vs. 2,970, a 3% increase.

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Operating income increased 27%, or $2.4 million, to $11.2 million, or 10.5% of net sales, for the second quarter from $8.8 million, or 9.3% of net sales, for the comparable period of fiscal 2005. Net sales increased 13%, or $12.0 million, to $106.5 million for the second quarter from $94.5 million for the comparable period of fiscal 2005 as discussed above. Unit volumes were up 34%. Gross margin was 20.6% of net sales for the second quarter compared to 18.9% for the comparable period of fiscal 2005. The improved gross margin is due to the sales volume increases discussed above and improved operating efficiencies at the Portugal and Czech Republic facilities. SG&A increased $1.6 million from the prior year period as a result of settlements of two product liability claims in the current quarter.

Other

The “Other” category includes the Automotive Body Panels, Construction Services and Steel Packaging operating segments, which are immaterial for separate disclosure, and also includes income and expense items not allocated to the operating segments.

The following table presents a summary of operating results for the Other category for the periods indicated:

	Three Months Ended November 30,
	2005							2004
Dollars in millions	Actual			% of Net Sales		% Change		Actual			% of Net Sales
Net sales	$	36.4		100.0	%	53	%	$	23.8		100.0	%
Cost of goods sold		32.4		89.0	%	45	%		22.3		93.7	%
Gross margin		4.0		11.0	%	167	%		1.5		6.3	%
Selling, general and administrative expense		4.1		11.3	%	58	%		2.6		10.9	%
Operating loss	$	(0.1	)	-0.3	%	91	%	$	(1.1	)	-4.6	%

The operating loss decreased $1.0 million to $0.1 million for the second quarter of fiscal 2006 from $1.1 million for the comparable period of fiscal 2005. The improvement was mainly due to a $1.1 million reduction of self-insurance reserves, as mentioned previously, the majority of which is recorded in cost of goods sold. Net sales increased 53%, or $12.6 million, to $36.4 million for the second quarter from $23.8 million for the comparable period of fiscal 2005 due primarily to increased sales in the Construction Services segment. Gross margin was 11.0% of net sales for the second quarter compared to 6.3% for the comparable period of fiscal 2005. SG&A increased $1.5 million from the prior year period.

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Year-to-Date - Fiscal 2006 Compared to Fiscal 2005

Consolidated Operations

The impact of the inventory holding gains and losses continues to be a major factor when comparing our results against the prior year. Average hot-roll prices were 28% lower during the first six months of fiscal 2006, versus the comparable period of fiscal 2005. The six months ended November 30, 2005 were positively impacted by an inventory holding loss estimated at $32.0 million. The six months ended November 30, 2004 contained an estimated inventory holding gain of $77.0 million.

The following table presents consolidated operating results for the periods indicated:

	Six Months Ended November 30,
	2005							2004
In millions, except per share	Actual			% of Net Sales		% Change		Actual			% of Net Sales
Net sales	$	1,393.7		100.0	%	-8	%	$	1,514.5		100.0	%
Cost of goods sold		1,214.9		87.2	%	-1	%		1,230.3		81.2	%
Gross margin		178.8		12.8	%	-37	%		284.2		18.8	%
Selling, general and administrative expense		101.6		7.3	%	-16	%		121.0		8.0	%
Impairment charges and other		—		0.0	%				5.6		0.4	%
Operating income		77.2		5.5	%	-51	%		157.6		10.4	%
Other income (expense):
Miscellaneous income (expense)		0.2		0.0	%	103	%		(6.3	)	-0.4	%
Interest expense		(13.3	)	-1.0	%	17	%		(11.4	)	-0.8	%
Equity in net income of unconsolidated affiliates		27.4		2.0	%	10	%		25.0		1.7	%
Earnings before income taxes		91.5		6.6	%	-45	%		164.9		10.9	%
Income tax expense		24.1		1.7	%	-59	%		59.4		3.9	%
Net earnings	$	67.4		4.8	%	-36	%	$	105.5		7.0	%
Average common shares outstanding-diluted		88.7							88.4
Earnings per share-diluted	$	0.76				-36	%	$	1.19

Net earnings decreased $38.1 million, to $67.4 million for the first six months of fiscal 2006, from $105.5 million for the comparable period of fiscal 2005. Diluted earnings per share decreased $0.43 per share to $0.76 per share from $1.19 per share for the prior fiscal year. Net earnings for the first six months of fiscal 2006 were positively impacted by a $5.3 million pre-tax reduction in insurance reserves, discussed previously, and a $5.3 million reduction in taxes, related to the modification of corporate tax laws in the state of Ohio enacted June 30, 2005. Net earnings for the first six months of fiscal 2005 were reduced by a $5.6 million pre-tax charge related to the sale of our Decatur, Alabama, steel-processing facility and its cold-rolling assets.

