10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended February 28, 2017

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 001-08399

WORTHINGTON INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)

Ohio	31-1189815
(State or other jurisdiction of incorporation or organization)	(I.R.S. 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  ☒    NO  ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

YES  ☒    NO  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐  (Do not check if a smaller reporting company)	Smaller reporting company	☐

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

YES  ☐    NO  ☒

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. On March 31, 2017, the number of Common Shares, without par value, issued and outstanding was 63,680,574.

TABLE OF CONTENTS

Safe Harbor Statement		ii
Part I. Financial Information
Item 1.	Financial Statements (Unaudited)
	Consolidated Balance Sheets – February 28, 2017 and May 31, 2016	1
	Consolidated Statements of Earnings – Three and Nine Months Ended February  28, 2017 and February 29, 2016	2
	Consolidated Statements of Comprehensive Income – Three and Nine Months Ended February  28, 2017 and February 29, 2016	3
	Consolidated Statements of Cash Flows – Three and Nine Months Ended February  28, 2017 and February 29, 2016	4
	Notes to Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38
Item 4.	Controls and Procedures	38
Part II. Other Information
Item 1.	Legal Proceedings	39
Item 1A.	Risk Factors	39
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39
Item 3.	Defaults Upon Senior Securities (Not applicable)	40
Item 4.	Mine Safety Disclosures (Not applicable)	40
Item 5.	Other Information (Not applicable)	40
Item 6.	Exhibits	40
Signatures		41
Index to Exhibits		42

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 (the “Act”). Forward-looking statements reflect our current expectations, estimates or projections concerning future results or events. These statements are often identified by the use of forward-looking words or phrases such as “believe,” “expect,” “anticipate,” “may,” “could,” “intend,” “estimate,” “plan,” “foresee,” “likely,” “will,” “should” or other similar words or phrases. These forward-looking statements include, without limitation, statements relating to:

• outlook, strategy or business plans;

• the ability to correct performance issues at operations;

• future or expected growth, forward momentum, performance, sales, volumes, cash flows, earnings, balance sheet strengths, debt, financial condition or other financial measures;

• pricing trends for raw materials and finished goods and the impact of pricing changes;

• demand trends for us or our markets;

• additions to product lines and opportunities to participate in new markets;

• expected benefits from Transformation efforts;

• anticipated capital expenditures and asset sales;

• anticipated improvements and efficiencies in costs, operations, sales, inventory management, sourcing and the supply chain and the results thereof;

• projected profitability potential, capacity, and working capital needs;

• the ability to make acquisitions and the projected timing, results, benefits, costs, charges and expenditures related to acquisitions, newly-created joint ventures, headcount reductions and facility dispositions, shutdowns and consolidations;

• the alignment of operations with demand;

• the ability to operate profitably and generate cash in down markets;

• the ability to maintain margins and capture and maintain market share and to develop or take advantage of future opportunities, customer initiatives, new businesses, new products and new markets;

• expectations for Company and customer inventories, jobs and orders;

• expectations for the economy and markets or improvements therein;

• expectations for increasing volatility or improving and sustainable earnings, earnings potential, margins or shareholder value;

• effects of judicial rulings; and

• other non-historical matters.

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, those that follow:

• the effect of national, regional and global economic conditions generally and within major product markets, including an economic downturn;

• the effect of conditions in national and worldwide financial markets;

• lower oil prices as a factor in demand for products;

• product demand and pricing;

• changes in product mix, product substitution and market acceptance of our products;

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

• effects of facility closures and the consolidation of operations;

• the effect of financial difficulties, consolidation and other changes within the steel, automotive, construction, oil and gas, and other industries in which we participate;

• failure to maintain appropriate levels of inventories;

• financial difficulties (including bankruptcy filings) of original equipment manufacturers, end-users and customers, suppliers, joint venture partners and others with whom we do business;

• the ability to realize targeted expense reductions from headcount reductions, facility closures and other cost reduction efforts;

ii

• the ability to realize other cost savings and operational, sales and sourcing improvements and efficiencies, and other expected benefits from Transformation initiatives, on a timely basis;

• the overall success of, and the ability to integrate, newly-acquired businesses and joint ventures, maintain and develop their customers, and achieve synergies and other expected benefits and cost savings therefrom;

• capacity levels and efficiencies, within facilities, within major product markets and within the industries as a whole;

• the effect of disruption in the business of suppliers, customers, facilities and shipping operations due to adverse weather, casualty events, equipment breakdowns, civil unrest, international conflicts, or terrorist activities or other causes;

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

• risks associated with doing business internationally, including economic, political and social instability, foreign currency exposure and the acceptance of our products in markets;

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

• the outcome of adverse claims experience with respect to workers’ compensation, product recalls or product liability, casualty events or other matters;

• 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, including those adopted by the United States Securities and Exchange Commission and other governmental agencies as contemplated by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010;

• the effect of changes to healthcare laws in the United States, which may increase our healthcare and other costs and negatively impact our operations and financial results;

• cyber security risks; and

• other risks described from time to time in our filings with the United States Securities and Exchange Commission, including those described in “PART I – Item 1A. — Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended May 31, 2016.

We note these factors for investors as contemplated by the Act. It is impossible to predict or identify all potential risk factors. Consequently, you should not consider the foregoing list to be a complete set of all potential risks and uncertainties. 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.

iii

PART I. FINANCIAL INFORMATION

Item 1. – Financial Statements

WORTHINGTON INDUSTRIES, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

	February 28, 2017		May 31, 2016
Assets
Current assets:
Cash and cash equivalents	$	227,281	$	84,188
Receivables, less allowances of $3,134 and $4,579 at February 28, 2017 and May 31, 2016, respectively		466,689		439,688
Inventories:
Raw materials		164,295		162,427
Work in process		98,683		86,892
Finished products		77,226		70,016
Total inventories		340,204		319,335
Income taxes receivable		15,554		10,535
Assets held for sale		13,617		10,079
Prepaid expenses and other current assets		53,596		51,290
Total current assets		1,116,941		915,115
Investments in unconsolidated affiliates		205,008		191,826
Goodwill		244,941		246,067
Other intangible assets, net of accumulated amortization of $59,577 and $49,532 at February 28, 2017 and May 31, 2016, respectively		85,289		96,164
Other assets		24,976		29,254
Property, plant and equipment:
Land		16,543		18,537
Buildings and improvements		257,190		256,973
Machinery and equipment		1,001,232		945,951
Construction in progress		26,403		48,156
Total property, plant and equipment		1,301,368		1,269,617
Less: accumulated depreciation		731,348		686,779
Total property, plant and equipment, net		570,020		582,838
Total assets	$	2,247,175	$	2,061,264
Liabilities and equity
Current liabilities:
Accounts payable	$	351,998	$	290,432
Short-term borrowings		167		2,651
Accrued compensation, contributions to employee benefit plans and related taxes		75,618		75,105
Dividends payable		13,557		13,471
Other accrued items		45,054		45,056
Income taxes payable		2,508		2,501
Current maturities of long-term debt		878		862
Total current liabilities		489,780		430,078
Other liabilities		64,441		63,487
Distributions in excess of investment in unconsolidated affiliate		67,722		52,983
Long-term debt		576,002		577,491
Deferred income taxes, net		27,183		17,379
Total liabilities		1,225,128		1,141,418
Shareholders’ equity—controlling interest		898,468		793,371
Noncontrolling interests		123,579		126,475
Total equity		1,022,047		919,846
Total liabilities and equity	$	2,247,175	$	2,061,264

See notes to consolidated financial statements.

1

WORTHINGTON INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended						Nine Months Ended
	February 28, 2017			February 29, 2016			February 28, 2017			February 29, 2016
Net sales	$	703,436		$	647,080		$	2,168,765		$	2,105,043
Cost of goods sold		592,446			551,157			1,787,690			1,786,925
Gross margin		110,990			95,923			381,075			318,118
Selling, general and administrative expense		75,276			70,149			232,819			218,822
Impairment of long-lived assets		—			—			—			25,962
Restructuring and other expense		1,394			702			5,994			5,294
Operating income		34,320			25,072			142,262			68,040
Other income (expense):
Miscellaneous income, net		749			3,305			2,484			3,723
Interest expense		(7,674	)		(7,886	)		(23,202	)		(23,539	)
Equity in net income of unconsolidated affiliates		22,697			24,994			84,365			80,822
Earnings before income taxes		50,092			45,485			205,909			129,046
Income tax expense		11,141			11,342			48,555			34,157
Net earnings		38,951			34,143			157,354			94,889
Net earnings attributable to noncontrolling interests		3,062			4,296			9,333			9,698
Net earnings attributable to controlling interest	$	35,889		$	29,847		$	148,021		$	85,191
Basic
Average common shares outstanding		62,750			61,747			62,325			62,810
Earnings per share attributable to controlling interest	$	0.57		$	0.48		$	2.37		$	1.36
Diluted
Average common shares outstanding		64,977			63,871			64,758			64,923
Earnings per share attributable to controlling interest	$	0.55		$	0.47		$	2.29		$	1.31
Common shares outstanding at end of period		62,776			61,285			62,776			61,285
Cash dividends declared per share	$	0.20		$	0.19		$	0.60		$	0.57

See notes to consolidated financial statements.

2

WORTHINGTON INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)

	Three Months Ended						Nine Months Ended
	February 28, 2017			February 29, 2016			February 28, 2017			February 29, 2016
Net earnings	$	38,951		$	34,143		$	157,354		$	94,889
Other comprehensive income (loss):
Foreign currency translation		905			8,646			(7,277	)		1,255
Pension liability adjustment, net of tax		(35	)		(90	)		(35	)		(98	)
Cash flow hedges, net of tax		(921	)		5,430			1,356			3,537
Other comprehensive income (loss)		(51	)		13,986			(5,956	)		4,694
Comprehensive income		38,900			48,129			151,398			99,583
Comprehensive income attributable to noncontrolling interests		3,071			7,476			9,198			12,207
Comprehensive income attributable to controlling interest	$	35,829		$	40,653		$	142,200		$	87,376

See notes to consolidated financial statements.

3

WORTHINGTON INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Three Months Ended						Nine Months Ended
	February 28, 2017			February 29, 2016			February 28, 2017			February 29, 2016
Operating activities:
Net earnings	$	38,951		$	34,143		$	157,354		$	94,889
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		21,677			20,761			65,154			62,748
Impairment of long-lived assets		—			—			—			25,962
Provision for (benefit from) deferred income taxes		7,609			9,322			9,946			(6,069	)
Bad debt (income) expense		(41	)		187			110			195
Equity in net income of unconsolidated affiliates, net of distributions		(1,256	)		(622	)		(182	)		(16,524	)
Net (gain) loss on sale of assets		1,875			(3,385	)		3,358			(7,633	)
Stock-based compensation		4,304			3,627			11,264			11,284
Changes in assets and liabilities, net of impact of acquisitions:
Receivables		(44,719	)		10,688			(34,920	)		76,791
Inventories		(2,346	)		37,211			(20,869	)		61,032
Prepaid expenses and other current assets		(13,379	)		(19,309	)		(7,954	)		9,324
Other assets		(423	)		(1,216	)		1,987			(4,019	)
Accounts payable and accrued expenses		89,736			13,756			66,849			(17,464	)
Other liabilities		718			1,052			2,813			5,352
Net cash provided by operating activities		102,706			106,215			254,910			295,868
Investing activities:
Investment in property, plant and equipment		(21,128	)		(14,973	)		(52,174	)		(75,465	)
Acquisitions, net of cash acquired		—			(31,256	)		—			(34,206	)
Investments in unconsolidated affiliates		—			(3,683	)		—			(5,596	)
Proceeds from sale of assets		2			431			958			9,887
Net cash used by investing activities		(21,126	)		(49,481	)		(51,216	)		(105,380	)
Financing activities:
Net repayments of short-term borrowings		(330	)		(16,716	)		(2,484	)		(57,728	)
Proceeds from long-term debt		—			—			—			921
Principal payments on long-term debt		(218	)		(216	)		(655	)		(644	)
Proceeds from issuance of common shares, net of tax withholdings		(12,197	)		2,747			(9,225	)		5,811
Payments to noncontrolling interests		(3,360	)		(4,206	)		(10,141	)		(9,106	)
Repurchase of common shares		—			(28,352	)		—			(99,848	)
Dividends paid		(13,374	)		(11,913	)		(38,096	)		(35,529	)
Net cash used by financing activities		(29,479	)		(58,656	)		(60,601	)		(196,123	)
Increase (decrease) in cash and cash equivalents		52,101			(1,922	)		143,093			(5,635	)
Cash and cash equivalents at beginning of period		175,180			27,354			84,188			31,067
Cash and cash equivalents at end of period	$	227,281		$	25,432		$	227,281		$	25,432

See notes to consolidated financial statements.

4

WORTHINGTON INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE A – Basis of Presentation

The consolidated financial statements include the accounts of Worthington Industries, Inc. and consolidated subsidiaries (collectively, “we,” “our,” “Worthington,” or the “Company”). Investments in unconsolidated affiliates are accounted for using the equity method. Significant intercompany accounts and transactions are eliminated.

We own controlling interests in the following five joint ventures: Spartan Steel Coating, LLC (“Spartan”) (52%), TWB Company, L.L.C. (“TWB”) (55%), Worthington Ar1taş Bas1nçl1 Kaplar Sanayi (“Worthington Aritas”) (75%), Worthington Energy Innovations, LLC (“WEI”) (75%), and Worthington Specialty Processing (“WSP”) (51%). These joint ventures are consolidated with the equity owned by the other joint venture members shown as noncontrolling interests in our consolidated balance sheets, and their portions of net earnings and other comprehensive income (loss) (“OCI”) shown as net earnings or comprehensive income attributable to noncontrolling interests in our consolidated statements of earnings and consolidated statements of comprehensive income, respectively.

These unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments, which are of a normal and recurring nature, except those which have been disclosed elsewhere in this Quarterly Report on Form 10-Q, necessary for a fair presentation of the consolidated financial statements for these interim periods, have been included. Operating results for the three and nine months ended February 28, 2017 are not necessarily indicative of the results that may be expected for the fiscal year ending May 31, 2017 (“fiscal 2017”). For further information, refer to the consolidated financial statements and notes thereto included in the Annual Report on Form 10-K for the fiscal year ended May 31, 2016 (“fiscal 2016”) of Worthington Industries, Inc. (the “2016 Form 10-K”).

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Recently Adopted Accounting Standards

In February 2015, amended accounting guidance was issued that revised consolidation requirements in order to provide financial statement users with a more useful presentation of an entity’s economic and operational results. The amended guidance revises the consolidation requirements for limited partnerships, the considerations surrounding the primary beneficiary determination and the consolidation of certain investment funds. The Company adopted this amended guidance on a prospective basis effective June 1, 2016. The adoption of this guidance did not impact our consolidated financial position or results of operations.

In April 2015, amended accounting guidance was issued that requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of the corresponding debt liability itself. The amended guidance does not apply to line-of-credit arrangements. Accordingly, issuance costs related to line-of-credit arrangements will continue to be presented as an asset and amortized ratably over the term of the arrangement. The Company adopted this guidance on a retrospective basis effective June 1, 2016. As a result, debt issuance costs totaling $2,233,000 and $2,491,000 as of February 28, 2017 and May 31, 2016, respectively, have been presented as a component of the carrying amount of long-term debt reported in our consolidated balance sheets. Fiscal 2016 amounts were previously capitalized and reported within other assets.

In September 2015, amended accounting guidance was issued regarding adjustments to provisional amounts recorded in conjunction with a business combination. The amended guidance requires the acquirer to recognize adjustments to provisional amounts identified during the measurement period in the reporting period in which such adjustments are identified, rather than retrospectively adjusting previously reported amounts. The Company adopted this amended guidance on a prospective basis effective June 1, 2016. The adoption of this guidance did not impact our consolidated financial position or results of operations.

5

In March 2016, amended accounting guidance was issued that simplifies the accounting for share-based payments. The amended guidance impacts several aspects of the accounting for share-based payment transactions, including the income tax consequences, forfeitures, statutory withholding requirements, and classification in the statement of cash flows. The Company early adopted this guidance during the fourth quarter of fiscal 2016. As required for early adoption in an interim period, all adjustments have been reflected as of the beginning of fiscal 2016. Accordingly, income tax expense for the three and nine months ended February 29, 2016 has been restated to reflect excess tax benefits associated with share-based payments totaling $271,000 and $965,000, respectively, in income tax expense, rather than in paid-in capital.

Recently Issued Accounting Standards

In May 2014, amended accounting guidance was issued that replaces most existing revenue recognition guidance under U.S. GAAP. The amended guidance requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. Subsequently, additional guidance was issued on several areas including guidance intended to improve the operability and understandability of the implementation of principal versus agent considerations and clarifications on the identification of performance obligations and implementation of guidance related to licensing. The amended guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The amended guidance permits the use of either the retrospective or cumulative effect transition method. We are in the process of evaluating the effect this guidance will have on the presentation of our consolidated financial statements and related disclosures. While we have not yet identified any material changes in the timing of revenue recognition, our evaluation is ongoing and not complete. We plan to adopt the amended guidance in the first quarter of fiscal 2019 and expect to make a determination as to the method of adoption by the end of fiscal 2017.

In July 2015, amended accounting guidance was issued regarding the measurement of inventory. The amended guidance requires that inventory accounted for under the first-in, first-out (FIFO) or average cost methods be measured at the lower of cost and net realizable value, where net realizable value represents the estimated selling price of inventory in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The amended guidance has no impact on inventory accounted for under the last-in, first-out (LIFO) or retail inventory methods. The amended guidance is effective prospectively for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted as of the beginning of an interim or annual reporting period. We do not expect the adoption of this amended accounting guidance to have a material impact on our consolidated financial position or results of operations.

