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Fair Value Measurements (Tables)
 12 Months Ended
May. 31, 2015
Schedule of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis

At May 31, 2015, our financial assets and liabilities measured at fair value on a recurring basis were as follows:

 

(in thousands)    Quoted  Prices
in
Active
Markets
(Level 1)		      Significant
Other
Observable
Inputs
(Level 2)		      Significant
Unobservable
Inputs
(Level 3)		      Totals  

Assets

            

Derivative contracts (1)

    $   -       $ 171       $ -       $ 171   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total assets

    $ -       $ 171       $ -       $ 171   
  

 

 

     

 

 

     

 

 

     

 

 

  

Liabilities

            

Derivative contracts (1)

    $ -       $ 22,131       $ -       $ 22,131   

Contingent consideration obligations (2)

      -         -         3,979         3,979   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total liabilities

    $ -       $ 22,131       $ 3,979       $ 26,110   
  

 

 

     

 

 

     

 

 

     

 

 

  

 

At May 31, 2014, our financial assets and liabilities measured at fair value on a recurring basis were as follows:

 

(in thousands)    Quoted  Prices
in
Active
Markets
(Level 1)		      Significant
Other
Observable
Inputs
(Level 2)		      Significant
Unobservable
Inputs
(Level 3)		      Totals  

Assets

            

Derivative contracts (1)

    $   -       $ 1,284       $ -       $ 1,284   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total assets

    $ -       $ 1,284       $ -       $ 1,284   
  

 

 

     

 

 

     

 

 

     

 

 

  

Liabilities

            

Derivative contracts (1)

    $ -       $ 4,475       $ -       $ 4,475   

Contingent consideration obligations (2)

      -         -         404         404   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total liabilities

    $ -       $ 4,475       $ 404       $ 4,879   
  

 

 

     

 

 

     

 

 

     

 

 

  

 

(1)

The fair value of our derivative contracts is based on the present value of the expected future cash flows considering the risks involved, including non-performance risk, and using discount rates appropriate for the respective maturities. Market observable, Level 2 inputs are used to determine the present value of the expected future cash flows. Refer to “Note P – Derivative Instruments and Hedging Activities” for additional information regarding our use of derivative instruments.

 

(2)

The fair value of the contingent consideration obligations is determined using a probability weighted cash flow approach based on management’s projections of future cash flows of the acquired businesses. The fair value measurements are based on significant inputs not observable in the market and thus represent Level 3 measurements.
Assets Measured at Fair Value on Non-recurring Basis

At May 31, 2015, our assets measured at fair value on a non-recurring basis were categorized as follows:

 

(in thousands)

    Quoted  Prices
in
Active
Markets
(Level 1)		      Significant
Other
Observable
Inputs
(Level 2)		      Significant
Unobservable
Inputs
(Level 3)		      Totals  

Assets

            

Long-lived assets held and used (1)

    $   -       $   -       $ 12,403       $ 12,403   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total assets

    $ -       $ -       $ 12,403       $ 12,403   
  

 

 

     

 

 

     

 

 

     

 

 

  

 

(1)

During the fourth quarter of fiscal 2015, the Company determined that indicators of impairment were present with regard to intangible assets related to our CNG fuel systems joint venture, dHybrid. Recoverability of the identified asset group was tested using future cash flow projections based on management’s long-range estimates of market conditions. The sum of these undiscounted future cash flows was less than the net book value of the asset group. In accordance with the applicable accounting guidance, the intangible assets were written down to their fair value of $600,000, resulting in an impairment charge of $2,344,000. The key assumptions that drove the fair value calculation were projected cash flows and the discount rate.

During the third quarter of fiscal 2015, the Company concluded that an interim impairment test of the goodwill of its Engineered Cabs operating segment was necessary. Prior to conducting the goodwill impairment test, the Company first evaluated the other long-lived assets of the Engineered Cabs operating segment for recoverability. Recoverability was tested using future cash flow projections based on management’s long-range estimates of market conditions. The sum of the undiscounted future cash flows for the customer relationship intangible asset and the property, plant and equipment of the Florence, South Carolina facility were less than their respective carrying values. As a result, these assets were written down to their respective fair values of $2,000,000 and $9,803,000. The fair value measurements are based on significant inputs not observable in the market and thus represent Level 3 measurements. The key assumptions that drove the fair value calculations were projected cash flows and the discount rate.

At May 31, 2014, our assets measured at fair value on a non-recurring basis were categorized as follows:

 

(in thousands)    Quoted
Prices  in
Active
Markets
(Level 1)		      Significant
Other
Observable
Inputs
(Level 2)		      Significant
Unobservable
Inputs
(Level 3)		      Totals  

Assets

            

Long-lived assets held for sale (1)

    $   -       $ 25,040       $   -       $ 25,040   

Long-lived assets held and used (2)

      -         7,034         -         7,034   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total assets

    $ -       $ 32,074       $ -       $ 32,074   
  

 

 

     

 

 

     

 

 

     

 

 

  

 

(1)

During the fourth quarter of fiscal 2014, management committed to a plan to sell the Company’s 60%-owned consolidated joint venture in India, Worthington Nitin Cylinders. In accordance with the applicable accounting guidance, the net assets were recorded at the lower of net book value or fair value less costs to sell. As the fair value of the asset group, or $5,925,000, was lower than its net book value, an impairment charge of $18,959,000 was recognized within impairment of long-lived assets in our fiscal 2014 consolidated statement of earnings. The portion of this impairment loss attributable to the noncontrolling interest, or $7,583,000, was recorded within net earnings attributable to noncontrolling interests in our fiscal 2014 consolidated statement of earnings.

During the fourth quarter of fiscal 2014, management committed to plans to sell the Company’s stainless steel business, Precision Specialty Metals, Inc. In accordance with the applicable accounting guidance, the net assets were recorded at the lower of net book value or fair value less costs to sell. As the fair value of the asset group, or $19,115,000, was lower than its net book value, an impairment charge of $7,141,000 was recognized within impairment of long-lived assets in our fiscal 2014 consolidated statement of earnings.

 

(2)

During the fourth quarter of fiscal 2014, we determined that indicators of impairment were present at the Company’s aluminum high-pressure cylinder business in New Albany, Mississippi, due to current and projected operating losses. Recoverability of the identified asset group was tested using future cash flow projections based on management’s long-range estimates of market conditions. The sum of these undiscounted future cash flows was less than the net book value of the asset group. In accordance with the applicable accounting guidance, the net assets were written down to their fair value of $7,034,000, resulting in an impairment charge of $1,412,000 within impairment of long-lived assets in our fiscal 2014 consolidated statement of earnings. Market observable, Level 2 inputs are used to determine fair value.