Net sales decreased 8%, or $120.8 million, to $1,393.7 million for the first six months of fiscal 2006 from $1,514.5 million for the comparable period last fiscal year. The decrease was primarily due to lower sales prices, which reflected the lower steel prices that prevailed during the first half of fiscal 2006 versus the comparable period of fiscal 2005 and reduced sales by $127.8 million. Higher overall volumes slightly offset the negative impact of the decline in selling prices. The volume increase was primarily due to increased volumes in the Metal Framing and Pressure Cylinder segments, but the impact was largely offset by a decrease in demand in the Steel Processing segment.

Gross margin decreased 37%, or $105.4 million, to $178.8 million for the first six months of fiscal 2006 from $284.2 million for the comparable period last fiscal year. An unfavorable pricing spread, accounted for $129.2 million of the decrease in the gross margin. An increase in overall volume and a decrease in direct labor and

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manufacturing expenses improved the gross margin by $14.7 million and $9.1 million, respectively. The decrease in direct labor and manufacturing expenses was mainly due to a decrease in profit sharing and bonus expense driven by lower earnings. Collectively, these factors decreased gross margin as a percentage of net sales to 12.8% for the first six months of fiscal 2006 compared to 18.8% for the comparable period of fiscal 2005.

SG&A expense as a percentage of net sales decreased to 7.3% for the first six months of fiscal 2006 compared to 8.0% of net sales for the comparable period of the prior year. In total, SG&A expense decreased 16%, or $19.4 million, to $101.6 million for the first six months of fiscal 2006 from $121.0 million for the comparable period of fiscal 2005. This decrease was primarily due to a $14.3 million decrease in profit sharing and bonus expense and a $3.7 million reduction in bad debt expense compared to the prior year which had an increase in bad debt expense to reflect the increased collection risk of certain customers.

Miscellaneous income (expense) increased $6.5 million in the current year compared to the first six months of fiscal 2005. This was due to an increase in and higher returns on cash and short-term investments and the reduced minority interest elimination for our consolidated joint ventures due to lower earnings of those joint ventures.

Interest expense increased 17% or $1.9 million due to higher rates and borrowings.

Equity in net income of unconsolidated affiliates increased slightly, to $27.4 million for the first six months of fiscal 2006 from $25.0 million, primarily due to improved results at our WAVE joint venture. The unconsolidated joint ventures generated $412.8 million in sales during the first six months of fiscal 2006. Joint venture income continues to be a consistent and significant contributor to our profitability.

Income tax expense decreased 59%, or $35.3 million, due to lower earnings, modifications to the corporate tax laws for the state of Ohio, and adjustments to our estimated tax liabilities. The new tax law changes, which are ongoing in nature, resulted in a $5.3 million favorable benefit in the first quarter of fiscal 2006, the majority of which was due to the one-time impact of lower rates on deferred taxes. We estimate that our effective tax rate will be 31.4% for fiscal 2006 compared to 37.8% for fiscal 2005. The main reason for the difference is the impact of the one-time adjustment to deferred taxes from the changes in the tax laws for the State of Ohio.

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Segment Operations

Steel Processing

Our Steel Processing segment represented approximately 52% of consolidated net sales. The steel-pricing environment and the automotive industry, which accounts for approximately 60% of its net sales, significantly impacts the results of this segment. After having risen steadily for the first four months of fiscal 2005, steel prices declined significantly from their all time high in September 2004. Overall, in contrast the price of steel in the first six months of fiscal 2006 was significantly lower than in the first six months of fiscal 2005, which led to a narrowed spread between our average selling prices and material costs. Sales to the automotive market for the first six months of fiscal 2006 were 3% lower than the comparable period for fiscal 2005. Big Three automotive production volumes were down about 2%, while North American vehicle production for all manufacturers was up approximately 3% for the same periods.

Effective August 1, 2004, we sold our Decatur, Alabama, steel-processing facility and its cold-rolling assets to Nucor Corporation (“Nucor”) for $80.4 million cash. The assets sold at Decatur include the land and buildings, the four-stand tandem cold mill, the temper mill, the pickle line and the annealing furnaces. The sale excluded the slitting and cut-to-length assets and net working capital. We continue to serve customers by providing steel-processing services at the Decatur site under a long-term building lease with Nucor. A pre-tax charge of $5.6 million, mainly related to contract termination costs, was recognized during the first quarter of fiscal 2005.

The following table presents a summary of operating results for the Steel Processing segment for the periods indicated:

	Six Months Ended November 30,
	2005						2004
Dollars in millions, tons in thousands	Actual		% of Net Sales		% Change		Actual		% of Net Sales
Net sales	$	716.1	100.0	%	-17	%	$	866.3	100.0	%
Cost of goods sold		645.4	90.1	%	-12	%		736.1	85.0	%
Gross margin		70.7	9.9	%	-46	%		130.2	15.0	%
Selling, general and administrative expense		37.7	5.3	%	-30	%		54.0	6.2	%
Impairment charges and other		—						5.6	0.6	%
Operating income	$	33.0	4.6	%	-53	%	$	70.6	8.1	%
Tons shipped		1,756			-6	%		1,863
Material cost	$	541.4	75.6	%	-13	%	$	619.6	71.5	%

Operating income decreased 53%, or $37.6 million, to $33.0 million, or 4.6% of net sales, for the first six months of fiscal 2006 from $70.6 million, or 8.1% of net sales, for the comparable period of fiscal 2005. Net sales decreased 17%, or $150.2 million, to $716.1 million from $866.3 million, due to a decrease in pricing of $63.4 million and a decrease in volume of $86.8 million, of which $62.9 million was due to the sale of certain Decatur assets. Gross margin declined 46%, or $59.5 million, to $70.7 million, or 9.9% of net sales, for the current period versus $130.2 million, or 15.0% of net sales, for the comparable period of fiscal 2005. A narrower spread between average selling price and material cost combined with a decrease in volume reduced gross margin by $52.1 million and $20.0 million, respectively. Gross margin was favorably impacted by a $12.5 million decline in operating expenses primarily due to an $8.5 million decrease in profit sharing and bonus expense due to lower earnings and a $4.4 million reduction in manufacturing expenses at our Decatur facility partially offset by increases for freight, zinc and natural gas expense. SG&A expense decreased $16.3 million, to 5.3% of net sales, for the first six months of fiscal 2006, down from 6.2% of net sales for the comparable period of fiscal 2005. The decline in SG&A was largely due to a decrease of $8.8 million in profit sharing and bonus expense driven by lower earnings and a $3.3 million decrease in bad debt expense compared to the prior year, which reflected increased collection risk of certain customers in the prior year.

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Metal Framing

Our Metal Framing segment represented approximately 29% of consolidated net sales. Volumes for the first six months of fiscal 2006 increased 10% compared to the same period in fiscal 2005. We believe the improved demand reflects a combination of factors, including pent-up demand, rebuilding in Florida after fiscal 2005’s hurricanes and market share gains.

The following table presents a summary of operating results for the Metal Framing segment for the periods indicated:

	Six Months Ended November 30,
	2005						2004
Dollars in millions, tons in thousands	Actual		% of Net Sales		% Change		Actual		% of Net Sales
Net sales	$	397.5	100.0	%	-7	%	$	428.1	100.0	%
Cost of goods sold		336.9	84.8	%	10	%		305.5	71.4	%
Gross margin		60.6	15.2	%	-51	%		122.6	28.6	%
Selling, general and administrative expense		36.3	9.1	%	-14	%		42.4	9.9	%
Operating income	$	24.3	6.1	%	-70	%	$	80.2	18.7	%
Tons shipped		355			10	%		324
Material cost	$	256.8	64.6	%	13	%	$	227.9	53.2	%

Operating income decreased $55.9 million to $24.3 million, or 6.1% of net sales, for the first six months of fiscal 2006 from $80.2 million, or 18.7% of net sales, for the comparable period of fiscal 2005. The primary driver of the decrease was the narrower spread between average selling price and material cost of $80.4 million partially offset by an increase in volume of $21.0 million. Net sales decreased 7%, or $30.6 million, to $397.5 million for the first six months of fiscal 2006 from $428.1 million for the comparable period of fiscal 2005 due to the impact of lower pricing of $79.6 million partially offset by the impact of an increase in volume of $49.0 million. Gross margin decreased $62.0 million, to $60.6 million, from $122.6 million and, as a percentage of net sales, was 15.2% compared to 28.6% for the comparable period in the prior year. SG&A expense decreased largely because of a decrease in profit sharing and bonus expense of $6.8 million driven by lower earnings.

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Pressure Cylinders

Our Pressure Cylinders segment represented approximately 15% of consolidated net sales. This segment had an increase in net sales and improved operating performance for the first six months of fiscal 2006 compared to the same period in the prior year.

The following table presents a summary of operating results for the Pressure Cylinders segment for the periods indicated:

	Six Months Ended November 30,
	2005						2004
Dollars in millions, units in thousands	Actual		% of Net Sales		% Change		Actual		% of Net Sales
Net sales	$	213.5	100.0	%	27	%	$	167.7	100.0	%
Cost of goods sold		173.1	81.1	%	26	%		137.8	82.2	%
Gross margin		40.4	18.9	%	35	%		29.9	17.8	%
Selling, general and administrative expense		21.2	9.9	%	18	%		17.9	10.7	%
Operating income	$	19.2	9.0	%	60	%	$	12.0	7.2	%
Units shipped*		25,550			110	%		12,178
Material cost	$	105.3	49.3	%	36	%	$	77.3	46.1	%

* Excluding the units from the Western Cylinders Assets from both periods, units shipped were 6,564 vs. 6,161, a 7% increase.

Operating income increased 60%, or $7.2 million, to $19.2 million, or 9.0% of net sales, for the first six months of fiscal 2006 from $12.0 million, or 7.2% of net sales, for the comparable period of fiscal 2005. Net sales increased 27%, or $45.8 million, to $213.5 million for the first six months of fiscal 2006 from $167.7 million for the comparable period of fiscal 2005. The acquired Western Cylinder Assets contributed $24.8 million to this increase, other North American net sales contributed $10.5 million and improved European sales contributed $10.5 million. Unit volumes were up 7%, excluding units from the Western Cylinder Assets. Gross margin was 18.9% of net sales for the first six months of fiscal 2006 compared to 17.8% for the comparable period of fiscal 2005. The improved gross margin is due to the increased volumes discussed above, combined with improved operating performances at the Portugal and Czech Republic facilities. The Portugal facility ceased production of its unprofitable liquefied petroleum gas cylinders in the first quarter of fiscal 2005, resulting in significantly improved gross margin as a percentage of sales. The Czech Republic facility expanded its air tank production in fiscal 2005, but incurred high labor and manufacturing expense during the expansion start-up in fiscal 2005. While SG&A expense increased $3.3 million from the prior year period, this expense as a percentage of net sales declined to 9.9% from 10.6% in the prior year period. Increased costs of $3.6 million related to the operation of the acquired Western Cylinder Assets and settlement of two product liability claims in the current fiscal year drove the increase over the prior year.

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Other

The following table presents a summary of operating results for the Other category for the periods indicated:

	Six Months Ended November 30,
	2005						2004
Dollars in millions	Actual		% of Net Sales		% Change		Actual			% of Net Sales
Net sales	$	66.5	100.0	%	27	%	$	52.4		100.0	%
Cost of goods sold		59.5	89.5	%	17	%		51.0		97.3	%
Gross margin		7.0	10.5	%	400	%		1.4		2.7	%
Selling, general and administrative expense		6.3	9.5	%	-5	%		6.6		12.6	%
Operating income (loss)	$	0.7	1.1	%	113	%	$	(5.2	)	-9.9	%

Operating income improved $5.9 million, to $0.7 million for the first six months of fiscal 2006 from an operating loss of $5.2 million for the comparable period of fiscal 2005 primarily due to an improvement in results for Construction Services and the adjustment to the self-insurance reserves mentioned previously. Net sales increased 27%, or $14.1 million, to $66.5 million for the first six months of fiscal 2006 from $52.4 million for the comparable period of fiscal 2005 due primarily to increased sales in the Construction Services segment. Gross margin was 10.6% of net sales for the current period compared to 2.7% for the comparable period of fiscal 2005. SG&A decreased $0.3 million from the prior year period.

Liquidity and Capital Resources

During the first six months of fiscal 2006, we generated $205.9 million in cash from operating activities. This was primarily the result of $67.4 million in net earnings, a $59.9 million decrease in receivables, a $36.2 million decrease in inventory and an increase in accounts payable of $33.1 million during the period. Cash from operating activities for the first six months of fiscal 2005 was $30.6 million. The decrease in inventory was the main reason for the difference in cash flow from operations for fiscal 2006 compared to fiscal 2005. As mentioned previously, steel prices peaked in September 2004 resulting in a significant increase the value of our inventories from the period May 31, 2004 to November 30, 2004. With the subsequent decline of steel prices, our investment in inventory has also declined.

Consolidated net working capital was $418.4 million at November 30, 2005, compared to $392.9 million at May 31, 2005. An increase in cash and cash equivalents and short-term investments of $146.7 was partially the result of decreases in receivables and inventory of $91.9 million and an increase in accounts payable of $34.5 million.

Our primary investing and financing activities included distributing $29.9 million in dividends to shareholders, spending $25.0 million on capital projects, which included $8.0 million for our ERP system and purchasing $95.3 million of net short-term investments. We generated $4.1 million in cash from the issuance of common shares through option exercises and $2.8 million from the sale of assets. We anticipate that our fiscal 2006 capital spending, excluding acquisitions, will be greater than our annual depreciation expense. The capital spending for fiscal 2006 is expected to include approximately $7.0 million in addition to the $8.0 million spent in the first six months of fiscal 2006 related to the ongoing implementation of our ERP system.

Our short-term liquidity needs are primarily met by a $435.0 million long-term revolving credit facility; a $100.0 million trade accounts receivable securitization facility and $60.0 million in uncommitted discretionary credit lines. All were unused as of November 30, 2005 and May 31, 2005.

Our 7  ¹/8% Senior Notes mature in May 2006 (principal outstanding of $142.9 million at November 30, 2005). We believe the facilities described in the preceding paragraph, as well as our cash, short-term investments and cash provided by operating activities will be more than adequate to satisfy that obligation.

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On September 29, 2005, we amended and restated our $435.0 million long-term revolving credit facility to extend the maturity to September 2010 and to replace the leverage ratio (debt-to-EBITDA) financial covenant with an interest coverage ratio (EBITDA-to-interest expense) financial covenant of not less than 3.25 times. The amended and restated facility also reduces the facility fees payable and provides liquidity beyond the maturity of our 6.70% Notes due in December 2009. The proceeds of the amended and restated facility may be used for general corporate purposes including working capital, capital expenditures, acquisitions and dividends.

Uncommitted lines of credit are extended to us on a discretionary basis. Because the outstanding principal amounts can be adjusted daily, these uncommitted lines typically provide us with the greatest amount of funding flexibility compared to our other sources of short-term capital.

At November 30, 2005, our total debt was $387.9 million compared to $388.4 million at May 31, 2005. Our debt to total capitalization ratio was 30.9% at November 30, 2005, down from 32.1% at May 31, 2005.

On June 13, 2005, we announced that our board of directors authorized the repurchase of up to 10.0 million of our outstanding common shares. The purchases may be made from time to time, on the open market or in private transactions, with consideration given to the market price of the common shares, the nature of other investment opportunities, cash flows from operations and general economic conditions. During the first six months of fiscal 2006, there were no repurchases of common shares.

We assess acquisition opportunities as they arise. Additional financing may be required if we decide to make additional acquisitions. There can be no assurance, however, that any such opportunities will arise, that any such acquisitions will be consummated, or that any needed additional financing will be available on satisfactory terms when required. Absent any other acquisitions, we anticipate that cash, short-term investments, cash provided by operating activities and unused borrowing capacity should be sufficient to fund expected normal operating costs, repayment of our 7 1/8% Senior Notes upon maturity, dividends, working capital, and capital expenditures for our existing businesses.

Dividend Policy

Dividends are declared at the discretion of our board of directors. Our board of directors reviews the dividend quarterly and establishes the dividend rate based upon our financial condition, results of operations, capital requirements, current and projected cash flows, business prospects and other factors which are deemed relevant. While we have paid a dividend every quarter since becoming a public company in 1968, there is no guarantee that this will continue in the future.

Contractual Cash Obligations and Other Commercial Commitments

Contractual cash obligations and other commercial commitments have not changed significantly from those disclosed in “Item 7 – Management’s Discussion and Analysis of Financial Conditions and Results of Operations” of our Annual Report on Form 10-K for fiscal 2005.

Off-Balance Sheet Arrangements

We had no material off-balance sheet arrangements at November 30, 2005.

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We continually evaluate our estimates, including those related to our valuation of receivables, intangible assets, accrued liabilities, income and other tax accruals, and contingencies and litigation. We base our estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances. These results form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Critical accounting policies are defined as those that reflect our significant judgments and uncertainties that could potentially result in materially different results under different

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assumptions and conditions. Although actual results historically have not deviated significantly from those determined using our estimates, as discussed below, our financial position or results of operations could be materially different if we were to report under different conditions or to use different assumptions in the application of such policies. We believe the following accounting policies are the most critical to us since these are the primary areas where financial information is subject to our estimates, assumptions and judgment in the preparation of our consolidated financial statements.

Revenue Recognition: We recognize revenue upon transfer of title and risk of loss provided evidence of an arrangement exists, pricing is fixed and determinable, and collectibility is probable. In circumstances where the collection of payment is highly questionable at the time of shipment, we defer recognition of revenue until payment is collected. We provide an allowance for returns based on experience and current customer activities.

Receivables: We review our receivables on a monthly basis to ensure that they are properly valued and collectible. This is accomplished through two contra-receivable accounts: returns and allowances and allowance for doubtful accounts. Returns and allowances are used to record estimates of returns or other allowances resulting from quality, delivery, discounts or other issues affecting the value of receivables. This account is estimated based on historical trends and current market conditions, with the offset recorded to net sales.

The allowance for doubtful accounts is used to record the estimated risk of loss related to the customers’ ability to pay. This allowance is maintained at a level that we consider appropriate based on factors that affect collectibility, such as the financial health of the customer, historical trends of charge-offs and recoveries, and current and projected economic and market conditions. As we monitor our receivables, we identify customers that may have a problem paying, and we adjust the allowance accordingly, with the offset to SG&A expense.

While we believe these allowances are adequate, changes in economic conditions, the financial health of customers, and bankruptcy settlements could impact our future earnings.

Impairment of Long-Lived Assets: We review the carrying value of our long-lived assets, including intangible assets, whenever events or changes in circumstances indicate that the carrying value of an asset or a group of assets may not be recoverable. Accounting standards require an impairment charge to be recognized in the financial statements if the carrying amount exceeds the undiscounted cash flows that asset or group of assets would generate. The loss recognized would be the difference between the fair value and the carrying amount of the asset or group of assets.

Annually, we review goodwill for impairment using the present value technique to determine the estimated fair value of goodwill associated with each reporting entity. There are three significant sets of values used to determine the fair value: estimated future discounted cash flows, capitalization rate and tax rates. The estimated future discounted cash flows used in the model are based on planned growth with an assumed perpetual growth rate. The capitalization rate is based on our current cost of debt and equity capital. Tax rates are maintained at current levels.

Accounting for Derivatives and Other Contracts at Fair Value: We use derivatives in the normal course of business to manage our exposure to fluctuations in commodity prices, foreign currency and interest rates. These derivatives are based on quoted market values. These estimates are based upon valuation methodologies deemed appropriate in the circumstances; however, the use of different assumptions could affect the estimated fair values.

Stock-Based Compensation: We currently account for employee and non-employee stock option plans under the recognition and measurement principles of Accounting Principles Board (“APB”) Opinion No. 25, Accounting for Stock Issued to Employees, and the related interpretations. No stock-based employee compensation cost is reflected in net earnings, as all options granted under plans had an exercise price equal to the fair market value of the underlying common shares on the grant date. Beginning in fiscal 2007, we will be required to record an expense for our stock-based compensation plans using the fair value method. Had we accounted for stock-based compensation plans using the fair value method prescribed in SFAS No. 123(R), we estimate that diluted earnings per share would have been reduced by $0.03 per share in fiscal 2005, $0.02 in fiscal 2004 and $0.01 in fiscal 2003.

Income Taxes: In accordance with the provisions of SFAS No. 109, Accounting for Income Taxes, we account for income taxes using the asset and liability method. The asset and liability method requires the recognition of deferred tax assets and liabilities for expected future tax consequences of temporary differences that currently exist between the tax bases and financial reporting bases of our assets and liabilities. In assessing the

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realizability of deferred tax assets, we consider whether it is more likely than not that some or a portion of the deferred tax assets will not be realized. We provide a valuation allowance for deferred income tax assets when, in our judgment, based upon currently available information and other factors, it is more likely than not that a portion of such deferred income tax assets will not be realized. The determination of the need for a valuation allowance is based on an on-going evaluation of current information including, among other things, estimates of future earnings in different tax jurisdictions and the expected timing of deferred income tax asset reversals. We believe that the determination to record a valuation allowance to reduce deferred income tax assets is a critical accounting estimate because it is based on an estimate of future taxable income in the various tax jurisdictions in which we do business, which is susceptible to change and may or may not occur, and because the impact of adjusting a valuation allowance may be material.

We have a reserve for taxes and associated interest that may become payable in future years as a result of audits by taxing authorities. While we believe the positions taken on previously filed tax returns are appropriate, we have established the tax and interest reserves in recognition that various taxing authorities may challenge our positions. The tax reserves are analyzed periodically and adjustments are made, as events occur to warrant adjustment to the reserve, such as lapsing of applicable statutes of limitations, conclusion of tax audits, additional exposure based on current calculations, identification of new issues, release of administrative guidance or court decisions affecting a particular tax issue.

Self-Insurance Reserves: We are largely self-insured with respect to workers’ compensation, general liability, property damage, employee medical claims and other potential losses. In order to reduce risk and better manage overall loss exposure, we purchase stop-loss insurance that covers individual claims in excess of the deductible amounts. We maintain reserves for the estimated cost to settle open claims as well as an estimate of the cost of claims that have been incurred but not reported. These estimates are based on third-party actuarial valuations that take into consideration the historical average claim volume, the average cost for settled claims, current trends in claim costs, changes in our business and workforce, general economic factors and other assumptions believed to be reasonable under the circumstances. The estimated reserves for these liabilities could be affected if future occurrences and claims differ from assumptions used and historical trends. Facility consolidations, focus on and investment in safety initiatives, and an emphasis on property loss prevention and product quality, has resulted in an improvement in our loss history and the related assumptions used to analyze these reserves. This improvement resulted in a $5.3 million reduction to these insurance reserves that was recorded during the second quarter of fiscal 2006. We will continue to review these reserves on a quarterly basis, or more frequently if factors dictate a more frequent review is warranted.

The critical accounting policies discussed herein are not intended to be a comprehensive list of all of our accounting policies. In many cases, the accounting treatment of a particular transaction is specifically dictated by accounting principles generally accepted in the United States, with no need for our judgment in their application. There are also areas in which our judgment in selecting an available alternative would not produce a materially different result.

Item 3. - Quantitative and Qualitative Disclosures About Market Risk

Market risks have not changed significantly from those disclosed in “Item 7A – Quantitative and Qualitative Disclosures About Market Risk” of our Annual Report on Form 10-K for the fiscal year ended May 31, 2005.

Item 4. - Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Management, with the participation of our principal executive officer and principal financial officer, performed an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of the end of the quarterly period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, our principal executive officer and principal financial officer have concluded that such disclosure controls and procedures were effective as of the end of the quarterly period covered by this Quarterly Report on Form 10-Q to ensure that material information relating to Worthington Industries, Inc. and our consolidated subsidiaries is made known to them, particularly during the period for which periodic reports of Worthington Industries, Inc., including this Quarterly Report on Form 10-Q, are being prepared.

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New ERP System

We are in the process of implementing a new software based ERP system throughout much of Worthington Industries, Inc. and our consolidated subsidiaries. Implementing a new system results in changes to business processes and related controls. We believe that we are adequately controlling the transition to the new processes and controls and that there will be no negative impact to our internal control environment. In fact, one of the expected benefits of the fully implemented ERP system is an enhancement of our internal controls.

Changes in Internal Control Over Financial Reporting

There were no significant changes (except for the ERP changes noted above), which occurred during our second fiscal quarter ended November 30, 2005, in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. – Legal Proceedings

Various legal actions, which generally have arisen in the ordinary course of business, are pending against Worthington Industries, Inc. and its subsidiaries (collectively, “Worthington”). None of this pending litigation, individually or collectively, is expected to have a material adverse effect on Worthington.

Item 2. – Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information about purchases made by, or on behalf of, Worthington Industries, Inc. or any “affiliated purchaser” (as defined in Rule 10b – 18(a) (3) under the Securities Exchange Act of 1934) of common shares of Worthington Industries, Inc. during each month of the fiscal quarter ended November 30, 2005:

Period	Total Number of Common Shares Purchased	Average Price Paid per Common Share		Total Number of Common Shares Purchased as part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Common Shares that May Yet Be Purchased Under the Plans or Programs (1)
September 1-30, 2005	—		—	—	10,000,000
October 1-31, 2005	15,483(2)	$	21.05	—	10,000,000
November 1-30, 2005	—		—	—	10,000,000
Total	15,483	$	21.05	—	10,000,000

(1) On June 13, 2005, Worthington Industries, Inc. announced that the board of directors had authorized the repurchase of up to 10 million of its outstanding common shares. The common shares may be purchased from time to time, with consideration given to the market price of the common shares, the nature of other investment opportunities, cash flows from operations and general economic conditions. Repurchases may be made on the open market or through privately negotiated transactions. During the second quarter of fiscal 2006, there were no repurchases of common shares.

(2) Reflects common shares owned and tendered by an employee to pay the exercise price for an option exercise.

Item 3. – Defaults Upon Senior Securities

Not applicable

Item 4. – Submission of Matters to a Vote of Security Holders

Not applicable

Item 5. – Other Information

Not applicable

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Item 6. – Exhibits

Exhibits

31.1	Rule 13a - 14(a) / 15d - 14(a) Certification (Principal Executive Officer)
31.2	Rule 13a - 14(a) / 15d - 14(a) Certification (Principal Financial Officer)
32.1	Section 1350 Certification of Principal Executive Officer
32.2	Section 1350 Certification of Principal Financial Officer

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	WORTHINGTON INDUSTRIES, INC.
Date: January 9, 2006	By:	/s/ John S. Christie
	John S. Christie,
	President and Chief Financial Officer
	(On behalf of the Registrant and as Principal Financial Officer)

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INDEX TO EXHIBITS

Exhibit	Description	Location
31.1	Rule 13a - 14(a) / 15d - 14(a) Certification (Principal Executive Officer)	Filed herewith.
31.2	Rule 13a - 14(a) / 15d - 14(a) Certification (Principal Financial Officer)	Filed herewith.
32.1	Section 1350 Certification of Principal Executive Officer	Filed herewith.
32.2	Section 1350 Certification of Principal Financial Officer	Filed herewith.

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EX-31.1

Exhibit 31.1

RULE 13a-14(a) / 15d - 14(a) CERTIFICATION (PRINCIPAL EXECUTIVE OFFICER)

I, John P. McConnell, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended November 30, 2005, of Worthington Industries, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	January 9, 2006	By:	/s/ John P. McConnell
			John P. McConnell,
			Chairman of the Board and Chief Executive Officer

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EX-31.2

Exhibit 31.2

RULE 13a-14(a) / 15d - 14(a) CERTIFICATION (PRINCIPAL FINANCIAL OFFICER)

I, John S. Christie, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended November 30, 2005, of Worthington Industries, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: January 9, 2006	By:	/s/ John S. Christie
		John S. Christie,
		President and Chief Financial Officer

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EX-32.1

Exhibit 32.1

SECTION 1350 CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

In connection with the Quarterly Report of Worthington Industries, Inc. (the “Company”) on Form 10-Q for the quarterly period ended November 30, 2005, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John P. McConnell, Chairman of the Board and Chief Executive Officer of the Company, certify, pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the consolidated financial condition and results of operations of the Company.

/s/ John P. McConnell*

Printed Name: John P. McConnell

Title: Chairman of the Board and Chief Executive Officer

Date: January 9, 2006

*This certification is being furnished as required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 1350 of Chapter 63 of Title 18 of the United States Code, and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that Section. This certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the Company specifically incorporates this certification by reference.

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EX-32.2

Exhibit 32.2

SECTION 1350 CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

In connection with the Quarterly Report of Worthington Industries, Inc. (the “Company”) on Form 10-Q for the quarterly period ended November 30, 2005, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John S. Christie, President and Chief Financial Officer of the Company, certify, pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the consolidated financial condition and results of operations of the Company.

/s/ John S. Christie*

Printed Name: John S. Christie

Title: President and Chief Financial Officer

Date: January 9, 2006

*This certification is being furnished as required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 1350 of Chapter 63 of Title 18 of the United States Code, and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that Section. This certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the Company specifically incorporates this certification by reference.

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