In February 2016, amended accounting guidance was issued that replaces most existing lease accounting guidance under U.S. GAAP. Among other changes, the amended guidance requires that lease assets and liabilities be recognized on the balance sheet by lessees for those leases classified as operating leases under previous guidance. The amended guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted, and the change is to be applied using a modified retrospective approach as of the beginning of the earliest period presented. We are in the process of evaluating the effect this guidance will have on our consolidated financial position, results of operations and cash flows, and we have not determined the effect of the amended guidance on our ongoing financial reporting.

In March 2016, amended accounting guidance was issued regarding derivative instruments designated as hedging instruments. The amended guidance clarifies that a change in the counterparty to such a hedging instrument does not, in and of itself, require dedesignation of that hedging relationship provided that all other hedge accounting criteria continue to be met. The amended guidance is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted, and the change may be applied either prospectively or retrospectively. We do not expect the adoption of this amended accounting guidance to have a material impact on our consolidated financial position or results of operations.

In June 2016, amended accounting guidance was issued related to the measurement of credit losses on financial instruments. The amended guidance changes the impairment model for most financial assets to require measurement and recognition of expected credit losses for financial assets held. The amended guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. We are in the process of evaluating the effect this guidance will have on our consolidated financial position and results of operations, and we have not determined the effect of the amended guidance on our ongoing financial reporting.

6

In August 2016, amended accounting guidance was issued to clarify the proper cash flow presentation of certain specific types of cash payments and cash receipts. The amended guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. We are in the process of evaluating the effect this guidance will have on our consolidated financial position, results of operations and cash flows, and we have not determined the effect of the amended guidance on our ongoing financial reporting.

In October 2016, amended accounting guidance was issued that requires the income tax consequences of an intra-entity transfer of an asset other than inventory to be recognized when the transfer occurs. The amended guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. We are in the process of evaluating the effect this guidance will have on our consolidated financial position, results of operations and cash flows, and have not determined the effect of the amended guidance on our ongoing financial reporting.

In November 2016, amended accounting guidance was issued that requires amounts generally described as restricted cash and restricted cash equivalents to be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amended guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. We do not expect the adoption of this amended guidance to have a material impact on our consolidated cash flows.

In January 2017, amended accounting guidance was issued to clarify the definition of a business to provide additional guidance to assist in evaluating whether transactions should be accounted for as an acquisition (or disposal) of either an asset or business. The amended guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. We do not expect the adoption of this amended guidance to have a material impact on our consolidated financial position or results of operations.

In January 2017, amended accounting guidance was issued to simplify the goodwill impairment calculation, by removing Step 2 of the goodwill impairment test. Goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of the goodwill. The amended guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. We are in the process of evaluating the effect this guidance will have on our consolidated financial position and results of operations, and have not determined the effect on our ongoing financial reporting.

NOTE B – Investments in Unconsolidated Affiliates

Our investments in affiliated companies that we do not control, either through majority ownership or otherwise, are accounted for using the equity method. These include ArtiFlex Manufacturing, LLC (“ArtiFlex”) (50%), Clarkwestern Dietrich Building Systems LLC (“ClarkDietrich”) (25%), Samuel Steel Pickling Company (31.25%), Serviacero Planos, S. de R. L. de C.V. (“Serviacero”) (50%), Worthington Armstrong Venture (“WAVE”) (50%), and Zhejiang Nisshin Worthington Precision Specialty Steel Co., Ltd. (10%).

We received distributions from unconsolidated affiliates totaling $84,183,000 during the nine months ended February 28, 2017. We have received cumulative distributions from WAVE in excess of our investment balance totaling $67,722,000 at February 28, 2017. In accordance with the applicable accounting guidance, these excess distributions are reclassified to the liabilities section of our consolidated balance sheet. We will continue to record our equity in the net income of WAVE as a debit to the investment account, and if it becomes positive, it will again be shown as an asset on our consolidated balance sheet. If it becomes obvious that any excess distribution may not be returned (upon joint venture liquidation or otherwise), we will recognize any balance classified as a liability as income immediately.

We use the “cumulative earnings” approach for determining cash flow presentation of distributions from our unconsolidated joint ventures. Distributions received are included in our consolidated statements of cash flows as operating activities, unless the cumulative distributions received, less distributions received in prior periods that were determined to be returns of investment, exceed our portion of the cumulative equity in the net earnings of the joint venture, in which case the excess distributions are deemed to be returns of the investment and are classified as investing activities in our consolidated statements of cash flows.

7

Combined financial information for our unconsolidated affiliates is summarized as follows:

(in thousands)	February 28, 2017		May 31, 2016
Cash	$	62,723	$	112,122
Other current assets		511,798		446,796
Noncurrent assets		365,343		352,370
Total assets	$	939,864	$	911,288
Current liabilities	$	141,266	$	112,491
Short-term borrowings		6,285		11,398
Current maturities of long-term debt		4,207		3,297
Long-term debt		268,032		266,942
Other noncurrent liabilities		20,558		21,034
Equity		499,516		496,126
Total liabilities and equity	$	939,864	$	911,288

	Three Months Ended				Nine Months Ended
(in thousands)	February 28, 2017		February 29, 2016		February 28, 2017		February 29, 2016
Net sales	$	384,261	$	376,448	$	1,188,568	$	1,170,096
Gross margin		84,645		83,251		305,383		257,036
Operating income		55,140		54,801		216,902		171,857
Depreciation and amortization		6,983		7,905		20,776		24,070
Interest expense		2,089		2,038		6,388		6,333
Income tax expense		5,065		2,625		16,128		7,348
Net earnings		49,098		51,994		198,609		186,063

The financial results of WSP have been included in the amounts presented in the tables above through March 1, 2016. Effective March 1, 2016, the Company obtained effective control over the operations of WSP. As a result, WSP’s results have been consolidated within the financial results of Steel Processing since that date with the minority member’s portion of net earnings eliminated within net earnings attributable to noncontrolling interests.

NOTE C – Impairment of Long-Lived Assets

We review the carrying value of our long-lived assets, including intangible assets with definite useful lives, for impairment whenever events or changes in circumstances indicate that the carrying value of an asset or asset group may not be recoverable.

Impairment testing of long-lived assets with definite useful lives involves a comparison of the sum of the undiscounted future cash flows of the asset or asset group to its respective carrying amount. If the sum of the undiscounted future cash flows exceeds the carrying amount, then no impairment exists. If the carrying amount exceeds the sum of the undiscounted future cash flows, then a second step is performed to determine the amount of impairment, which would be recorded as an impairment charge in our consolidated statement of earnings.

No impairment charges were recognized during the nine months ended February 28, 2017.

8

Impairment charges during the nine months ended February 29, 2016, consisted of $3,000,000 related to the then remaining long-lived assets of the Company’s Engineered Cabs facility in Florence, South Carolina, which ceased operations on September 30, 2015, and $22,962,000 for the impairment of the long-lived assets of two oil & gas equipment facilities triggered by a significant decrease in the long-term cash flow projections of that business. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s 2016 Form 10-K.

NOTE D – Restructuring and Other Expense

We consider restructuring activities to be programs whereby we fundamentally change our operations such as closing and consolidating manufacturing facilities, moving manufacturing of a product to another location, and rationalizing headcount.

A progression of the liabilities associated with our restructuring activities, combined with a reconciliation to the restructuring and other expense financial statement caption in our consolidated statement of earnings for the nine months ended February 28, 2017 is summarized as follows:

(in thousands)	Beginning Balance		Expense		Payments			Adjustments		Ending Balance (1)
Early retirement and severance	$	1,831	$	1,795	$	(3,071	)	$	58	$	613
Facility exit and other costs		653		3,190		(3,369	)		45		519
	$	2,484		4,985	$	(6,440	)	$	103	$	1,132
Net loss on sale of assets				1,009
Restructuring and other expense			$	5,994

1) The total liability as of February 28, 2017 is expected to be paid in the next twelve months.

During the nine months ended February 28, 2017, the following activities were taken related to the Company’s restructuring activities:

• The Company announced certain organizational changes impacting its Pressure Cylinders operating segment, including the consolidation of the Cryogenics business unit into the Industrial Products business unit. In connection with this matter, the Company recognized severance expense of $1,356,000 related to permanent headcount reductions.

• In connection with the closure of the Company’s stainless steel business, Precision Specialty Metals, Inc. (“PSM”), the Company recognized $1,666,000 of facility exit costs and a credit to severance expense of $106,000.

• In connection with the closure of the Engineered Cabs facility in Florence, South Carolina, the Company recognized facility exit costs of $459,000. The Company also recognized a net loss of $101,000 related to the disposal of assets.

• In connection with the consolidation of the Company’s existing cryogenics facility in Istanbul, Turkey, to its Greenfield facility in Bandirma, Turkey, the Company recognized facility exit costs of $1,113,000 and severance expense of $640,000. The consolidation is substantially complete.

• The Company sold the remaining real estate of the legacy Advanced Component Technologies, Inc. (“ACT”) business within Engineered Cabs for cash proceeds of $700,000, resulting in a loss of $822,000.

• In connection with other non-significant restructuring activities, the Company recognized a credit to severance expense of $95,000 and a credit to facility exit costs of $48,000. The Company also recognized a net loss on disposal of assets of $86,000.

9

NOTE E – Contingent Liabilities and Commitments

We are defendants in certain legal actions. In the opinion of management, the outcome of these actions, which is not clearly determinable at the present time, would not significantly affect our consolidated financial position or future results of operations or cash flows. We believe that environmental issues will not have a material effect on our capital expenditures, consolidated financial position or future results of operations or cash flows.

NOTE F – Guarantees

We do not have guarantees that we believe are reasonably likely to have a material current or future effect on our consolidated financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. However, as of February 28, 2017, we were party to an operating lease for an aircraft in which we have guaranteed a residual value at the termination of the lease. The maximum obligation under the terms of this guarantee was approximately $9,566,000 at February 28, 2017. Based on current facts and circumstances, we have estimated the likelihood of payment pursuant to this guarantee is not probable and, therefore, no amount has been recognized in our consolidated financial statements.

We also had in place $15,893,000 of outstanding stand-by letters of credit issued to third-party service providers at February 28, 2017. The fair value of these guarantee instruments, based on premiums paid, was not material and no amounts were drawn against them at February 28, 2017.

NOTE G – Debt and Receivables Securitization

We maintain a $500,000,000 multi-year revolving credit facility (the “Credit Facility”) with a group of lenders that matures in April 2020. Borrowings under the Credit Facility typically have maturities of less than one year. However, we can extend the term of amounts borrowed by renewing these borrowings for the term of the Credit Facility. We have the option to borrow at rates equal to an applicable margin over the LIBOR, Prime rate or Fed Funds rate. The applicable margin is determined by our credit rating. There were no borrowings outstanding under the Credit Facility at February 28, 2017. As discussed in “NOTE F – Guarantees,” we provided $15,893,000 in letters of credit for third-party beneficiaries as of February 28, 2017. While not drawn against at February 28, 2017, $13,600,000 of these letters of credit were issued against availability under the Credit Facility, leaving $486,400,000 available under the Credit Facility at February 28, 2017.

We also maintain a $100,000,000 revolving trade accounts receivable securitization facility (the “AR Facility”) which matures in January 2018. Pursuant to the terms of the AR Facility, certain of our subsidiaries sell their accounts receivable without recourse, on a revolving basis, to Worthington Receivables Corporation (“WRC”), a wholly-owned, consolidated, bankruptcy-remote subsidiary. In turn, WRC may sell without recourse, on a revolving basis, up to $100,000,000 of undivided ownership interests in this pool of accounts receivable to a third-party bank. We retain an undivided interest in this pool and are subject to risk of loss based on the collectability of the receivables from this retained interest. Because the amount eligible to be sold excludes receivables more than 90 days past due, receivables offset by an allowance for doubtful accounts due to bankruptcy or other cause, concentrations over certain limits with specific customers and certain reserve amounts, we believe additional risk of loss is minimal. As of February 28, 2017, no undivided ownership interests in this pool of accounts receivable had been sold.

NOTE H – Other Comprehensive Income

The following table summarizes the tax effects on each component of OCI for the three months ended:

	February 28, 2017								February 29, 2016
	Before-Tax			Tax		Net-of-Tax			Before-Tax			Tax			Net-of-Tax
(in thousands)
Foreign currency translation	$	905		$	-	$	905		$	8,646		$	-		$	8,646
Pension liability adjustment		(117	)		82		(35	)		(90	)		-			(90	)
Cash flow hedges		(1,299	)		378		(921	)		8,505			(3,075	)		5,430
Other comprehensive income (loss)	$	(511	)	$	460	$	(51	)	$	17,061		$	(3,075	)	$	13,986

10

The following table summarizes the tax effects on each component of OCI for the nine months ended:

	February 28, 2017									February 29, 2016
	Before-Tax			Tax			Net-of-Tax			Before-Tax			Tax			Net-of-Tax
(in thousands)
Foreign currency translation	$	(7,277	)	$	-		$	(7,277	)	$	1,255		$	-		$	1,255
Pension liability adjustment		(117	)		82			(35	)		(98	)		-			(98	)
Cash flow hedges		1,836			(480	)		1,356			5,938			(2,401	)		3,537
Other comprehensive income (loss)	$	(5,558	)	$	(398	)	$	(5,956	)	$	7,095		$	(2,401	)	$	4,694

NOTE I – Changes in Equity

The following table provides a summary of the changes in total equity, shareholders’ equity attributable to controlling interest, and equity attributable to noncontrolling interests for the nine months ended February 28, 2017:

	Controlling Interest
(in thousands)	Additional Paid-in Capital			Accumulated Other Comprehensive Loss, Net of Tax			Retained Earnings			Total			Non- controlling Interests			Total
Balance at May 31, 2016	$	298,984		$	(28,565	)	$	522,952		$	793,371		$	126,475		$	919,846
Net earnings		-			-			148,021			148,021			9,333			157,354
Other comprehensive loss		-			(5,821	)		-			(5,821	)		(135	)		(5,956	)
Common shares issued, net of withholding tax		(9,225	)		-			-			(9,225	)		-			(9,225	)
Common shares in NQ plans		1,058			-			-			1,058			-			1,058
Stock-based compensation		10,599			-			-			10,599			-			10,599
Cash dividends declared		-			-			(38,600	)		(38,600	)		-			(38,600	)
Dividends to noncontrolling interest		-			-			-			-			(10,141	)		(10,141	)
Purchase of noncontrolling interest in dHybrid (1)		(935	)		-			-			(935	)		(1,953	)		(2,888	)
Balance at February 28, 2017	$	300,481		$	(34,386	)	$	632,373		$	898,468		$	123,579		$	1,022,047

1) On January 1, 2017, the Company acquired the minority membership interests in dHybrid Systems, LLC (“dHybrid”) from the noncontrolling member in a non-cash transaction.

The components of the changes in accumulated other comprehensive loss were as follows:

(in thousands)	Foreign Currency Translation			Pension Liability Adjustment			Cash Flow Hedges			Accumulated Other Comprehensive Loss
Balance as of May 31, 2016	$	(18,728	)	$	(17,061	)	$	7,224		$	(28,565	)
Other comprehensive income (loss) before reclassifications		(7,142	)		(117	)		10,112			2,853
Reclassification adjustments to income (a)		-			-			(8,276	)		(8,276	)
Income taxes		-			82			(480	)		(398	)
Balance as of February 28, 2017	$	(25,870	)	$	(17,096	)	$	8,580		$	(34,386	)

(a) The statement of earnings classification of amounts reclassified to income for cash flow hedges is disclosed in “NOTE N – Derivative Instruments and Hedging Activities.”

11

NOTE J – Stock-Based Compensation

Non-Qualified Stock Options

During the nine months ended February 28, 2017, we granted non-qualified stock options covering a total of 111,000 common shares under our stock-based compensation plans. The option price of $42.30 per share was equal to the market price of the underlying common shares at the grant date. The fair value of these stock options, based on the Black-Scholes option-pricing model, calculated at the grant date, was $11.60 per share. The calculated pre-tax stock-based compensation expense for these stock options, after an estimate for forfeitures, is $1,146,000 and will be recognized on a straight-line basis over the three-year vesting period. The following assumptions were used to value these stock options:

Dividend yield	2.59	%
Expected volatility	36.86	%
Risk-free interest rate	1.15	%
Expected term (years)	6.0

Expected volatility is based on the historical volatility of our common shares and the risk-free interest rate is based on the United States Treasury strip rate for the expected term of the stock options. The expected term was developed using historical exercise experience.

Service-Based Restricted Common Shares

During the nine months ended February 28, 2017, we granted an aggregate of 520,850 service-based restricted common shares under our stock-based compensation plans. The fair value of these restricted common shares was equal to the weighted average closing market price of the underlying common shares on the date of grant, or $42.27 per share. The calculated pre-tax stock-based compensation expense for these restricted common shares, after an estimate for forfeitures, is $19,695,000 and will be recognized on a straight-line basis over the three-year service-based vesting period.

Performance Share Awards

We have awarded performance shares to certain key employees under our stock-based compensation plans. These performance shares are earned based on the level of achievement with respect to corporate targets for cumulative corporate economic value added, earnings per share growth and, in the case of business unit executives, business unit operating income targets for the three-year periods ending May 31, 2017, 2018 and 2019. These performance share awards will be paid, to the extent earned, in common shares of the Company in the fiscal quarter following the end of the applicable three-year performance period. The fair values of our performance shares are determined by the closing market prices of the underlying common shares at their respective grant dates and the pre-tax stock-based compensation expense is based on our periodic assessment of the probability of the targets being achieved and our estimate of the number of common shares that will ultimately be issued. During the nine months ended February 28, 2017, we granted performance share awards covering an aggregate of 66,200 common shares (at target levels). The calculated pre-tax stock-based compensation expense for these performance shares is $2,973,000 and will be recognized over the three-year performance period.

NOTE K – Income Taxes

Income tax expense for the nine months ended February 28, 2017 and February 29, 2016 reflected estimated annual effective income tax rates of 27.2% and 29.6%, respectively. The annual effective income tax rates exclude any impact from the inclusion of net earnings attributable to noncontrolling interests in our consolidated statements of earnings. Net earnings attributable to noncontrolling interests are primarily a result of our WSP, Spartan, Worthington Aritas, and TWB consolidated joint ventures. The earnings attributable to the noncontrolling interests in WSP, Spartan and TWB’s U.S. operations do not generate tax expense to Worthington since the investors in WSP, Spartan and TWB’s U.S. operations are taxed directly based on the earnings attributable to them. The tax expense of Worthington Aritas (a foreign corporation), and TWB’s wholly-owned foreign corporations, is reported in our consolidated tax expense. Management is required to estimate the annual effective income tax rate based upon its forecast of annual pre-tax income for domestic and foreign operations. Our actual effective income tax rate for fiscal 2017 could be materially different from the forecasted rate as of February 28, 2017.

12

NOTE L – Earnings per Share

The following table sets forth the computation of basic and diluted earnings per share attributable to controlling interest for the three and nine months ended February 28, 2017 and February 29, 2016:

	Three Months Ended				Nine Months Ended
(in thousands, except per share amounts)	February 28, 2017		February 29, 2016		February 28, 2017		February 29, 2016
Numerator (basic & diluted):
Net earnings attributable to controlling interest-income available to common shareholders	$	35,889	$	29,847	$	148,021	$	85,191
Denominator:
Denominator for basic earnings per share attributable to controlling interest—weighted average common shares		62,750		61,747		62,325		62,810
Effect of dilutive securities		2,227		2,124		2,433		2,113
Denominator for diluted earnings per share attributable to controlling interest—adjusted weighted average common shares		64,977		63,871		64,758		64,923
Basic earnings per share attributable to controlling interest	$	0.57	$	0.48	$	2.37	$	1.36
Diluted earnings per share attributable to controlling interest	$	0.55	$	0.47	$	2.29	$	1.31

Stock options covering 107,224 and 352,830 common shares for the three months ended February 28, 2017 and February 29, 2016, respectively, and 97,638 and 343,454 common shares for the nine months ended February 28, 2017 and February 29, 2016, respectively, have been excluded from the computation of diluted earnings per share because the effect of their inclusion would have been “anti-dilutive.”

13

NOTE M – Segment Operations

Summarized financial information for our reportable segments is shown in the following table:

	Three Months Ended						Nine Months Ended
(in thousands)	February 28, 2017			February 29, 2016			February 28, 2017			February 29, 2016
Net sales
Steel Processing	$	478,174		$	419,026		$	1,492,654		$	1,377,638
Pressure Cylinders		198,433			200,721			598,303			626,288
Engineered Cabs		23,547			25,553			71,591			92,869
Other		3,282			1,780			6,217			8,248
Total net sales	$	703,436		$	647,080		$	2,168,765		$	2,105,043
Operating income (loss)
Steel Processing	$	26,026		$	21,294		$	116,256		$	71,574
Pressure Cylinders		10,071			8,969			35,480			15,479
Engineered Cabs		(2,001	)		(4,053	)		(7,225	)		(17,634	)
Other		224			(1,138	)		(2,249	)		(1,379	)
Total operating income	$	34,320		$	25,072		$	142,262		$	68,040
Impairment of long-lived assets
Steel Processing	$	-		$	-		$	-		$	-
Pressure Cylinders		-			-			-			22,962
Engineered Cabs		-			-			-			3,000
Other		-			-			-			-
Total impairment of long-lived assets	$	-		$	-		$	-		$	25,962
Restructuring and other expense (income)
Steel Processing	$	212		$	1,068		$	1,496		$	3,788
Pressure Cylinders		1,056			(1,031	)		3,165			(316	)
Engineered Cabs		169			416			1,379			3,059
Other		(43	)		249			(46	)		(1,237	)
Total restructuring and other expense	$	1,394		$	702		$	5,994		$	5,294

(in thousands)	February 28, 2017		May 31, 2016
Total assets
Steel Processing	$	885,244	$	819,853
Pressure Cylinders		751,131		787,786
Engineered Cabs		65,633		75,124
Other		545,167		378,501
Total assets	$	2,247,175	$	2,061,264

14

NOTE N – Derivative Instruments and Hedging Activities

We utilize derivative instruments to manage exposure to certain risks related to our ongoing operations. The primary risks managed through the use of derivative instruments include interest rate risk, foreign currency exchange rate risk and commodity price risk. While certain of our derivative instruments are designated as hedging instruments, we also enter into derivative instruments that are designed to hedge a risk, but are not designated as hedging instruments and therefore do not qualify for hedge accounting. These derivative instruments are adjusted to current fair value through earnings at the end of each period.

Interest Rate Risk Management – We are exposed to the impact of interest rate changes. Our objective is to manage the impact of interest rate changes on cash flows and the market value of our borrowings. We utilize a mix of debt maturities along with both fixed-rate and variable-rate debt to manage changes in interest rates. In addition, we enter into interest rate swaps to further manage our exposure to interest rate variations related to our borrowings and to lower our overall borrowing costs.

Foreign Currency Rate Risk Management – We conduct business in several major international currencies and are therefore subject to risks associated with changing foreign currency exchange rates. We enter into various contracts that change in value as foreign currency exchange rates change to manage this exposure. Such contracts limit exposure to both favorable and unfavorable currency fluctuations. The translation of foreign currencies into United States dollars also subjects us to exposure related to fluctuating foreign currency exchange rates; however, derivative instruments are not used to manage this risk.

Commodity Price Risk Management – We are exposed to changes in the price of certain commodities, including steel, natural gas, zinc and other raw materials, and our utility requirements. Our objective is to reduce earnings and cash flow volatility associated with forecasted purchases and sales of these commodities to allow management to focus its attention on business operations. Accordingly, we enter into derivative contracts to manage the associated price risk.

We are exposed to counterparty credit risk on all of our derivative instruments. Accordingly, we have established and maintain strict counterparty credit guidelines. We have credit support agreements in place with certain counterparties to limit our credit exposure. These agreements require either party to post cash collateral if its cumulative market position exceeds a predefined liability threshold. Amounts posted to the margin accounts accrue interest at market rates and are required to be refunded in the period in which the cumulative market position falls below the required threshold. We do not have significant exposure to any one counterparty, and management believes the risk of loss is remote and, in any event, would not be material.

Refer to “NOTE O – Fair Value” for additional information regarding the accounting treatment for our derivative instruments, as well as how fair value is determined.

15

The following table summarizes the fair value of our derivative instruments and the respective financial statement caption in which they were recorded in our consolidated balance sheet at February 28, 2017:

	Asset Derivatives				Liability Derivatives
(in thousands)	Balance Sheet Location		Fair Value		Balance Sheet Location		Fair Value
Derivatives designated as hedging instruments:
Commodity contracts		Receivables	$	14,053		Accounts payable	$	-
		Other assets		176		Other liabilities		-
				14,229				-
Interest rate contracts		Receivables		-		Accounts payable		83
		Other assets		-		Other liabilities		228
				-				311
Totals			$	14,229			$	311
Derivatives not designated as hedging instruments:
Commodity contracts		Receivables	$	2,964		Accounts payable	$	233
		Other assets		-		Other liabilities		36
				2,964				269
Foreign currency contracts		Receivables		511		Accounts payable		-
Totals			$	3,475			$	269
Total derivative instruments			$	17,704			$	580

The amounts in the table above reflect the fair value of the Company’s derivative instruments on a net basis. Had these amounts been recognized on a gross basis, the aggregate impact would have been a $91,000 increase in receivables with a corresponding increase in accounts payable.

16

The following table summarizes the fair value of our derivative instruments and the financial statement caption in which they were recorded in the consolidated balance sheet at May 31, 2016:

	Asset Derivatives				Liability Derivatives
(in thousands)	Balance Sheet Location		Fair Value		Balance Sheet Location		Fair Value
Derivatives designated as hedging instruments:
Commodity contracts		Receivables	$	13,224		Accounts payable	$	696
		Other assets		3,589		Other liabilities		80
				16,813				776
Interest rate contracts		Receivables		-		Accounts payable		155
		Other assets		-		Other liabilities		306
				-				461
Totals			$	16,813			$	1,237
Derivatives not designated as hedging instruments:
Commodity contracts		Receivables	$	4,660		Accounts payable	$	761
		Other assets		317		Other liabilities		-
				4,977				761
Foreign currency contracts		Receivables		-		Accounts payable		15
				-				15
Totals			$	4,977			$	776
Total derivative instruments			$	21,790			$	2,013

The amounts in the table above reflect the fair value of the Company’s derivative instruments on a net basis. Had these amounts been recognized on a gross basis, the aggregate impact would have been a $300,000 decrease in receivables with a corresponding decrease in accounts payable.

Cash Flow Hedges

We enter into derivative instruments to hedge our exposure to changes in cash flows attributable to interest rates and commodity price fluctuations associated with certain forecasted transactions. These derivative instruments are designated and qualify as cash flow hedges. Accordingly, the effective portion of the gain or loss on the derivative instrument is reported as a component of OCI and reclassified into earnings in the same financial statement caption associated with the forecasted transaction and in the same period during which the hedged transaction affects earnings. The ineffective portion of the gain or loss on the derivative instrument is recognized in earnings immediately.

The following table summarizes our cash flow hedges outstanding at February 28, 2017:

(in thousands)	Notional Amount		Maturity Date
Commodity contracts	$	40,570	March 2017 - December 2018
Interest rate contracts		16,183	September 2019

17

The following table summarizes the gain (loss) recognized in OCI and the gain (loss) reclassified from accumulated OCI into earnings for derivative instruments designated as cash flow hedges during the three months ended February 28, 2017 and February 29, 2016:

				Location of				Location of
				Gain (Loss)	Gain (Loss)			Gain	Gain
				Reclassified	Reclassified			(Ineffective	(Ineffective
	Gain (Loss)			from	from			Portion)	Portion)
	Recognized			Accumulated	Accumulated			and Excluded	and Excluded
	in OCI			OCI	OCI			from	from
	(Effective			(Effective	(Effective			Effectiveness	Effectiveness
(in thousands)	Portion)			Portion)	Portion)			Testing	Testing
For the three months ended February 28, 2017:
Commodity contracts	$	2,037		Cost of goods sold	$	3,397		Cost of goods sold	$	-
Interest rate contracts		25		Interest expense		(36	)	Interest expense		-
Totals	$	2,062			$	3,361			$	-
For the three months ended February 29, 2016:
Commodity contracts	$	707		Cost of goods sold	$	(7,775	)	Cost of goods sold	$	-
Interest rate contracts		(107	)	Interest expense		(130	)	Interest expense		-
Totals		600				(7,905	)			-

The following table summarizes the gain (loss) recognized in OCI and the gain (loss) reclassified from accumulated OCI into earnings for derivative instruments designated as cash flow hedges during the nine months ended February 28, 2017 and February 29, 2016:

				Location of				Location of
				Gain (Loss)	Gain (Loss)			Gain	Gain
				Reclassified	Reclassified			(Ineffective	(Ineffective
	Gain (Loss)			from	from			Portion)	Portion)
	Recognized			Accumulated	Accumulated			and Excluded	and Excluded
	in OCI			OCI	OCI			from	from
	(Effective			(Effective	(Effective			Effectiveness	Effectiveness
(in thousands)	Portion)			Portion)	Portion)			Testing	Testing
For the nine months ended February 28, 2017:
Commodity contracts	$	9,963		Cost of goods sold	$	8,882		Interest expense	$	-
Interest rate contracts		149		Interest expense		(606	)	Cost of goods sold		-
Totals	$	10,112			$	8,276			$	-
For the nine months ended February 29, 2016:
Commodity contracts	$	(17,629	)	Cost of goods sold	$	(23,422	)	Interest expense	$	-
Interest rate contracts		(274	)	Interest expense		(415	)	Cost of goods sold		-
Foreign currency contracts		-		Miscellaneous income, net		(4	)	Miscellaneous income, net		-
Totals	$	(17,903	)		$	(23,841	)		$	-

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The estimated net amount of the losses recognized in accumulated OCI at February 28, 2017 expected to be reclassified into net earnings within the succeeding twelve months is $10,088,000 (net of tax of $5,725,000). This amount was computed using the fair value of the cash flow hedges at February 28, 2017, and will change before actual reclassification from OCI to net earnings during the fiscal years ending May 31, 2017 and 2018.

Economic (Non-designated) Hedges

We enter into foreign currency contracts to manage our foreign currency exchange rate exposure related to inter-company and financing transactions that do not meet the requirements for hedge accounting treatment. We also enter into certain commodity contracts that do not qualify for hedge accounting treatment. Accordingly, these derivative instruments are adjusted to current market value at the end of each period through earnings.

The following table summarizes our economic (non-designated) derivative instruments outstanding at February 28, 2017:

(in thousands)	Notional Amount		Maturity Date(s)
Commodity contracts	$	22,971	March 2017 - December 2018
Foreign currency contracts		15,450	March 2017 - August 2017

The following table summarizes the gain recognized in earnings for economic (non-designated) derivative financial instruments during the three months ended February 28, 2017 and February 29, 2016:

			Gain (Loss) Recognized
			in Earnings for the
			Three Months Ended
(in thousands)	Location of Gain (Loss) Recognized in Earnings		February 28, 2017			February 29, 2016
Commodity contracts		Cost of goods sold	$	258		$	173
Foreign currency contracts		Miscellaneous income, net		(172	)		47
Total			$	86		$	220

The following table summarizes the gain (loss) recognized in earnings for economic (non-designated) derivative financial instruments during the nine months ended February 28, 2017 and February 29, 2016:

			Gain (Loss) Recognized
			in Earnings for the
			Nine Months Ended
(in thousands)	Location of Gain (Loss) Recognized in Earnings		February 28, 2017			February 29, 2016
Commodity contracts		Cost of goods sold	$	5,169		$	(7,972	)
Foreign currency contracts		Miscellaneous income, net		(837	)		117
Total			$	4,332		$	(7,855	)

The gain (loss) on the foreign currency derivatives significantly offsets the gain (loss) on the hedged item.

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NOTE O – Fair Value

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is an exit price concept that assumes an orderly transaction between willing market participants and is required to be based on assumptions that market participants would use in pricing an asset or a liability. Current accounting guidance establishes a three-tier fair value hierarchy as a basis for considering such assumptions and for classifying the inputs used in the valuation methodologies. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair values are as follows:

Level 1	–	Observable prices in active markets for identical assets and liabilities.
Level 2	–	Inputs other than quoted prices included within Level 1 that are observable for the assets and liabilities, either directly or indirectly.
Level 3	–	Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities.

Recurring Fair Value Measurements

At February 28, 2017, our 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 instruments (1)	$	-	$	17,704	$	-	$	17,704
Total assets	$	-	$	17,704	$	-	$	17,704
Liabilities
Derivative instruments (1)	$	-	$	580	$	-	$	580
Contingent consideration obligations (2)		-		-		4,557		4,557
Total liabilities	$	-	$	580	$	4,557	$	5,137

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At May 31, 2016, our 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 instruments (1)	$	-	$	21,790	$	-	$	21,790
Total assets	$	-	$	21,790	$	-	$	21,790
Liabilities
Derivative instruments (1)	$	-	$	2,013	$	-	$	2,013
Contingent consideration obligations (2)		-		-		4,519		4,519
Total liabilities	$	-	$	2,013	$	4,519	$	6,532

(1) The fair value of our derivative instruments 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 N – 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 measurement was based on Level 3 inputs not observable in the market.

The fair value of non-derivative financial instruments included in the carrying amounts of cash and cash equivalents, receivables, notes receivable, income taxes receivable, other assets, accounts payable, short-term borrowings, accrued compensation, contributions to employee benefit plans and related taxes, other accrued items, income taxes payable and other liabilities approximate carrying value due to their short-term nature. The fair value of long-term debt, including current maturities, based upon models utilizing market observable (Level 2) inputs and credit risk, was $602,907,000 and $609,245,000 at February 28, 2017 and May 31, 2016, respectively. The carrying amount of long-term debt, including current maturities, was $576,880,000 and $578,353,000 at February 28, 2017 and May 31, 2016, respectively.

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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 and “Part I—Item 1A.—Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended May 31, 2016.

Introduction

The following discussion and analysis of market and industry trends, business developments, and the results of operations and financial position of Worthington Industries, Inc., together with its subsidiaries (collectively, “we,” “our,” “Worthington,” or our “Company”), should be read in conjunction with our consolidated financial statements and notes thereto included in “Item 1. – Financial Statements” of this Quarterly Report on Form 10-Q. Our Annual Report on Form 10-K for the fiscal year ended May 31, 2016 (“fiscal 2016”) includes additional information about Worthington, our operations and our consolidated financial position and should be read in conjunction with this Quarterly Report on Form 10-Q.

As of February 28, 2017, excluding our joint ventures, we operated 30 manufacturing facilities worldwide, principally in three operating segments, which correspond with our reportable business segments: Steel Processing, Pressure Cylinders and Engineered Cabs. Our remaining operating segment consists of Worthington Energy Innovations (“WEI”), which does not meet the applicable aggregation criteria or quantitative thresholds for separate disclosure, and therefore is combined and reported in the “Other” category.

We also held equity positions in 11 active joint ventures, which operated 50 manufacturing facilities worldwide, as of February 28, 2017. Five of these joint ventures are consolidated with the equity owned by the other joint venture member(s) shown as noncontrolling interests in our consolidated balance sheets, and their portions of net earnings and other comprehensive income (loss) shown as net earnings or comprehensive income attributable to noncontrolling interests in our consolidated statements of earnings and consolidated statements of comprehensive income, respectively. The remaining six of these joint ventures are accounted for using the equity method.

Overview

The Company’s performance during the third quarter of fiscal 2017 was highlighted by near record earnings at Steel Processing, modest improvement at Pressure Cylinders and Engineered Cabs, and a modest decline at our unconsolidated joint ventures. The Company delivered overall sales growth of 9% on higher average direct selling prices in Steel Processing and contributions from the consolidation of the WSP joint venture effective March 1, 2016. Margins also improved during the quarter on a favorable pricing spread in Steel Processing, which benefited from lower inventory holding losses, and strength in the consumer products business within Pressure Cylinders. Demand continues to be soft in the oil & gas equipment market; however, volumes appear to have stabilized and certain geographic regions are beginning to show signs of improvement. We have reduced costs in an attempt to match demand in this market while maintaining capacity to respond to an eventual market upturn.

Equity in net income of unconsolidated affiliates (“equity income”) decreased $2.3 million from the prior year quarter, as lower contributions from ArtiFlex and Serviacero more than offset improvements at ClarkDietrich, where equity income more than doubled to $2.8 million on strong demand. Strong automotive and construction markets in the U.S. are benefiting these businesses. We received distributions from unconsolidated joint ventures of $21.4 million during the third quarter of fiscal 2017.

Recent Business Developments

• The Company completed the exit of the businesses within its former Construction Services operating segment during the first quarter of fiscal 2017.

• The Company’s laser blanking joint venture, TWB, commissioned two new production lines in Mexico during the second quarter of fiscal 2017.

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• During the second quarter of fiscal 2017, the Company announced certain organizational changes impacting its Pressure Cylinders operating segment, including the consolidation of the Cryogenics business unit into the Industrial Products business unit.

• On March 29, 2017, the Board of Directors of Worthington Industries, Inc. (the “Board”) declared a quarterly dividend of $0.20 per share payable on June 29, 2017, to shareholders of record on June 15, 2017.

Market & Industry Overview

We sell our products and services to a diverse customer base and a broad range of end markets. The breakdown of our net sales by end market for the third quarter of each of fiscal 2017 and fiscal 2016 is illustrated in the following chart:

The automotive industry is one of the largest consumers of flat-rolled steel, and thus the largest end market for our Steel Processing operating segment. Approximately 63% of the net sales of our Steel Processing operating segment are to the automotive market. North American vehicle production, primarily by Ford, General Motors and FCA US (the “Detroit Three automakers”), has a considerable impact on the activity within this operating segment. The majority of the net sales of three of our unconsolidated joint ventures are also to the automotive end market.

Approximately 13% of the net sales of our Steel Processing operating segment and 49% of the net sales of our Engineered Cabs operating segment are to the construction market. The construction market is also the predominant end market for two of our unconsolidated joint ventures: WAVE and ClarkDietrich. While the market price of steel significantly impacts these businesses, there are other key indicators that are meaningful in analyzing construction market demand, including U.S. gross domestic product (“GDP”), the Dodge Index of construction contracts and, in the case of ClarkDietrich, trends in the relative price of framing lumber and steel.

Substantially all of the net sales of our Pressure Cylinders operating segment, and approximately 24% and 51% of the net sales of our Steel Processing and Engineered Cabs operating segments, respectively, are to other markets such as consumer products, industrial, lawn and garden, agriculture, oil & gas equipment, heavy truck, mining, forestry and appliance. Given the many different products that make up these net sales and the wide variety of end markets, it is very difficult to detail the key market indicators that drive these portions of our business. However, we believe that the trend in U.S. GDP growth is a good economic indicator for analyzing these operating segments.

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We use the following information to monitor our costs and demand in our major end markets:

	Three Months Ended									Nine Months Ended
	Feb 28, 2017			Feb 29, 2016			Inc / (Dec)			Feb 28, 2017			Feb 29, 2016			Inc / (Dec)
U.S. GDP (% growth year-over-year) 1		1.7	%		1.8	%		-0.1	%		1.6	%		2.0	%		-0.4	%
Hot-Rolled Steel ($ per ton) 2	$	608		$	381		$	227		$	590		$	420		$	170
Detroit Three Auto Build (000’s vehicles) 3		2,166			2,159			7			6,876			6,972			(96	)
No. America Auto Build (000’s vehicles) 3		4,283			4,246			37			13,690			13,526			164
Zinc ($ per pound) 4	$	1.25		$	0.72		$	0.53		$	1.10		$	0.79		$	0.31
Natural Gas ($ per mcf) 5	$	3.27		$	2.07		$	1.20		$	2.96		$	2.43		$	0.53
On-Highway Diesel Fuel Prices ($ per gallon) 6	$	2.59		$	2.15		$	0.44		$	2.59		$	2.47		$	0.12
Crude Oil—WTI ($ per barrel) 6	$	52.64		$	33.06		$	19.58		$	48.52		$	42.99		$	5.53

¹ 2016 figures based on revised actuals ² CRU Hot-Rolled Index; period average ³ IHS Global ⁴ LME Zinc; period average ⁵ NYMEX Henry Hub Natural Gas; period average ⁶ Energy Information Administration; period average

U.S. GDP growth rate trends are generally indicative of the strength in demand and, in many cases, pricing for our products. A year-over-year increase in U.S. GDP growth rates is indicative of a stronger economy, which generally increases demand and pricing for our products. Conversely, decreasing U.S. GDP growth rates generally indicate a weaker economy. Changes in U.S. GDP growth rates can also signal changes in conversion costs related to production and in selling, general and administrative (“SG&A”) expense.

The market price of hot-rolled steel is one of the most significant factors impacting our selling prices and operating results. When steel prices fall, we typically have higher-priced material flowing through cost of goods sold, while selling prices compress to what the market will bear, negatively impacting our results. On the other hand, in a rising price environment, our results are generally favorably impacted, as lower-priced material purchased in previous periods flows through cost of goods sold, while our selling prices increase at a faster pace to cover current replacement costs.

The following table presents the average quarterly market price per ton of hot-rolled steel during fiscal 2017 (first, second and third quarters), fiscal 2016 and fiscal 2015:

(Dollars per ton 1 )
	Fiscal Year
	2017		2016		2015
1st Quarter	$	617	$	461	$	673
2nd Quarter	$	544	$	419	$	651
3rd Quarter	$	608	$	381	$	578
4th Quarter		N/A	$	486	$	464
Annual Avg.	$	590	$	437	$	592

¹ CRU Hot-Rolled Index, period average

No single customer contributed more than 10% of our consolidated net sales during the third quarter of fiscal 2017. While our automotive business is largely driven by the production schedules of the Detroit Three automakers, our customer base is much broader and includes other domestic manufacturers and many of their suppliers. During the third quarter of fiscal 2017, overall North American vehicle production was essentially flat as was production at the Detroit Three automakers.

Certain other commodities, such as zinc, natural gas and diesel fuel, represent a significant portion of our cost of goods sold, both directly through our manufacturing operations and indirectly through transportation and freight expense.

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Results of Operations

Third Quarter – Fiscal 2017 Compared to Fiscal 2016

Consolidated Operations

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

	Three Months Ended
	Feb 28,			% of			Feb 29,			% of			Increase/
(In millions)	2017			Net sales			2016			Net sales			(Decrease)
Net sales	$	703.4			100.0	%	$	647.1			100.0	%	$	56.3
Cost of goods sold		592.4			84.2	%		551.2			85.2	%		41.2
Gross margin		111.0			15.8	%		95.9			14.8	%		15.1
Selling, general and administrative expense		75.3			10.7	%		70.1			10.8	%		5.2
Restructuring and other expense		1.4			0.2	%		0.7			0.1	%		0.7
Operating income		34.3			4.9	%		25.1			3.9	%		9.2
Miscellaneous income, net		0.7			0.1	%		3.2			0.5	%		(2.5	)
Interest expense		(7.7	)		-1.1	%		(7.9	)		-1.2	%		(0.2	)
Equity in net income of unconsolidated affiliates (1)		22.7			3.2	%		25.0			3.9	%		(2.3	)
Income tax expense		(11.1	)		-1.6	%		(11.3	)		-1.7	%		(0.2	)
Net earnings		38.9			5.5	%		34.1			5.3	%		4.8
Net earnings attributable to noncontrolling interests		3.0			0.4	%		4.3			0.7	%		(1.3	)
Net earnings attributable to controlling interest	$	35.9			5.1	%	$	29.8			4.6	%	$	6.1
(1) Equity income by unconsolidated affiliate
WAVE	$	18.4					$	18.7					$	(0.3	)
ClarkDietrich		2.8						1.3						1.5
Serviacero		0.5						1.7						(1.2	)
ArtiFlex		1.1						3.0						(1.9	)
WSP		—						0.2						(0.2	)
Other		(0.1	)					0.1						(0.2	)
Total	$	22.7					$	25.0					$	(2.3	)

Net earnings attributable to controlling interest for the three months ended February 28, 2017 increased $6.1 million from the comparable period in the prior year. Net sales and operating highlights were as follows:

• Net sales increased $56.3 million from the comparable period in the prior year. The increase was driven primarily by higher average direct selling prices in Steel Processing, which increased net sales by $43.8 million. The remaining increase was driven by the consolidation of WSP, which contributed net sales of $16.7 million.

• Gross margin increased $15.1 million from the comparable period in the prior year. The improvement was driven primarily by a favorable pricing spread in Steel Processing, which benefited from lower inventory holding losses, and strength in the consumer products business within Pressure Cylinders.

• SG&A expense increased $5.2 million over the comparable period in the prior year on higher profit sharing and bonus expense, the consolidation of WSP and an increase in accrued legal costs. Overall, SG&A expense is trending in line with the prior year quarter at 10.7% of consolidated net sales.

• Restructuring and other expense totaled $1.4 million in the current period and consisted primarily of costs related to a plant consolidation at our cryogenics joint venture in Turkey. For additional information regarding the Company’s restructuring activities, refer to “Item 1. – Financial Statements – Notes to Consolidated Financial Statements – NOTE D – Restructuring and Other Expense” of this Quarterly Report on Form 10-Q.

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• Interest expense decreased $0.2 million from the comparable period in the prior year due to lower short-term borrowings.

• Equity income decreased $2.3 million from the comparable period in the prior year as lower contributions from ArtiFlex and Serviacero more than offset improvements at ClarkDietrich, where equity income more than doubled to $2.8 million on strong demand. Equity income at Serviacero was negatively impacted by foreign currency fluctuations and the related income tax effects. Strong automotive and construction markets in the U.S. are benefiting these businesses. We received distributions of $21.4 million from our unconsolidated affiliates during the quarter. For additional information regarding our unconsolidated affiliates, refer to “Item 1. – Financial Statements – Notes to Consolidated Financial Statements – NOTE B – Investments in Unconsolidated Affiliates” of this Quarterly Report on Form 10-Q.

• Income tax expense decreased $0.2 million from the comparable period in the prior year. Increased tax expense due to higher overall earnings and an unfavorable change in the mix of business generated between various tax jurisdictions was more than offset by a $5.1 million tax benefit associated with share-based payment awards. The current quarter expense was calculated using an estimated annual effective income tax rate of 27.2% versus 29.6% in the prior year quarter. Refer to “Item 1. – Financial Statements – Notes to Consolidated Financial Statements – NOTE K – Income Taxes” of this Quarterly Report on Form 10-Q for more information on our tax rates.

Segment Operations

Steel Processing

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

	Three Months Ended
	Feb 28,		% of			Feb 29,		% of			Increase/
(Dollars in millions)	2017		Net sales			2016		Net sales			(Decrease)
Net sales	$	478.2		100.0	%	$	419.0		100.0	%	$	59.2
Cost of goods sold		417.6		87.3	%		366.6		87.5	%		51.0
Gross margin		60.6		12.7	%		52.4		12.5	%		8.2
Selling, general and administrative expense		34.4		7.2	%		30.0		7.2	%		4.4
Restructuring and other expense		0.2		0.0	%		1.1		0.3	%		(0.9	)
Operating income	$	26.0		5.4	%	$	21.3		5.1	%	$	4.7
Material cost	$	324.3				$	284.4				$	39.9
Tons shipped (in thousands)		944					801					143

Net sales and operating highlights were as follows:

• Net sales increased $59.2 million from the comparable period in the prior year driven primarily by higher average direct selling prices, which increased net sales by $43.8 million. The remaining increase was driven by the consolidation of WSP, which contributed net sales of $16.7 million. The mix of direct versus toll tons processed was 52% to 48% compared to 60% to 40% in the prior year quarter. The change in mix was primarily the result of the consolidation of WSP.

• Operating income increased $4.7 million from the comparable period in the prior year on higher gross margin, partially offset by higher SG&A expense. Gross margin was up on a favorable pricing spread, which benefited from lower inventory holding losses, partially offset by higher manufacturing expenses due to production/start-up costs associated with new production lines at our TWB joint venture and higher healthcare costs. The net impact of these factors increased gross margin by $7.8 million. SG&A expense increased $4.4 million on higher allocated corporate costs and the consolidation of WSP.

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Pressure Cylinders

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

	Three Months Ended
	Feb 28,		% of			Feb 29,			% of			Increase/
(Dollars in millions)	2017		Net sales			2016			Net sales			(Decrease)
Net sales	$	198.4		100.0	%	$	200.7			100.0	%	$	(2.3	)
Cost of goods sold		152.1		76.7	%		157.4			78.4	%		(5.3	)
Gross margin		46.3		23.3	%		43.3			21.6	%		3.0
Selling, general and administrative expense		35.1		17.7	%		35.3			17.6	%		(0.2	)
Restructuring and other (income) expense		1.1		0.6	%		(1.0	)		-0.5	%		2.1
Operating income		10.1		5.1	%		9.0			4.5	%		1.1
Material cost	$	83.8				$	84.9					$	(1.1	)
Net sales by principal class of products:
Consumer products	$	54.3				$	51.1					$	3.2
Industrial products		105.8					110.1						(4.3	)
Alternative fuels		23.0					22.3						0.7
Oil & gas equipment		15.3					17.2						(1.9	)
Total Pressure Cylinders	$	198.4				$	200.7					$	(2.3	)
Units shipped by principal class of products:
Consumer products		10,818,423					10,478,006						340,417
Industrial products		6,923,044					6,481,937						441,107
Alternative fuels		100,509					96,123						4,386
Oil & gas equipment		481					640						(159	)
Total Pressure Cylinders		17,842,457					17,056,706						785,751

Net sales and operating highlights were as follows:

• Net sales decreased $2.3 million from the comparable period in the prior year on declines in the industrial products and oil & gas equipment businesses, partially offset by improvements in consumer products. The most significant decline was in the industrial products business, where net sales decreased $4.3 million on an unfavorable change in product mix due to weak demand across our refillable propane cylinder products and softness for high pressure industrial cylinders in Europe. Demand continues to be soft in the oil & gas equipment market, however, volumes appear to have stabilized and certain geographic regions are beginning to show signs of improvement.

• Operating income increased $1.1 million from the comparable period in the prior year driven by higher profitability in the consumer products business, partially offset by higher restructuring charges. Restructuring charges in the current period consisted primarily of costs related to a plant consolidation at our cryogenics joint venture in Turkey. Restructuring and other income in the prior year period was driven primarily by a gain related to the sale of the Worthington Nitin Cylinders joint venture in India.

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Engineered Cabs

The following table presents a summary of operating results for our Engineered Cabs operating segment for the periods indicated:

	Three Months Ended
(In millions)	Feb 28, 2017			% of Net sales			Feb 29, 2016			% of Net sales			Increase/ (Decrease)
Net sales	$	23.5			100.0	%	$	25.6			100.0	%	$	(2.1	)
Cost of goods sold		21.8			92.8	%		25.2			98.4	%		(3.4	)
Gross margin		1.7			7.2	%		0.4			1.6	%		1.3
Selling, general and administrative expense		3.5			14.9	%		4.1			16.0	%		(0.6	)
Restructuring and other expense		0.2			0.9	%		0.4			1.6	%		(0.2	)
Operating loss	$	(2.0	)		-8.5	%	$	(4.1	)		-16.0	%	$	2.1
Material cost	$	10.8					$	12.3					$	(1.5	)

Net sales and operating highlights were as follows:

• Net sales decreased $2.1 million from the comparable period in the prior year on lower volume due to declines in market demand.

• Operating loss improved $2.1 million to $2.0 million. The improvement was driven by a favorable pricing spread and successful cost reduction efforts, which led to higher overall margins and lower SG&A expense.

Other

The Other category includes the WEI operating segment, which does not meet the quantitative thresholds for separate disclosure. Certain income and expense items not allocated to our operating segments are also included in the Other category, including costs associated with our captive insurance company. The following table presents a summary of operating results for the Other category for the periods indicated:

	Three Months Ended
(In millions)	Feb 28, 2017		% of Net sales			Feb 29, 2016			% of Net sales			Increase/ (Decrease)
Net sales	$	3.3		100.0	%	$	1.7			100.0	%	$	1.6
Cost of goods sold		1.0		30.3	%		1.9			111.8	%		(0.9	)
Gross margin (loss)		2.3		69.7	%		(0.2	)		-11.8	%		2.5
Selling, general and administrative expense		2.1		63.6	%		0.7			41.2	%		1.4
Restructuring and other expense		-		0.0	%		0.2			11.8	%		(0.2	)
Operating income (loss)	$	0.2		6.1	%	$	(1.1	)		-64.7	%	$	1.3

Net sales and operating highlights were as follows:

• Net sales increased $1.6 million from the comparable period in the prior year on higher volumes at WEI.

• Operating income of $0.2 million in the current period was driven primarily by improvements at WEI, partially offset by higher SG&A expense, which was negatively impacted by a $1.3 million increase in accrued legal costs. The operating loss in the prior year period was driven primarily by losses within the Construction Services business, which has ceased operations.

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Nine Months Year-to-Date – Fiscal 2017 Compared to Fiscal 2016

Consolidated Operations

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

	Nine Months Ended
	Feb 28,			% of			Feb 29,			% of			Increase/
(In millions)	2017			Net sales			2016			Net sales			(Decrease)
Net sales	$	2,168.8			100.0	%	$	2,105.0			100.0	%	$	63.8
Cost of goods sold		1,787.7			82.4	%		1,786.9			84.9	%		0.8
Gross margin		381.1			17.6	%		318.1			15.1	%		63.0
Selling, general and administrative expense		232.8			10.7	%		218.8			10.4	%		14.0
Impairment of long-lived assets		—			0.0	%		26.0			1.2	%		(26.0	)
Restructuring and other expense		6.0			0.3	%		5.3			0.3	%		0.7
Operating income		142.3			6.6	%		68.0			3.2	%		74.3
Miscellaneous income, net		2.4			0.1	%		3.7			0.2	%		(1.3	)
Interest expense		(23.2	)		-1.1	%		(23.5	)		-1.1	%		(0.3	)
Equity in net income of unconsolidated affiliates (1)		84.4			3.9	%		80.8			3.8	%		3.6
Income tax expense		(48.6	)		-2.2	%		(34.1	)		-1.6	%		14.5
Net earnings		157.3			7.3	%		94.9			4.5	%		62.4
Net earnings attributable to noncontrolling interests		9.3			0.4	%		9.7			0.5	%		(0.4	)
Net earnings attributable to controlling interest	$	148.0			6.8	%	$	85.2			4.0	%	$	62.8
(1) Equity income by unconsolidated affiliate
WAVE	$	57.9					$	59.8					$	(1.9	)
ClarkDietrich		15.7						10.3						5.4
Serviacero		4.5						2.9						1.6
ArtiFlex		6.1						7.2						(1.1	)
WSP		—						1.7						(1.7	)
Other		0.2						(1.1	)					1.3
Total	$	84.4					$	80.8					$	3.6

Net earnings attributable to controlling interest for the nine months ended February 28, 2017 increased $62.8 million from the comparable period in the prior year. Net sales and operating highlights were as follows:

• Net sales increased $63.8 million from the comparable period in the prior year. The increase was the result of higher average direct selling prices in Steel Processing, which favorably impacted net sales by $80.9 million, partially offset by lower volume in Engineered Cabs and certain Pressure Cylinders businesses. Net sales were also favorably impacted by the consolidation of WSP, which contributed net sales of $52.0 million.

• Gross margin increased $63.0 million from the comparable period in the prior year. A favorable pricing spread, primarily in Steel Processing and to a lesser extent in Pressure Cylinders, increased gross margin by $86.2 million. The impact of higher spreads was partially offset by higher overall manufacturing expenses, which reduced gross margin by $19.6 million.

• SG&A expense increased $14.0 million over the comparable prior year period. The consolidation of WSP and the impact of prior year acquisitions in Pressure Cylinders accounted for $7.4 million of the increase. The remaining increase in SG&A expense was due to higher profit sharing and bonus expense and an increase in accrued legal costs.

• Restructuring and other expense totaled $6.0 million in the current period. A total of $3.1 million related to activities within Pressure Cylinders, including $1.8 million of costs incurred in connection with a plant consolidation at our cryogenics joint venture in Turkey. The remaining activity related to ongoing costs associated with previously completed plant closures in Steel Processing and Engineered Cabs.

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For additional information regarding the Company’s restructuring activities, refer to “Item 1. – Financial Statements – Notes to Consolidated Financial Statements – NOTE D – Restructuring and Other Expense” of this Quarterly Report on Form 10-Q.

• Interest expense decreased $0.3 million from the comparable period in the prior year on lower short-term borrowings.

• Equity income increased $3.6 million from the comparable period in the prior year on higher contributions from ClarkDietrich and Serviacero. Equity income at ClarkDietrich was $5.4 million higher than the prior year period despite a $4.0 million favorable impact related to legal settlements in the prior year. The contribution from Serviacero was also up on a favorable pricing spread driven by significant inventory holding gains in the current period. Strong automotive and construction markets in the U.S. are benefiting these businesses. We received distributions of $84.2 million from our unconsolidated affiliates during the nine months ended February 28, 2017. For additional information regarding our unconsolidated affiliates, refer to “Item 1. – Financial Statements – Notes to Consolidated Financial Statements – NOTE B – Investments in Unconsolidated Affiliates” of this Quarterly Report on Form 10-Q.

• Income tax expense increased $14.5 million from the comparable period in the prior year due to higher earnings. The increase in tax expense was partially offset by the following items recorded in the current year: (i) a $16.0 million tax benefit associated with share-based payment awards, and (ii) a $1.2 million tax benefit related to foreign tax credits. Tax expense of $48.6 million for the nine months ended February 28, 2017 was calculated using an estimated annual effective rate of 27.2% versus 29.6% in the prior year comparable period. Refer to “Item 1. – Financial Statements – Notes to Consolidated Financial Statements – NOTE K – Income Taxes” of this Quarterly Report on Form 10-Q for more information on our tax rates.

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Segment Operations

Steel Processing

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

	Nine Months Ended
	Feb 28,		% of			Feb 29,		% of			Increase/
(Dollars in millions)	2017		Net sales			2016		Net sales			(Decrease)
Net sales	$	1,492.7		100.0	%	$	1,377.6		100.0	%	$	115.1
Cost of goods sold		1,267.8		84.9	%		1,206.4		87.6	%		61.4
Gross margin		224.9		15.1	%		171.2		12.4	%		53.7
Selling, general and administrative expense		107.1		7.2	%		95.8		7.0	%		11.3
Restructuring and other expense		1.5		0.1	%		3.8		0.3	%		(2.3	)
Operating income	$	116.3		7.8	%	$	71.6		5.2	%	$	44.7
Material cost	$	976.0				$	955.2				$	20.8
Tons shipped (in thousands)		2,995					2,495					500

Net sales and operating highlights were as follows:

• Net sales increased $115.1 million from the comparable period in the prior year driven primarily by higher average direct selling prices, which increased net sales by $80.9 million. The remaining increase was due to higher volume as a result of the consolidation of the WSP joint venture. The mix of direct versus toll tons processed was 51% to 49% compared to 61% to 39% in the comparable period of fiscal 2016. The change in mix was primarily the result of the consolidation of WSP.

• Operating income increased $44.7 million from the comparable period in the prior year on higher gross margin, partially offset by higher SG&A expense. Margins improved on a favorable pricing spread, partially offset by higher manufacturing expenses driven by higher profit sharing and bonus expense, an increase in healthcare costs and production/start-up costs associated with new production lines at our TWB joint venture. The net impact of these factors increased gross margin by $51.6 million. SG&A expense increased $11.3 million on higher allocated corporate costs, the consolidation of WSP, and higher profit sharing and bonus expense. Restructuring and other expense in the nine months ended February 28, 2017 consisted primarily of costs related to the closure of PSM.

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Pressure Cylinders

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

	Nine Months Ended
	Feb 28,		% of			Feb 29,			% of			Increase/
(Dollars in millions)	2017		Net sales			2016			Net sales			(Decrease)
Net sales	$	598.3		100.0	%	$	626.3			100.0	%	$	(28.0	)
Cost of goods sold		452.0		75.5	%		482.0			77.0	%		(30.0	)
Gross margin		146.3		24.5	%		144.3			23.0	%		2.0
Selling, general and administrative expense		107.7		18.0	%		106.1			16.9	%		1.6
Impairment of long-lived assets		—		0.0	%		23.0			3.7	%		(23.0	)
Restructuring and other (income) expense		3.1		0.5	%		(0.3	)		0.0	%		3.4
Operating income	$	35.5		5.9	%	$	15.5			2.5	%	$	20.0
Material cost	$	243.1				$	269.4					$	(26.3	)
Net sales by principal class of products:
Consumer products	$	170.4				$	155.5					$	14.9
Industrial products		305.0					324.6						(19.6	)
Alternative fuels		81.9					71.1						10.8
Oil & gas equipment		41.0					75.1						(34.1	)
Total Pressure Cylinders	$	598.3				$	626.3					$	(28.0	)
Units shipped by principal class of products:
Consumer products		33,291,082					32,979,643						311,439
Industrial products		19,403,628					19,709,251						(305,623	)
Alternative fuels		370,761					295,200						75,561
Oil & gas equipment		1,671					3,004						(1,333	)
Total Pressure Cylinders		53,067,142					52,987,098						80,044

Net sales and operating highlights were as follows:

• Net sales decreased $28.0 million from the comparable period in the prior year. The decrease was driven by lower volumes in the oil & gas equipment and industrial products businesses, partially offset by improvements in consumer products and alternative fuels. The most significant decline was in oil & gas equipment, where net sales decreased 45%, or $34.1 million, on weak demand. Net sales in the industrial products business were down $19.6 million on lower volume due to weak demand across our refillable propane cylinder products, as well as softness for high pressure industrial cylinders in Europe.

• Operating income increased $20.0 million from the comparable period in the prior year primarily on lower impairment and restructuring charges, which declined $19.6 million. Improvements in the consumer products and alternative fuels businesses were largely offset by declines in the oil & gas equipment and industrial products businesses.

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Engineered Cabs

The following table presents a summary of operating results for our Engineered Cabs operating segment for the periods indicated:

	Nine Months Ended
	Feb 28,			% of			Feb 29,			% of			Increase/
(In millions)	2017			Net sales			2016			Net sales			(Decrease)
Net sales	$	71.6			100.0	%	$	92.9			100.0	%	$	(21.3	)
Cost of goods sold		66.2			92.5	%		90.2			97.1	%		(24.0	)
Gross margin		5.4			7.5	%		2.7			2.9	%		2.7
Selling, general and administrative expense		11.2			15.6	%		14.2			15.3	%		(3.0	)
Impairment of long-lived assets		-			0.0	%		3.0			3.2	%		(3.0	)
Restructuring and other expense		1.4			2.0	%		3.1			3.3	%		(1.7	)
Operating loss	$	(7.2	)		-10.1	%	$	(17.6	)		-18.9	%	$	10.4
Material cost	$	32.2					$	43.7					$	(11.5	)

Net sales and operating highlights were as follows:

• Net sales decreased $21.3 million from the comparable period in the prior year due to declines in market demand.

• Operating loss improved $10.4 million to $7.2 million on lower impairment and restructuring charges and the impact of cost reduction efforts, which led to margin improvements and a 21% decline in SG&A expense.

Other

The Other category includes the WEI operating segment, which does not meet the quantitative thresholds for separate disclosure. Certain income and expense items not allocated to our operating segments are also included in the Other category, including costs associated with our captive insurance company. The following table presents a summary of operating results for the Other category for the periods indicated:

	Nine Months Ended
	Feb 28,			% of			Feb 29,			% of			Increase/
(In millions)	2017			Net sales			2016			Net sales			(Decrease)
Net sales	$	6.2			100.0	%	$	8.2			100.0	%	$	(2.0	)
Cost of goods sold		1.7			27.4	%		8.3			101.2	%		(6.6	)
Gross margin (loss)		4.5			72.6	%		(0.1	)		-1.2	%		4.6
Selling, general and administrative expense		6.8			109.7	%		2.5			30.5	%		4.3
Restructuring and other income		-			0.0	%		(1.2	)		-14.6	%		1.2
Operating loss		(2.3	)		-37.1	%		(1.4	)		-17.1	%		(0.9	)

Net sales and operating highlights were as follows:

• Net sales decreased $2.0 million from the comparable period in the prior year as the former Construction Services operating segment ceased operations during the first quarter of fiscal 2017.

• Operating loss of $2.3 million in the current period was driven primarily by higher SG&A expense, up $4.3 million due primarily to higher profit sharing and bonus expense and an increase in accrued legal costs. Gross margin improved $4.6 million on higher contributions from WEI and lower losses in Construction Services, which ceased operations during the first quarter of fiscal 2017.

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Liquidity and Capital Resources

During the nine months ended February 28, 2017, we generated $254.9 million of cash from operating activities, invested $52.2 million in property, plant and equipment and paid dividends of $38.1 million on our common shares. The following table summarizes our consolidated cash flows for the nine months ended February 28, 2017 and February 29, 2016:

	Nine Months Ended
(in millions)	February 28, 2017			February 29, 2016
Net cash provided by operating activities	$	254.9		$	295.8
Net cash used by investing activities		(51.2	)		(105.4	)
Net cash used by financing activities		(60.6	)		(196.1	)
Increase (decrease) in cash and cash equivalents		143.1			(5.7	)
Cash and cash equivalents at beginning of period		84.2			31.1
Cash and cash equivalents at end of period	$	227.3		$	25.4

We believe we have access to adequate resources to meet the needs of our existing businesses for normal operating costs, mandatory capital expenditures, debt redemptions, dividend payments, and working capital. These resources include cash and cash equivalents, cash provided by operating activities and unused lines of credit. We also believe that we have adequate access to the financial markets to allow us to be in a position to sell long-term debt or equity securities. However, uncertainty and volatility in the financial markets may impact our ability to access capital and the terms under which we can do so.

Operating Activities

Our business is cyclical and cash flows from operating activities may fluctuate during the year and from year to year due to economic conditions. We rely on cash and short-term borrowings to meet cyclical increases in working capital needs. These needs generally rise during periods of increased economic activity or increasing raw material prices due to higher levels of inventory and accounts receivable. During economic slowdowns, or periods of decreasing raw material costs, working capital needs generally decrease as a result of the reduction of inventories and accounts receivable.

Net cash provided by operating activities was $254.9 million during the nine months ended February 28, 2017 compared to $295.8 million in the comparable period of fiscal 2016. The decrease was driven primarily by an increase in working capital levels as a result of higher average steel prices, partially offset by higher net earnings. Net cash provided by operating activities in the prior year period benefited from declining working capital levels as a result of declining steel prices and lower overall volumes.

Investing Activities

Net cash used by investing activities was $51.2 million during the nine months ended February 28, 2017 compared to $105.4 million in the prior year period. The decrease from the prior year period was driven primarily by the absence of acquisitions in the current year and lower capital expenditures, which decreased $23.3 million.

Investment activities are largely discretionary, and future investment activities could be reduced significantly, or eliminated, as economic conditions warrant. We assess acquisition opportunities as they arise, and such opportunities may require additional financing. 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.

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Financing Activities

Net cash used by financing activities was $60.6 million during the nine months ended February 28, 2017 compared to $196.1 million in the comparable prior year period. The decrease from the prior year period was driven primarily by the absence of share repurchases and lower repayments of short-term borrowings.

As of February 28, 2017, we were in compliance with our short-term and long-term financial debt covenants. These debt agreements do not include credit rating triggers or material adverse change provisions. Our credit ratings at February 28, 2017 were unchanged from those reported as of May 31, 2016.

Common shares - The Board of Directors of Worthington Industries, Inc. (the “Board”) declared a quarterly dividend of $0.20 per common share for the first, second and third quarters of fiscal 2017 compared to $0.19 per common share for the first, second and third quarters of fiscal 2016. Dividends paid on our common shares totaled $38.1 million and $35.5 million during the nine months ended February 28, 2017 and February 29, 2016, respectively. On March 29, 2017, the Board declared a quarterly dividend of $0.20 per share payable on June 29, 2017, to shareholders of record on June 15, 2017.

On June 25, 2014, the Board authorized the repurchase of up to 10,000,000 of our outstanding common shares. A total of 5,953,855 common shares have been repurchased under this authorization, leaving 4,046,145 common shares available for repurchase. No common shares were repurchased under this authorization during the first nine months of fiscal 2017.

The common shares available for repurchase under this authorization 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, general economic conditions and other relevant considerations. Repurchases may be made on the open market or through privately negotiated transactions.

Dividend Policy

We currently have no material contractual or regulatory restrictions on the payment of dividends. Dividends are declared at the discretion of the Board. The Board reviews the dividend quarterly and establishes the dividend rate based upon our consolidated financial condition, results of operations, capital requirements, current and projected cash flows, business prospects, and other relevant factors. While we have paid a dividend every quarter since becoming a public company in 1968, there is no guarantee that payments will continue in the future.

Contractual Cash Obligations and Other Commercial Commitments

Our contractual cash obligations and other commercial commitments have not changed significantly from those disclosed in “Part II – Item 7. – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Contractual Cash Obligations and Other Commercial Commitments” of our 2016 Form 10-K, other than the changes in borrowings, as described in “Part I – Item 1. – Financial Statements – NOTE G – Debt and Receivables Securitization” of this Quarterly Report on Form 10-Q.

Off-Balance Sheet Arrangements

We do not have guarantees or other off-balance sheet financing arrangements that we believe are reasonably likely to have a material current or future effect on our consolidated financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. However, as of February 28, 2017, we were party to an operating lease for an aircraft in which we have guaranteed a residual value at the termination of the lease. The maximum obligation under the terms of this guarantee was approximately $9.6 million at February 28, 2017. Based on current facts and circumstances, we have estimated the likelihood of payment pursuant to this guarantee is not probable and, therefore, no amounts have been recognized in our consolidated financial statements.

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Recently Adopted Accounting Standards

In February 2015, amended accounting guidance was issued that revised consolidation requirements in order to provide financial statement users with a more useful presentation of an entity’s economic and operational results. The amended guidance revises the consolidation requirements for limited partnerships, the considerations surrounding the primary beneficiary determination and the consolidation of certain investment funds. The Company adopted this amended guidance on a prospective basis effective June 1, 2016. The adoption of this guidance did not impact our consolidated financial position or results of operations.

In April 2015, amended accounting guidance was issued that requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of the corresponding debt liability itself. The amended guidance does not apply to line-of-credit arrangements. Accordingly, issuance costs related to line-of-credit arrangements will continue to be presented as an asset and amortized ratably over the term of the arrangement. The Company adopted this guidance on a retrospective basis effective June 1, 2016. As a result, debt issuance costs totaling $2.2 million and $2.5 million as of February 28, 2017 and May 31, 2016, respectively, have been presented as a component of the carrying amount of long-term debt reported in our consolidated balance sheets. Fiscal 2016 amounts were previously capitalized and reported within other assets.

In September 2015, amended accounting guidance was issued regarding adjustments to provisional amounts recorded in conjunction with a business combination. The amended guidance requires the acquirer to recognize adjustments to provisional amounts identified during the measurement period in the reporting period in which such adjustments are identified, rather than retrospectively adjusting previously reported amounts. The Company adopted this amended guidance on a prospective basis effective June 1, 2016. The adoption of this guidance did not impact our consolidated financial position or results of operations.

In March 2016, amended accounting guidance was issued that simplifies the accounting for share-based payments. The amended guidance impacts several aspects of the accounting for share-based payment transactions, including the income tax consequences, forfeitures, statutory withholding requirements, and classification in the statement of cash flows. The Company early adopted this guidance during the fourth quarter of fiscal 2016. As required for early adoption in an interim period, all adjustments have been reflected as of the beginning of fiscal 2016. Accordingly, income tax expense for the three and nine months ended February 29, 2016 has been restated to reflect excess tax benefits associated with share-based payments totaling $271,000 and $965,000, respectively, in income tax expense, rather than in paid-in capital.

Recently Issued Accounting Standards

In May 2014, amended accounting guidance was issued that replaces most existing revenue recognition guidance under U.S. GAAP. The amended guidance requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. Subsequently, additional guidance was issued on several areas including guidance intended to improve the operability and understandability of the implementation of principal versus agent considerations and clarifications on the identification of performance obligations and implementation of guidance related to licensing. The amended guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The amended guidance permits the use of either the retrospective or cumulative effect transition method. We are in the process of evaluating the effect this guidance will have on the presentation of our consolidated financial statements and related disclosures. While we have not yet identified any material changes in the timing of revenue recognition, our evaluation is ongoing and not complete. We plan to adopt the amended guidance in the first quarter of fiscal 2019 and expect to make a determination as to the method of adoption by the end of fiscal 2017.

In July 2015, amended accounting guidance was issued regarding the measurement of inventory. The amended guidance requires that inventory accounted for under the first-in, first-out (FIFO) or average cost methods be measured at the lower of cost and net realizable value, where net realizable value represents the estimated selling price of inventory in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The amended guidance has no impact on inventory accounted for under the last-in, first-out (LIFO) or retail inventory methods. The amended guidance is effective prospectively for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted as of the beginning of an interim or annual reporting period. We do not expect the adoption of this amended accounting guidance to have a material impact on our consolidated financial position or results of operations.

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In February 2016, amended accounting guidance was issued that replaces most existing lease accounting guidance under U.S. GAAP. Among other changes, the amended guidance requires that lease assets and liabilities be recognized on the balance sheet by lessees for those leases classified as operating leases under previous guidance. The amended guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted, and the change is to be applied using a modified retrospective approach as of the beginning of the earliest period presented. We are in the process of evaluating the effect this guidance will have on our consolidated financial position, results of operations and cash flows, and we have not determined the effect of the amended guidance on our ongoing financial reporting.

In March 2016, amended accounting guidance was issued regarding derivative instruments designated as hedging instruments. The amended guidance clarifies that a change in the counterparty to such a hedging instrument does not, in and of itself, require dedesignation of that hedging relationship provided that all other hedge accounting criteria continue to be met. The amended guidance is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted, and the change may be applied either prospectively or retrospectively. We do not expect the adoption of this amended accounting guidance to have a material impact on our consolidated financial position or results of operations.

In June 2016, amended accounting guidance was issued related to the measurement of credit losses on financial instruments. The amended guidance changes the impairment model for most financial assets to require measurement and recognition of expected credit losses for financial assets held. The amended guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. We are in the process of evaluating the effect this guidance will have on our consolidated financial position and results of operations, and we have not determined the effect of the amended guidance on our ongoing financial reporting.

In August 2016, amended accounting guidance was issued to clarify the proper cash flow presentation of certain specific types of cash payments and cash receipts. The amended guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. We are in the process of evaluating the effect this guidance will have on our consolidated financial position, results of operations and cash flows, and we have not determined the effect of the amended guidance on our ongoing financial reporting.

In October 2016, amended accounting guidance was issued that requires the income tax consequences of an intra-entity transfer of an asset other than inventory to be recognized when the transfer occurs. The amended guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. We are in the process of evaluating the effect this guidance will have on our consolidated financial position, results of operations and cash flows, and have not determined the effect of the amended guidance on our ongoing financial reporting.

In November 2016, amended accounting guidance was issued that requires amounts generally described as restricted cash and restricted cash equivalents to be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amended guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. We do not expect the adoption of this amended guidance to have a material impact on our consolidated cash flows.

In January 2017, amended accounting guidance was issued to clarify the definition of a business to provide additional guidance to assist in evaluating whether transactions should be accounted for as an acquisition (or disposal) of either an asset or business. The amended guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. We do not expect the adoption of this amended guidance to have a material impact on our consolidated financial position or results of operations.

In January 2017, amended accounting guidance was issued to simplify the goodwill impairment calculation, by removing Step 2 of the goodwill impairment test. Goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of the goodwill. The amended guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. We are in the process of evaluating the effect this guidance will have on our consolidated financial position and results of operations, and have not determined the effect on our ongoing financial reporting.

37

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these consolidated 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. 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 obtained from other sources. Critical accounting policies are defined as those that require our significant judgments and involve uncertainties that could potentially result in materially different results under different assumptions and conditions. Although actual results historically have not deviated significantly from those determined using our estimates, 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. Our critical accounting policies have not significantly changed from those discussed in “Part II – Item 7. – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies” of our 2016 Form 10-K.

Item 3. –  Quantitative and Qualitative Disclosures About Market Risk

Market risks have not changed significantly from those disclosed in “Part II—Item 7A. – Quantitative and Qualitative Disclosures About Market Risk” of our 2016 Form 10-K.

Item 4. – Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures [as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)] that are designed to provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Management, with the participation of our principal executive officer and our principal financial officer, performed an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q (the fiscal quarter ended February 28, 2017). Based on that evaluation, our principal executive officer and our principal financial officer have concluded that such disclosure controls and procedures were effective at a reasonable assurance level as of the end of the period covered by this Quarterly Report on Form 10-Q.

Changes in Internal Control Over Financial Reporting

There were no changes that occurred during the period covered by this Quarterly Report on Form 10-Q (the fiscal quarter ended February 28, 2017) in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

38

PART II. OTHER INFORMATION

Item 1. – Legal Proceedings

Various legal actions, which generally have arisen in the ordinary course of business, are pending against the Company. None of this pending litigation, individually or collectively, is expected to have a material adverse effect on our consolidated financial position, results of operations or cash flows.

Item 1A. – Risk Factors

There are certain risks and uncertainties in our business that could cause our actual results to differ materially from those anticipated. In “PART I – Item 1A. – Risk Factors” of the Annual Report on Form 10-K of Worthington Industries, Inc. for the fiscal year ended May 31, 2016 (the “2016 Form 10-K”), as filed with the Securities and Exchange Commission on August 1, 2016, and available at www.sec.gov or at www.worthingtonindustries.com, we included a detailed discussion of our risk factors. Our risk factors have not changed significantly from those disclosed in our 2016 Form 10-K. These risk factors should be read carefully in connection with evaluating our business and in connection with the forward-looking statements and other information contained in this Quarterly Report on Form 10-Q. Any of the risks described in our 2016 Form 10-K could materially affect our business, consolidated financial condition or future results and the actual outcome of matters as to which forward-looking statements are made. The risk factors described in our 2016 Form 10-K are not the only risks we face. Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial, also may materially adversely affect our business, financial condition and/or future results.

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, as amended) of common shares of Worthington Industries, Inc. during each month of the fiscal quarter ended February 28, 2017:

					Total Number of
					Common Shares
					Purchased as		Maximum Number of
	Total Number		Average Price		Part of Publicly		Common Shares that
	of Common		Paid per		Announced		May Yet Be
	Shares		Common		Plans or		Purchased Under the
Period	Purchased		Share		Programs		Plans or Programs (1)
December 1-31, 2016 (2)		178,020	$	58.85		-		4,046,145
January 1-31, 2017		-	$	-		-		4,046,145
February 1-28, 2017		-	$	-		-		4,046,145
Total		178,020	$	58.85		-

(1) The number shown represents, as of the end of each period, the maximum number of common shares that could be purchased under the publicly announced repurchase authorization then in effect. On June 26, 2014, Worthington Industries, Inc. announced that on June 25, 2014, the Board of Directors had authorized the repurchase of up to 10,000,000 of Worthington Industries’ outstanding common shares. A total of 4,046,145 common shares were available under this repurchase authorization at February 28, 2017.

The common shares available for repurchase under this authorization 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, general economic conditions and other appropriate factors. Repurchases may be made on the open market or through privately negotiated transactions.

(2) Includes an aggregate of 178,020 common shares surrendered by employees in December 2016 to satisfy tax withholding obligations upon the vesting of restricted common shares. These common shares were not counted against the share repurchase authorization in effect throughout the third quarter of fiscal 2017 and discussed in footnote (1) above.

39

Item 3. – Defaults Upon Senior Securities

Not applicable.

Item 4. – Mine Safety Disclosures

Not applicable.

Item 5. –  Other Information

Not applicable.

Item 6. – Exhibits

31.1	Rule 13a - 14(a) / 15d - 14(a) Certifications (Principal Executive Officer) *
31.2	Rule 13a - 14(a) / 15d - 14(a) Certifications (Principal Financial Officer) *
32.1	Certifications of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**
32.2	Certifications of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**
101.INS	XBRL Instance Document #
101.SCH	XBRL Taxonomy Extension Schema Document #
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document #
101.LAB	XBRL Taxonomy Extension Label Linkbase Document #
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document #
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document #

* Filed herewith.

** Furnished herewith.

# Attached as Exhibit 101 to this Quarterly Report on Form 10-Q of Worthington Industries, Inc. are the following documents formatted in XBRL (Extensible Business Reporting Language):

(i) Consolidated Balance Sheets at February 28, 2017 and May 31, 2016;

(ii) Consolidated Statements of Earnings for the three and nine months ended February 28, 2017 and February 29, 2016;

(iii) Consolidated Statements of Comprehensive Income for the three and nine months ended February 28, 2017 and February 29, 2016;

(iv) Consolidated Statements of Cash Flows for the three and nine months ended February 28, 2017 and February 29, 2016; and

(v) Notes to Consolidated Financial Statements.

40

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: April 10, 2017	By:	/s/ B. Andrew Rose
		B. Andrew Rose,
		Executive Vice President and Chief Financial Officer
		(On behalf of the Registrant and as Principal
		Financial Officer)

41

INDEX TO EXHIBITS

Exhibit No.	Description	Location
31.1	Rule 13a - 14(a) / 15d - 14(a) Certifications (Principal Executive Officer)	Filed herewith
31.2	Rule 13a - 14(a) / 15d - 14(a) Certifications (Principal Financial Officer)	Filed herewith
32.1	Certifications of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Furnished herewith
32.2	Certifications of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Furnished herewith
101.INS	XBRL Instance Document	Submitted electronically herewith #
101.SCH	XBRL Taxonomy Extension Schema Document	Submitted electronically herewith #
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document	Submitted electronically herewith #
101.LAB	XBRL Taxonomy Extension Label Linkbase Document	Submitted electronically herewith #
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document	Submitted electronically herewith #
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document	Submitted electronically herewith #

# Attached as Exhibit 101 to this Quarterly Report on Form 10-Q of Worthington Industries, Inc. are the following documents formatted in XBRL (Extensible Business Reporting Language):

(i) Consolidated Balance Sheets at February 28, 2017 and May 31, 2016;

(ii) Consolidated Statements of Earnings for the three and nine months ended February 28, 2017 and February 29, 2016;

(iii) Consolidated Statements of Comprehensive Income for the three and nine months ended February 28, 2017 and February 29, 2016;

(iv) Consolidated Statements of Cash Flows for the three and nine months ended February 28, 2017 and February 29, 2016; and

(v) Notes to Consolidated Financial Statements.

42

EX-31.1

Exhibit 31.1

RULE 13a-14(a) / 15d-14(a)

CERTIFICATIONS (PRINCIPAL EXECUTIVE OFFICER)

CERTIFICATIONS

I, John P. McConnell, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended February 28, 2017 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 (the registrant’s fourth fiscal quarter in the case of an annual report) 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 the 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: April 10, 2017	By:	/s/ John P. McConnell
		John P. McConnell,
		Chairman of the Board and Chief Executive Officer

EX-31.2

Exhibit 31.2

RULE 13a-14(a) / 15d-14(a)

CERTIFICATIONS (PRINCIPAL FINANCIAL OFFICER)

CERTIFICATIONS

I, B. Andrew Rose, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended February 28, 2017 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 (the registrant’s fourth fiscal quarter in the case of an annual report) 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 the 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: April 10, 2017	By:	/s/ B. Andrew Rose
		B. Andrew Rose,
		Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATIONS OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002*

In connection with the Quarterly Report of Worthington Industries, Inc. (the “Company”) on Form 10-Q for the quarterly period ended February 28, 2017, 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) or 15(d) of the Securities Exchange Act of 1934, as amended; 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 and its subsidiaries.

/s/ John P. McConnell

Printed Name: John P. McConnell

Title: Chairman of the Board and Chief Executive Officer

Date: April 10, 2017

*These certifications are 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. These certifications shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that Worthington Industries, Inc. specifically incorporates these certifications by reference.

EX-32.2

Exhibit 32.2

CERTIFICATIONS OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS

ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002*

In connection with the Quarterly Report of Worthington Industries, Inc. (the “Company”) on Form 10-Q for the quarterly period ended February 28, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, B. Andrew Rose, Executive Vice 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) or 15(d) of the Securities Exchange Act of 1934, as amended; 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 and its subsidiaries.

/s/ B. Andrew Rose

Printed Name: B. Andrew Rose

Title: Executive Vice President and Chief Financial Officer

Date: April 10, 2017

*These certifications are 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. These certifications shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that Worthington Industries, Inc. specifically incorporates these certifications by reference.

XML

Document and Entity Information - shares	9 Months Ended
	Feb. 28, 2017	Mar. 31, 2017
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Feb. 28, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q3
Trading Symbol	WOR
Entity Registrant Name	WORTHINGTON INDUSTRIES INC
Entity Central Index Key	0000108516
Current Fiscal Year End Date	--05-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		63,680,574

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Feb. 28, 2017	May 31, 2016
Current assets:
Cash and cash equivalents	$ 227,281	$ 84,188
Receivables, less allowances of $3,134 and $4,579 at February 28, 2017 and May 31, 2016, respectively	466,689	439,688
Inventories:
Raw materials	164,295	162,427
Work in process	98,683	86,892
Finished products	77,226	70,016
Total inventories	340,204	319,335
Income taxes receivable	15,554	10,535
Assets held for sale	13,617	10,079
Prepaid expenses and other current assets	53,596	51,290
Total current assets	1,116,941	915,115
Investments in unconsolidated affiliates	205,008	191,826
Goodwill	244,941	246,067
Other intangible assets, net of accumulated amortization of $59,577 and $49,532 at February 28, 2017 and May 31, 2016, respectively	85,289	96,164
Other assets	24,976	29,254
Property, plant and equipment:
Land	16,543	18,537
Buildings and improvements	257,190	256,973
Machinery and equipment	1,001,232	945,951
Construction in progress	26,403	48,156
Total property, plant and equipment	1,301,368	1,269,617
Less: accumulated depreciation	731,348	686,779
Total property, plant and equipment, net	570,020	582,838
Total assets	2,247,175	2,061,264
Current liabilities:
Accounts payable	351,998	290,432
Short-term borrowings	167	2,651
Accrued compensation, contributions to employee benefit plans and related taxes	75,618	75,105
Dividends payable	13,557	13,471
Other accrued items	45,054	45,056
Income taxes payable	2,508	2,501
Current maturities of long-term debt	878	862
Total current liabilities	489,780	430,078
Other liabilities	64,441	63,487
Distributions in excess of investment in unconsolidated affiliate	67,722	52,983
Long-term debt	576,002	577,491
Deferred income taxes, net	27,183	17,379
Total liabilities	1,225,128	1,141,418
Shareholders' equity-controlling interest	898,468	793,371
Noncontrolling interests	123,579	126,475
Total equity	1,022,047	919,846
Total liabilities and equity	$ 2,247,175	$ 2,061,264

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Feb. 28, 2017	May 31, 2016
Receivables, allowances	$ 3,134	$ 4,579
Other intangible assets, accumulated amortization	$ 59,577	$ 49,532

XML

Consolidated Statements of Earnings - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Feb. 28, 2017	Feb. 29, 2016	Feb. 28, 2017	Feb. 29, 2016
Net sales	$ 703,436	$ 647,080	$ 2,168,765	$ 2,105,043
Cost of goods sold	592,446	551,157	1,787,690	1,786,925
Gross margin	110,990	95,923	381,075	318,118
Selling, general and administrative expense	75,276	70,149	232,819	218,822
Impairment of long-lived assets			0	25,962
Restructuring and other expense	1,394	702	5,994	5,294
Operating income	34,320	25,072	142,262	68,040
Other income (expense):
Miscellaneous income, net	749	3,305	2,484	3,723
Interest expense	(7,674)	(7,886)	(23,202)	(23,539)
Equity in net income of unconsolidated affiliates	22,697	24,994	84,365	80,822
Earnings before income taxes	50,092	45,485	205,909	129,046
Income tax expense	11,141	11,342	48,555	34,157
Net earnings	38,951	34,143	157,354	94,889
Net earnings attributable to noncontrolling interests	3,062	4,296	9,333	9,698
Net earnings attributable to controlling interest	$ 35,889	$ 29,847	$ 148,021	$ 85,191
Basic
Average common shares outstanding	62,750	61,747	62,325	62,810
Earnings per share attributable to controlling interest	$ 0.57	$ 0.48	$ 2.37	$ 1.36
Diluted
Average common shares outstanding	64,977	63,871	64,758	64,923
Earnings per share attributable to controlling interest	$ 0.55	$ 0.47	$ 2.29	$ 1.31
Common shares outstanding at end of period	62,776	61,285	62,776	61,285
Cash dividends declared per share	$ 0.20	$ 0.19	$ 0.60	$ 0.57

XML

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Feb. 28, 2017	Feb. 29, 2016	Feb. 28, 2017	Feb. 29, 2016
Net earnings	$ 38,951	$ 34,143	$ 157,354	$ 94,889
Other comprehensive income (loss):
Foreign currency translation	905	8,646	(7,277)	1,255
Pension liability adjustment, net of tax	(35)	(90)	(35)	(98)
Cash flow hedges, net of tax	(921)	5,430	1,356	3,537
Other comprehensive income (loss)	(51)	13,986	(5,956)	4,694
Comprehensive income	38,900	48,129	151,398	99,583
Comprehensive income attributable to noncontrolling interests	3,071	7,476	9,198	12,207
Comprehensive income attributable to controlling interest	$ 35,829	$ 40,653	$ 142,200	$ 87,376

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Feb. 28, 2017	Feb. 29, 2016	Feb. 28, 2017	Feb. 29, 2016
Operating activities:
Net earnings	$ 38,951	$ 34,143	$ 157,354	$ 94,889
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	21,677	20,761	65,154	62,748
Impairment of long-lived assets			0	25,962
Provision for (benefit from) deferred income taxes	7,609	9,322	9,946	(6,069)
Bad debt (income) expense	(41)	187	110	195
Equity in net income of unconsolidated affiliates, net of distributions	(1,256)	(622)	(182)	(16,524)
Net (gain) loss on sale of assets	1,875	(3,385)	3,358	(7,633)
Stock-based compensation	4,304	3,627	11,264	11,284
Changes in assets and liabilities, net of impact of acquisitions :
Receivables	(44,719)	10,688	(34,920)	76,791
Inventories	(2,346)	37,211	(20,869)	61,032
Prepaid expenses and other current assets	(13,379)	(19,309)	(7,954)	9,324
Other assets	(423)	(1,216)	1,987	(4,019)
Accounts payable and accrued expenses	89,736	13,756	66,849	(17,464)
Other liabilities	718	1,052	2,813	5,352
Net cash provided by operating activities	102,706	106,215	254,910	295,868
Investing activities:
Investment in property, plant and equipment	(21,128)	(14,973)	(52,174)	(75,465)
Acquisitions, net of cash acquired		(31,256)		(34,206)
Investments in unconsolidated affiliates		(3,683)		(5,596)
Proceeds from sale of assets	2	431	958	9,887
Net cash used by investing activities	(21,126)	(49,481)	(51,216)	(105,380)
Financing activities:
Net repayments of short-term borrowings	(330)	(16,716)	(2,484)	(57,728)
Proceeds from long-term debt				921
Principal payments on long-term debt	(218)	(216)	(655)	(644)
Proceeds from issuance of common shares, net of tax withholdings	(12,197)	2,747	(9,225)	5,811
Payments to noncontrolling interests	(3,360)	(4,206)	(10,141)	(9,106)
Repurchase of common shares		(28,352)		(99,848)
Dividends paid	(13,374)	(11,913)	(38,096)	(35,529)
Net cash used by financing activities	(29,479)	(58,656)	(60,601)	(196,123)
Increase (decrease) in cash and cash equivalents	52,101	(1,922)	143,093	(5,635)
Cash and cash equivalents at beginning of period	175,180	27,354	84,188	31,067
Cash and cash equivalents at end of period	$ 227,281	$ 25,432	$ 227,281	$ 25,432

XML

Basis of Presentation

9 Months Ended

Feb. 28, 2017

Basis of Presentation

NOTE A – Basis of Presentation

The consolidated financial statements include the accounts of Worthington Industries, Inc. and consolidated subsidiaries (collectively, “we,” “our,” “Worthington,” or the “Company”). Investments in unconsolidated affiliates are accounted for using the equity method. Significant intercompany accounts and transactions are eliminated.

We own controlling interests in the following five joint ventures: Spartan Steel Coating, LLC (“Spartan”) (52%), TWB Company, L.L.C. (“TWB”) (55%), Worthington Ar1taş Bas1nçl1 Kaplar Sanayi (“Worthington Aritas”) (75%), Worthington Energy Innovations, LLC (“WEI”) (75%), and Worthington Specialty Processing (“WSP”) (51%). These joint ventures are consolidated with the equity owned by the other joint venture members shown as noncontrolling interests in our consolidated balance sheets, and their portions of net earnings and other comprehensive income (loss) (“OCI”) shown as net earnings or comprehensive income attributable to noncontrolling interests in our consolidated statements of earnings and consolidated statements of comprehensive income, respectively.

These unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments, which are of a normal and recurring nature, except those which have been disclosed elsewhere in this Quarterly Report on Form 10-Q, necessary for a fair presentation of the consolidated financial statements for these interim periods, have been included. Operating results for the three and nine months ended February 28, 2017 are not necessarily indicative of the results that may be expected for the fiscal year ending May 31, 2017 (“fiscal 2017”). For further information, refer to the consolidated financial statements and notes thereto included in the Annual Report on Form 10-K for the fiscal year ended May 31, 2016 (“fiscal 2016”) of Worthington Industries, Inc. (the “2016 Form 10-K”).

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Recently Adopted Accounting Standards

In February 2015, amended accounting guidance was issued that revised consolidation requirements in order to provide financial statement users with a more useful presentation of an entity’s economic and operational results. The amended guidance revises the consolidation requirements for limited partnerships, the considerations surrounding the primary beneficiary determination and the consolidation of certain investment funds. The Company adopted this amended guidance on a prospective basis effective June 1, 2016. The adoption of this guidance did not impact our consolidated financial position or results of operations.

In April 2015, amended accounting guidance was issued that requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of the corresponding debt liability itself. The amended guidance does not apply to line-of-credit arrangements. Accordingly, issuance costs related to line-of-credit arrangements will continue to be presented as an asset and amortized ratably over the term of the arrangement. The Company adopted this guidance on a retrospective basis effective June 1, 2016. As a result, debt issuance costs totaling $2,233,000 and $2,491,000 as of February 28, 2017 and May 31, 2016, respectively, have been presented as a component of the carrying amount of long-term debt reported in our consolidated balance sheets. Fiscal 2016 amounts were previously capitalized and reported within other assets.

In September 2015, amended accounting guidance was issued regarding adjustments to provisional amounts recorded in conjunction with a business combination. The amended guidance requires the acquirer to recognize adjustments to provisional amounts identified during the measurement period in the reporting period in which such adjustments are identified, rather than retrospectively adjusting previously reported amounts. The Company adopted this amended guidance on a prospective basis effective June 1, 2016. The adoption of this guidance did not impact our consolidated financial position or results of operations.

In March 2016, amended accounting guidance was issued that simplifies the accounting for share-based payments. The amended guidance impacts several aspects of the accounting for share-based payment transactions, including the income tax consequences, forfeitures, statutory withholding requirements, and classification in the statement of cash flows. The Company early adopted this guidance during the fourth quarter of fiscal 2016. As required for early adoption in an interim period, all adjustments have been reflected as of the beginning of fiscal 2016. Accordingly, income tax expense for the three and nine months ended February 29, 2016 has been restated to reflect excess tax benefits associated with share-based payments totaling $271,000 and $965,000, respectively, in income tax expense, rather than in paid-in capital.

Recently Issued Accounting Standards

In May 2014, amended accounting guidance was issued that replaces most existing revenue recognition guidance under U.S. GAAP. The amended guidance requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. Subsequently, additional guidance was issued on several areas including guidance intended to improve the operability and understandability of the implementation of principal versus agent considerations and clarifications on the identification of performance obligations and implementation of guidance related to licensing. The amended guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The amended guidance permits the use of either the retrospective or cumulative effect transition method. We are in the process of evaluating the effect this guidance will have on the presentation of our consolidated financial statements and related disclosures. While we have not yet identified any material changes in the timing of revenue recognition, our evaluation is ongoing and not complete. We plan to adopt the amended guidance in the first quarter of fiscal 2019 and expect to make a determination as to the method of adoption by the end of fiscal 2017.

In July 2015, amended accounting guidance was issued regarding the measurement of inventory. The amended guidance requires that inventory accounted for under the first-in, first-out (FIFO) or average cost methods be measured at the lower of cost and net realizable value, where net realizable value represents the estimated selling price of inventory in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The amended guidance has no impact on inventory accounted for under the last-in, first-out (LIFO) or retail inventory methods. The amended guidance is effective prospectively for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted as of the beginning of an interim or annual reporting period. We do not expect the adoption of this amended accounting guidance to have a material impact on our consolidated financial position or results of operations.

In February 2016, amended accounting guidance was issued that replaces most existing lease accounting guidance under U.S. GAAP. Among other changes, the amended guidance requires that lease assets and liabilities be recognized on the balance sheet by lessees for those leases classified as operating leases under previous guidance. The amended guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted, and the change is to be applied using a modified retrospective approach as of the beginning of the earliest period presented. We are in the process of evaluating the effect this guidance will have on our consolidated financial position, results of operations and cash flows, and we have not determined the effect of the amended guidance on our ongoing financial reporting.

In March 2016, amended accounting guidance was issued regarding derivative instruments designated as hedging instruments. The amended guidance clarifies that a change in the counterparty to such a hedging instrument does not, in and of itself, require dedesignation of that hedging relationship provided that all other hedge accounting criteria continue to be met. The amended guidance is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted, and the change may be applied either prospectively or retrospectively. We do not expect the adoption of this amended accounting guidance to have a material impact on our consolidated financial position or results of operations.

In June 2016, amended accounting guidance was issued related to the measurement of credit losses on financial instruments. The amended guidance changes the impairment model for most financial assets to require measurement and recognition of expected credit losses for financial assets held. The amended guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. We are in the process of evaluating the effect this guidance will have on our consolidated financial position and results of operations, and we have not determined the effect of the amended guidance on our ongoing financial reporting.

In August 2016, amended accounting guidance was issued to clarify the proper cash flow presentation of certain specific types of cash payments and cash receipts. The amended guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. We are in the process of evaluating the effect this guidance will have on our consolidated financial position, results of operations and cash flows, and we have not determined the effect of the amended guidance on our ongoing financial reporting.

In October 2016, amended accounting guidance was issued that requires the income tax consequences of an intra-entity transfer of an asset other than inventory to be recognized when the transfer occurs. The amended guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. We are in the process of evaluating the effect this guidance will have on our consolidated financial position, results of operations and cash flows, and have not determined the effect of the amended guidance on our ongoing financial reporting.

In November 2016, amended accounting guidance was issued that requires amounts generally described as restricted cash and restricted cash equivalents to be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amended guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. We do not expect the adoption of this amended guidance to have a material impact on our consolidated cash flows.

In January 2017, amended accounting guidance was issued to clarify the definition of a business to provide additional guidance to assist in evaluating whether transactions should be accounted for as an acquisition (or disposal) of either an asset or business. The amended guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. We do not expect the adoption of this amended guidance to have a material impact on our consolidated financial position or results of operations.

In January 2017, amended accounting guidance was issued to simplify the goodwill impairment calculation, by removing Step 2 of the goodwill impairment test. Goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of the goodwill. The amended guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. We are in the process of evaluating the effect this guidance will have on our consolidated financial position and results of operations, and have not determined the effect on our ongoing financial reporting.

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Investments in Unconsolidated Affiliates

9 Months Ended

Feb. 28, 2017

Unconsolidated Affiliates

Investments in Unconsolidated Affiliates

NOTE B – Investments in Unconsolidated Affiliates

Our investments in affiliated companies that we do not control, either through majority ownership or otherwise, are accounted for using the equity method. These include ArtiFlex Manufacturing, LLC (“ArtiFlex”) (50%), Clarkwestern Dietrich Building Systems LLC (“ClarkDietrich”) (25%), Samuel Steel Pickling Company (31.25%), Serviacero Planos, S. de R. L. de C.V. (“Serviacero”) (50%), Worthington Armstrong Venture (“WAVE”) (50%), and Zhejiang Nisshin Worthington Precision Specialty Steel Co., Ltd. (10%).

We received distributions from unconsolidated affiliates totaling $84,183,000 during the nine months ended February 28, 2017. We have received cumulative distributions from WAVE in excess of our investment balance totaling $67,722,000 at February 28, 2017. In accordance with the applicable accounting guidance, these excess distributions are reclassified to the liabilities section of our consolidated balance sheet. We will continue to record our equity in the net income of WAVE as a debit to the investment account, and if it becomes positive, it will again be shown as an asset on our consolidated balance sheet. If it becomes obvious that any excess distribution may not be returned (upon joint venture liquidation or otherwise), we will recognize any balance classified as a liability as income immediately.

We use the “cumulative earnings” approach for determining cash flow presentation of distributions from our unconsolidated joint ventures. Distributions received are included in our consolidated statements of cash flows as operating activities, unless the cumulative distributions received, less distributions received in prior periods that

were determined to be returns of investment, exceed our portion of the cumulative equity in the net earnings of the joint venture, in which case the excess distributions are deemed to be returns of the investment and are classified as investing activities in our consolidated statements of cash flows.

Combined financial information for our unconsolidated affiliates is summarized as follows:

(in thousands)	February 28, 2017		May 31, 2016
Cash	$	62,723	$	112,122
Other current assets		511,798		446,796
Noncurrent assets		365,343		352,370
Total assets	$	939,864	$	911,288
Current liabilities	$	141,266	$	112,491
Short-term borrowings		6,285		11,398
Current maturities of long-term debt		4,207		3,297
Long-term debt		268,032		266,942
Other noncurrent liabilities		20,558		21,034
Equity		499,516		496,126
Total liabilities and equity	$	939,864	$	911,288

	Three Months Ended				Nine Months Ended
(in thousands)	February 28, 2017		February 29, 2016		February 28, 2017		February 29, 2016
Net sales	$	384,261	$	376,448	$	1,188,568	$	1,170,096
Gross margin		84,645		83,251		305,383		257,036
Operating income		55,140		54,801		216,902		171,857
Depreciation and amortization		6,983		7,905		20,776		24,070
Interest expense		2,089		2,038		6,388		6,333
Income tax expense		5,065		2,625		16,128		7,348
Net earnings		49,098		51,994		198,609		186,063

The financial results of WSP have been included in the amounts presented in the tables above through March 1, 2016. Effective March 1, 2016, the Company obtained effective control over the operations of WSP. As a result, WSP’s results have been consolidated within the financial results of Steel Processing since that date with the minority member’s portion of net earnings eliminated within net earnings attributable to noncontrolling interests.

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Impairment of Long-Lived Assets

9 Months Ended

Feb. 28, 2017

Impairment of Long-Lived Assets

NOTE C – Impairment of Long-Lived Assets

We review the carrying value of our long-lived assets, including intangible assets with definite useful lives, for impairment whenever events or changes in circumstances indicate that the carrying value of an asset or asset group may not be recoverable.

Impairment testing of long-lived assets with definite useful lives involves a comparison of the sum of the undiscounted future cash flows of the asset or asset group to its respective carrying amount. If the sum of the undiscounted future cash flows exceeds the carrying amount, then no impairment exists. If the carrying amount exceeds the sum of the undiscounted future cash flows, then a second step is performed to determine the amount of impairment, which would be recorded as an impairment charge in our consolidated statement of earnings.

No impairment charges were recognized during the nine months ended February 28, 2017.

Impairment charges during the nine months ended February 29, 2016, consisted of $3,000,000 related to the then remaining long-lived assets of the Company’s Engineered Cabs facility in Florence, South Carolina, which ceased operations on September 30, 2015, and $22,962,000 for the impairment of the long-lived assets of two oil & gas equipment facilities triggered by a significant decrease in the long-term cash flow projections of that business. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s 2016 Form 10-K.

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Restructuring and Other Expense

9 Months Ended

Feb. 28, 2017

Restructuring and Other Expense

NOTE D – Restructuring and Other Expense

We consider restructuring activities to be programs whereby we fundamentally change our operations such as closing and consolidating manufacturing facilities, moving manufacturing of a product to another location, and rationalizing headcount.

A progression of the liabilities associated with our restructuring activities, combined with a reconciliation to the restructuring and other expense financial statement caption in our consolidated statement of earnings for the nine months ended February 28, 2017 is summarized as follows:

(in thousands)	Beginning Balance		Expense		Payments			Adjustments		Ending Balance (1)
Early retirement and severance	$	1,831	$	1,795	$	(3,071	)	$	58	$	613
Facility exit and other costs		653		3,190		(3,369	)		45		519
	$	2,484		4,985	$	(6,440	)	$	103	$	1,132
Net loss on sale of assets				1,009
Restructuring and other expense			$	5,994

1) The total liability as of February 28, 2017 is expected to be paid in the next twelve months.

During the nine months ended February 28, 2017, the following activities were taken related to the Company’s restructuring activities:

• The Company announced certain organizational changes impacting its Pressure Cylinders operating segment, including the consolidation of the Cryogenics business unit into the Industrial Products business unit. In connection with this matter, the Company recognized severance expense of $1,356,000 related to permanent headcount reductions.

• In connection with the closure of the Company’s stainless steel business, Precision Specialty Metals, Inc. (“PSM”), the Company recognized $1,666,000 of facility exit costs and a credit to severance expense of $106,000.

• In connection with the closure of the Engineered Cabs facility in Florence, South Carolina, the Company recognized facility exit costs of $459,000. The Company also recognized a net loss of $101,000 related to the disposal of assets.

• In connection with the consolidation of the Company’s existing cryogenics facility in Istanbul, Turkey, to its Greenfield facility in Bandirma, Turkey, the Company recognized facility exit costs of $1,113,000 and severance expense of $640,000. The consolidation is substantially complete.

• The Company sold the remaining real estate of the legacy Advanced Component Technologies, Inc. (“ACT”) business within Engineered Cabs for cash proceeds of $700,000, resulting in a loss of $822,000.

• In connection with other non-significant restructuring activities, the Company recognized a credit to severance expense of $95,000 and a credit to facility exit costs of $48,000. The Company also recognized a net loss on disposal of assets of $86,000.

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Contingent Liabilities and Commitments

9 Months Ended

Feb. 28, 2017

Contingent Liabilities and Commitments

NOTE E – Contingent Liabilities and Commitments

We are defendants in certain legal actions. In the opinion of management, the outcome of these actions, which is not clearly determinable at the present time, would not significantly affect our consolidated financial position or future results of operations or cash flows. We believe that environmental issues will not have a material effect on our capital expenditures, consolidated financial position or future results of operations or cash flows.

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Guarantees

9 Months Ended

Feb. 28, 2017

Guarantees

NOTE F – Guarantees

We do not have guarantees that we believe are reasonably likely to have a material current or future effect on our consolidated financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. However, as of February 28, 2017, we were party to an operating lease for an aircraft in which we have guaranteed a residual value at the termination of the lease. The maximum obligation under the terms of this guarantee was approximately $9,566,000 at February 28, 2017. Based on current facts and circumstances, we have estimated the likelihood of payment pursuant to this guarantee is not probable and, therefore, no amount has been recognized in our consolidated financial statements.

We also had in place $15,893,000 of outstanding stand-by letters of credit issued to third-party service providers at February 28, 2017. The fair value of these guarantee instruments, based on premiums paid, was not material and no amounts were drawn against them at February 28, 2017.

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Debt and Receivables Securitization

9 Months Ended

Feb. 28, 2017

Debt and Receivables Securitization

NOTE G – Debt and Receivables Securitization

We maintain a $500,000,000 multi-year revolving credit facility (the “Credit Facility”) with a group of lenders that matures in April 2020. Borrowings under the Credit Facility typically have maturities of less than one year. However, we can extend the term of amounts borrowed by renewing these borrowings for the term of the Credit Facility. We have the option to borrow at rates equal to an applicable margin over the LIBOR, Prime rate or Fed Funds rate. The applicable margin is determined by our credit rating. There were no borrowings outstanding under the Credit Facility at February 28, 2017. As discussed in “NOTE F – Guarantees,” we provided $15,893,000 in letters of credit for third-party beneficiaries as of February 28, 2017. While not drawn against at February 28, 2017, $13,600,000 of these letters of credit were issued against availability under the Credit Facility, leaving $486,400,000 available under the Credit Facility at February 28, 2017.

We also maintain a $100,000,000 revolving trade accounts receivable securitization facility (the “AR Facility”) which matures in January 2018. Pursuant to the terms of the AR Facility, certain of our subsidiaries sell their accounts receivable without recourse, on a revolving basis, to Worthington Receivables Corporation (“WRC”), a wholly-owned, consolidated, bankruptcy-remote subsidiary. In turn, WRC may sell without recourse, on a revolving basis, up to $100,000,000 of undivided ownership interests in this pool of accounts receivable to a third-party bank. We retain an undivided interest in this pool and are subject to risk of loss based on the collectability of the receivables from this retained interest. Because the amount eligible to be sold excludes receivables more than 90 days past due, receivables offset by an allowance for doubtful accounts due to bankruptcy or other cause, concentrations over certain limits with specific customers and certain reserve amounts, we believe additional risk of loss is minimal. As of February 28, 2017, no undivided ownership interests in this pool of accounts receivable had been sold.

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Other Comprehensive Income

9 Months Ended

Feb. 28, 2017

Other Comprehensive Income

NOTE H – Other Comprehensive Income

The following table summarizes the tax effects on each component of OCI for the three months ended:

	February 28, 2017								February 29, 2016
	Before-Tax			Tax		Net-of-Tax			Before-Tax			Tax			Net-of-Tax
(in thousands)
Foreign currency translation	$	905		$	-	$	905		$	8,646		$	-		$	8,646
Pension liability adjustment		(117	)		82		(35	)		(90	)		-			(90	)
Cash flow hedges		(1,299	)		378		(921	)		8,505			(3,075	)		5,430
Other comprehensive income (loss)	$	(511	)	$	460	$	(51	)	$	17,061		$	(3,075	)	$	13,986

The following table summarizes the tax effects on each component of OCI for the nine months ended:

	February 28, 2017									February 29, 2016
	Before-Tax			Tax			Net-of-Tax			Before-Tax			Tax			Net-of-Tax
(in thousands)
Foreign currency translation	$	(7,277	)	$	-		$	(7,277	)	$	1,255		$	-		$	1,255
Pension liability adjustment		(117	)		82			(35	)		(98	)		-			(98	)
Cash flow hedges		1,836			(480	)		1,356			5,938			(2,401	)		3,537
Other comprehensive income (loss)	$	(5,558	)	$	(398	)	$	(5,956	)	$	7,095		$	(2,401	)	$	4,694

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Changes in Equity

9 Months Ended

Feb. 28, 2017

Changes in Equity

NOTE I – Changes in Equity

The following table provides a summary of the changes in total equity, shareholders’ equity attributable to controlling interest, and equity attributable to noncontrolling interests for the nine months ended February 28, 2017:

	Controlling Interest
(in thousands)	Additional Paid-in Capital			Accumulated Other Comprehensive Loss, Net of Tax			Retained Earnings			Total			Non- controlling Interests			Total
Balance at May 31, 2016	$	298,984		$	(28,565	)	$	522,952		$	793,371		$	126,475		$	919,846
Net earnings		-			-			148,021			148,021			9,333			157,354
Other comprehensive loss		-			(5,821	)		-			(5,821	)		(135	)		(5,956	)
Common shares issued, net of withholding tax		(9,225	)		-			-			(9,225	)		-			(9,225	)
Common shares in NQ plans		1,058			-			-			1,058			-			1,058
Stock-based compensation		10,599			-			-			10,599			-			10,599
Cash dividends declared		-			-			(38,600	)		(38,600	)		-			(38,600	)
Dividends to noncontrolling interest		-			-			-			-			(10,141	)		(10,141	)
Purchase of noncontrolling interest in dHybrid (1)		(935	)		-			-			(935	)		(1,953	)		(2,888	)
Balance at February 28, 2017	$	300,481		$	(34,386	)	$	632,373		$	898,468		$	123,579		$	1,022,047

1) On January 1, 2017, the Company acquired the minority membership interests in dHybrid Systems, LLC (“dHybrid”) from the noncontrolling member in a non-cash transaction.

The components of the changes in accumulated other comprehensive loss were as follows:

(in thousands)	Foreign Currency Translation			Pension Liability Adjustment			Cash Flow Hedges			Accumulated Other Comprehensive Loss
Balance as of May 31, 2016	$	(18,728	)	$	(17,061	)	$	7,224		$	(28,565	)
Other comprehensive income (loss) before reclassifications		(7,142	)		(117	)		10,112			2,853
Reclassification adjustments to income (a)		-			-			(8,276	)		(8,276	)
Income taxes		-			82			(480	)		(398	)
Balance as of February 28, 2017	$	(25,870	)	$	(17,096	)	$	8,580		$	(34,386	)

(a) The statement of earnings classification of amounts reclassified to income for cash flow hedges is disclosed in “NOTE N – Derivative Instruments and Hedging Activities.”

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Stock-Based Compensation

9 Months Ended

Feb. 28, 2017

Stock-Based Compensation

NOTE J – Stock-Based Compensation

Non-Qualified Stock Options

During the nine months ended February 28, 2017, we granted non-qualified stock options covering a total of 111,000 common shares under our stock-based compensation plans. The option price of $42.30 per share was equal to the market price of the underlying common shares at the grant date. The fair value of these stock options, based on the Black-Scholes option-pricing model, calculated at the grant date, was $11.60 per share. The calculated pre-tax stock-based compensation expense for these stock options, after an estimate for forfeitures, is $1,146,000 and will be recognized on a straight-line basis over the three-year vesting period. The following assumptions were used to value these stock options:

Dividend yield	2.59	%
Expected volatility	36.86	%
Risk-free interest rate	1.15	%
Expected term (years)	6.0

Expected volatility is based on the historical volatility of our common shares and the risk-free interest rate is based on the United States Treasury strip rate for the expected term of the stock options. The expected term was developed using historical exercise experience.

Service-Based Restricted Common Shares

During the nine months ended February 28, 2017, we granted an aggregate of 520,850 service-based restricted common shares under our stock-based compensation plans. The fair value of these restricted common shares was equal to the weighted average closing market price of the underlying common shares on the date of grant, or $42.27 per share. The calculated pre-tax stock-based compensation expense for these restricted common shares, after an estimate for forfeitures, is $19,695,000 and will be recognized on a straight-line basis over the three-year service-based vesting period.

Performance Share Awards

We have awarded performance shares to certain key employees under our stock-based compensation plans. These performance shares are earned based on the level of achievement with respect to corporate targets for cumulative corporate economic value added, earnings per share growth and, in the case of business unit executives, business unit operating income targets for the three-year periods ending May 31, 2017, 2018 and 2019. These performance share awards will be paid, to the extent earned, in common shares of the Company in the fiscal quarter following the end of the applicable three-year performance period. The fair values of our performance shares are determined by the closing market prices of the underlying common shares at their respective grant dates and the pre-tax stock-based compensation expense is based on our periodic assessment of the probability of the targets being achieved and our estimate of the number of common shares that will ultimately be issued. During the nine months ended February 28, 2017, we granted performance share awards covering an aggregate of 66,200 common shares (at target levels). The calculated pre-tax stock-based compensation expense for these performance shares is $2,973,000 and will be recognized over the three-year performance period.

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Income Taxes

9 Months Ended

Feb. 28, 2017

Income Taxes

NOTE K – Income Taxes

Income tax expense for the nine months ended February 28, 2017 and February 29, 2016 reflected estimated annual effective income tax rates of 27.2% and 29.6%, respectively. The annual effective income tax rates exclude any impact from the inclusion of net earnings attributable to noncontrolling interests in our consolidated statements of earnings. Net earnings attributable to noncontrolling interests are primarily a result of our WSP, Spartan, Worthington Aritas, and TWB consolidated joint ventures. The earnings attributable to the noncontrolling interests in WSP, Spartan and TWB’s U.S. operations do not generate tax expense to Worthington since the investors in WSP, Spartan and TWB’s U.S. operations are taxed directly based on the earnings attributable to them. The tax expense of Worthington Aritas (a foreign corporation), and TWB’s wholly-owned foreign corporations, is reported in our consolidated tax expense. Management is required to estimate the annual effective income tax rate based upon its forecast of annual pre-tax income for domestic and foreign operations. Our actual effective income tax rate for fiscal 2017 could be materially different from the forecasted rate as of February 28, 2017.

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Earnings per Share

9 Months Ended

Feb. 28, 2017

Earnings per Share

NOTE L – Earnings per Share

The following table sets forth the computation of basic and diluted earnings per share attributable to controlling interest for the three and nine months ended February 28, 2017 and February 29, 2016:

	Three Months Ended				Nine Months Ended
(in thousands, except per share amounts)	February 28, 2017		February 29, 2016		February 28, 2017		February 29, 2016
Numerator (basic & diluted):
Net earnings attributable to controlling interest-income available to common shareholders	$	35,889	$	29,847	$	148,021	$	85,191
Denominator:
Denominator for basic earnings per share attributable to controlling interest—weighted average common shares		62,750		61,747		62,325		62,810
Effect of dilutive securities		2,227		2,124		2,433		2,113
Denominator for diluted earnings per share attributable to controlling interest—adjusted weighted average common shares		64,977		63,871		64,758		64,923
Basic earnings per share attributable to controlling interest	$	0.57	$	0.48	$	2.37	$	1.36
Diluted earnings per share attributable to controlling interest	$	0.55	$	0.47	$	2.29	$	1.31

Stock options covering 107,224 and 352,830 common shares for the three months ended February 28, 2017 and February 29, 2016, respectively, and 97,638 and 343,454 common shares for the nine months ended February 28, 2017 and February 29, 2016, respectively, have been excluded from the computation of diluted earnings per share because the effect of their inclusion would have been “anti-dilutive.”

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Segment Operations

9 Months Ended

Feb. 28, 2017

Segment Operations

NOTE M – Segment Operations

Summarized financial information for our reportable segments is shown in the following table:

	Three Months Ended						Nine Months Ended
(in thousands)	February 28, 2017			February 29, 2016			February 28, 2017			February 29, 2016
Net sales
Steel Processing	$	478,174		$	419,026		$	1,492,654		$	1,377,638
Pressure Cylinders		198,433			200,721			598,303			626,288
Engineered Cabs		23,547			25,553			71,591			92,869
Other		3,282			1,780			6,217			8,248
Total net sales	$	703,436		$	647,080		$	2,168,765		$	2,105,043
Operating income (loss)
Steel Processing	$	26,026		$	21,294		$	116,256		$	71,574
Pressure Cylinders		10,071			8,969			35,480			15,479
Engineered Cabs		(2,001	)		(4,053	)		(7,225	)		(17,634	)
Other		224			(1,138	)		(2,249	)		(1,379	)
Total operating income	$	34,320		$	25,072		$	142,262		$	68,040
Impairment of long-lived assets
Steel Processing	$	-		$	-		$	-		$	-
Pressure Cylinders		-			-			-			22,962
Engineered Cabs		-			-			-			3,000
Other		-			-			-			-
Total impairment of long-lived assets	$	-		$	-		$	-		$	25,962
Restructuring and other expense (income)
Steel Processing	$	212		$	1,068		$	1,496		$	3,788
Pressure Cylinders		1,056			(1,031	)		3,165			(316	)
Engineered Cabs		169			416			1,379			3,059
Other		(43	)		249			(46	)		(1,237	)
Total restructuring and other expense	$	1,394		$	702		$	5,994		$	5,294

(in thousands)	February 28, 2017		May 31, 2016
Total assets
Steel Processing	$	885,244	$	819,853
Pressure Cylinders		751,131		787,786
Engineered Cabs		65,633		75,124
Other		545,167		378,501
Total assets	$	2,247,175	$	2,061,264

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Derivative Instruments and Hedging Activities

9 Months Ended

Feb. 28, 2017

Derivative Instruments and Hedging Activities

NOTE N – Derivative Instruments and Hedging Activities

We utilize derivative instruments to manage exposure to certain risks related to our ongoing operations. The primary risks managed through the use of derivative instruments include interest rate risk, foreign currency exchange rate risk and commodity price risk. While certain of our derivative instruments are designated as hedging instruments, we also enter into derivative instruments that are designed to hedge a risk, but are not designated as hedging instruments and therefore do not qualify for hedge accounting. These derivative instruments are adjusted to current fair value through earnings at the end of each period.

Interest Rate Risk Management – We are exposed to the impact of interest rate changes. Our objective is to manage the impact of interest rate changes on cash flows and the market value of our borrowings. We utilize a mix of debt maturities along with both fixed-rate and variable-rate debt to manage changes in interest rates. In addition, we enter into interest rate swaps to further manage our exposure to interest rate variations related to our borrowings and to lower our overall borrowing costs.

Foreign Currency Rate Risk Management – We conduct business in several major international currencies and are therefore subject to risks associated with changing foreign currency exchange rates. We enter into various contracts that change in value as foreign currency exchange rates change to manage this exposure. Such contracts limit exposure to both favorable and unfavorable currency fluctuations. The translation of foreign currencies into United States dollars also subjects us to exposure related to fluctuating foreign currency exchange rates; however, derivative instruments are not used to manage this risk.

Commodity Price Risk Management – We are exposed to changes in the price of certain commodities, including steel, natural gas, zinc and other raw materials, and our utility requirements. Our objective is to reduce earnings and cash flow volatility associated with forecasted purchases and sales of these commodities to allow management to focus its attention on business operations. Accordingly, we enter into derivative contracts to manage the associated price risk.

We are exposed to counterparty credit risk on all of our derivative instruments. Accordingly, we have established and maintain strict counterparty credit guidelines. We have credit support agreements in place with certain counterparties to limit our credit exposure. These agreements require either party to post cash collateral if its cumulative market position exceeds a predefined liability threshold. Amounts posted to the margin accounts accrue interest at market rates and are required to be refunded in the period in which the cumulative market position falls below the required threshold. We do not have significant exposure to any one counterparty, and management believes the risk of loss is remote and, in any event, would not be material.

Refer to “NOTE O – Fair Value” for additional information regarding the accounting treatment for our derivative instruments, as well as how fair value is determined.

The following table summarizes the fair value of our derivative instruments and the respective financial statement caption in which they were recorded in our consolidated balance sheet at February 28, 2017:

	Asset Derivatives				Liability Derivatives
(in thousands)	Balance Sheet Location		Fair Value		Balance Sheet Location		Fair Value
Derivatives designated as hedging instruments:
Commodity contracts		Receivables	$	14,053		Accounts payable	$	-
		Other assets		176		Other liabilities		-
				14,229				-
Interest rate contracts		Receivables		-		Accounts payable		83
		Other assets		-		Other liabilities		228
				-				311
Totals			$	14,229			$	311
Derivatives not designated as hedging instruments:
Commodity contracts		Receivables	$	2,964		Accounts payable	$	233
		Other assets		-		Other liabilities		36
				2,964				269
Foreign currency contracts		Receivables		511		Accounts payable		-
Totals			$	3,475			$	269
Total derivative instruments			$	17,704			$	580

The amounts in the table above reflect the fair value of the Company’s derivative instruments on a net basis. Had these amounts been recognized on a gross basis, the aggregate impact would have been a $91,000 increase in receivables with a corresponding increase in accounts payable.

The following table summarizes the fair value of our derivative instruments and the financial statement caption in which they were recorded in the consolidated balance sheet at May 31, 2016:

	Asset Derivatives				Liability Derivatives
(in thousands)	Balance Sheet Location		Fair Value		Balance Sheet Location		Fair Value
Derivatives designated as hedging instruments:
Commodity contracts		Receivables	$	13,224		Accounts payable	$	696
		Other assets		3,589		Other liabilities		80
				16,813				776
Interest rate contracts		Receivables		-		Accounts payable		155
		Other assets		-		Other liabilities		306
				-				461
Totals			$	16,813			$	1,237
Derivatives not designated as hedging instruments:
Commodity contracts		Receivables	$	4,660		Accounts payable	$	761
		Other assets		317		Other liabilities		-
				4,977				761
Foreign currency contracts		Receivables		-		Accounts payable		15
				-				15
Totals			$	4,977			$	776
Total derivative instruments			$	21,790			$	2,013

The amounts in the table above reflect the fair value of the Company’s derivative instruments on a net basis. