Note N – Segment Data

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

During the first quarter of fiscal 2014, we made certain organizational changes impacting the internal reporting and management structure of our Steel Packaging operating segment. As a result of these organizational changes, management responsibilities and internal reporting were realigned under our Steel Processing operating segment. Segment information reported in previous periods has been restated to conform to this new presentation.

Steel Processing: The Steel Processing operating segment consists of the Worthington Steel business unit, and includes Precision Specialty Metals, Inc., a specialty stainless processor located in Los Angeles, California, and Worthington Steelpac Systems, LLC (“SteelPac”), which designs and manufactures reusable steel custom platforms, racks and pallets for supporting, protecting and handling products throughout the shipping process. Worthington Steel also includes our consolidated joint ventures: Spartan Steel Coating, LLC (“Spartan”) and TWB. Spartan operates a cold-rolled hot dipped galvanizing line and TWB operates a tailor welded blank business. Worthington Steel is an intermediate processor of flat-rolled steel. This operating segment’s processing capabilities include pickling; slitting; oscillate slitting; cold reducing; hot-dipped galvanizing; hydrogen annealing; cutting-to-length; temper rolling; tension leveling; edging; non-metallic coating, including dry lubrication, acrylic and paint; and configured blanking. Worthington Steel sells to customers principally in the automotive, construction, lawn and garden, hardware, furniture, office equipment, leisure and recreation, appliance, agricultural, HVAC, container and aerospace markets. Worthington Steel also toll processes steel for steel mills, large end-users, service centers and other processors. Toll processing is different from typical steel processing in that the mill, end-user or other party retains title to the steel and has the responsibility for selling the end product.

Pressure Cylinders: The Pressure Cylinders operating segment consists of the Worthington Cylinders business unit and two consolidated joint ventures: Worthington Nitin Cylinders, an India-based manufacturer of high-pressure, seamless steel cylinders for CNG and other industrial gas storage applications; and Worthington Aritas, a Turkey-based manufacturer that is one of Europe’s leading cryogenic technology companies for LNG and other gas storage applications. Our Pressure Cylinders operating segment manufactures and sells filled and unfilled pressure cylinders, tanks and various accessories and related products for diversified end-use market applications. The following is a description of these markets:

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Consumer Products: These products include LPG cylinders for barbecue grills and other heating applications, propane accessories, propane-filled cylinders for camping stove and other applications, hand held torches and accessories including filled fuel cylinders, and Balloon Time^® helium-filled balloon kits. These products are sold primarily to mass merchandisers, cylinder exchangers and distributors.

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Alternative fuels: This sector includes Type I, II, III and ASME cylinders for containment of CNG and hydrogen for automobiles, buses, and light-duty trucks, as well as propane/autogas cylinders for automobiles and light and medium-duty trucks.

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Industrial Products: This market sector includes industrial, refrigerant, cryogenic and certain LPG cylinders for gas, as well as cryogenic pressure vessels and other specialty products. Cylinders in these markets are generally sold to gas producers and distributors. Industrial cylinders hold fuel for uses such as cutting, welding, breathing (medical, diving and firefighting), semiconductor production, and beverage delivery. Refrigerant gas cylinders are used to hold refrigerant gases for commercial, residential and automotive air conditioning and refrigeration systems. Cryogenic cylinders are used to store liquid nitrogen, oxygen, argon and carbon dioxide for industrial gas markets. Cryogenic LNG pressure vessels include transport trailers, ISO containers, bulk tanks and satellite stations for re-gasification. LPG cylinders hold fuel for recreational vehicle equipment, residential and light commercial heating systems, industrial forklifts and commercial/residential cooking (the latter, generally outside North America). Specialty products include a variety of fire suppression and chemical tanks.

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Energy: This sector was formed in fiscal 2013 as a result of the acquisition of Westerman, Inc. on September 17, 2012 and also included the Palmer and Steffes acquisitions. Products for this sector include steel and fiberglass tanks, and pressure vessels and other products for global energy markets, including oil and gas and nuclear, which products are used for a broad variety of exploration, recovery and production purposes; and hoists and other marine products which are used principally in shipyard lift systems. This sector also leverages its manufacturing competencies to produce pressure vessels, atmospheric tanks, controls and various custom machined components for other industrial and agricultural end markets.

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

Other: The Other category includes the Construction Services and Worthington Energy Innovations operating segments, as they do not meet the quantitative thresholds for separate disclosure. Certain income and expense items not allocated to our operating segments are also included in Other as is the activity related to the wind down of our former Metal Framing operating segment.

Construction Services: The Construction Services operating segment consists of the Military Construction business unit, and, for periods prior to its closure in May 2014, the Worthington Construction Group business unit. Military Construction’s operations involve the supply and construction of single family housing, with a focus on military housing. We are in the process of evaluating strategic options for this business.

Worthington Energy Innovations: WEI is a 75%-owned consolidated joint venture with a subsidiary of Professional Supply, Inc. (20%) and Stonehenge Structured Finance Partners, LLC (5%) (together referred to as “WEI Partners”), located in Fremont, Ohio. WEI is a professional services company that develops cost-effective energy solutions for entities in North America. WEI designs solutions to minimize energy consumption, manages the energy solution installation, monitors and verifies energy usage, guarantees future energy savings and shares in these savings.

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

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


(in thousands)	2014			2013			2012
Net sales
Steel Processing	$	1,936,073		$	1,462,630		$	1,598,812
Pressure Cylinders		928,396			859,264			770,101
Engineered Cabs		200,528			226,002			104,272
Other		61,429			64,348			61,516

Total net sales	$	3,126,426		$	2,612,244		$	2,534,701

Operating income (loss)
Steel Processing	$	119,025		$	68,156		$	73,626
Pressure Cylinders		55,004			66,367			45,108
Engineered Cabs		(26,516	)		4,158			4,878
Other		(11,760	)		(9,539	)		(22,002	)

Total operating income	$	135,753		$	129,142		$	101,610

Depreciation and amortization
Steel Processing	$	32,882		$	25,918		$	27,093
Pressure Cylinders		31,984			26,919			20,407
Engineered Cabs		10,027			9,096			3,540
Other		4,837			4,536			4,833

Total depreciation and amortization	$	79,730		$	66,469		$	55,873

Impairment of long-lived assets
Steel Processing	$	7,141		$	-		$	-
Pressure Cylinders		32,005			6,488			-
Engineered Cabs		19,100			-			-
Other		-			-			355

Total impairment of long-lived assets	$	58,246		$	6,488		$	355

Restructuring and other expense (income)
Steel Processing	$	(3,382	)	$	-		$	-
Pressure Cylinders		(745	)		2,665			52
Engineered Cabs		-			-			-
Other		1,215			628			5,932

Total restructuring and other expense	$	(2,912	)	$	3,293		$	5,984

Joint venture transactions
Steel Processing	$	-		$	-		$	(2,102	)
Pressure Cylinders		-			-			-
Engineered Cabs		-			-			-
Other		1,036			(604	)		1,952

Total joint venture transactions	$	1,036		$	(604	)	$	(150	)

Total assets
Steel Processing	$	850,748		$	610,464		$	709,030
Pressure Cylinders		818,720			742,686			575,250
Engineered Cabs		181,251			201,048			199,594
Other		445,662			396,659			393,923

Total assets	$	2,296,381		$	1,950,857		$	1,877,797

Capital expenditures
Steel Processing	$	16,682			8,371		$	9,705
Pressure Cylinders		32,364			13,368			8,456
Engineered Cabs		10,351			6,265			4,641
Other		11,941			16,584			8,911

Total capital expenditures	$	71,338		$	44,588		$	31,713

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


(in thousands)	2014		2013		2012
United States	$	2,917,484	$	2,418,307	$	2,333,575
Europe		136,513		159,562		150,458
Mexico		51,430		-		-
Canada		10,324		21,257		29,097
Other		10,675		13,118		21,571

Total	$	3,126,426	$	2,612,244	$	2,534,701

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


(in thousands)	2014		2013
United States	$	429,068	$	400,032
Europe		56,884		51,222
Mexico		6,314		-
Canada		-		1,275
Other		6,595		6,901

Total	$	498,861	$	459,430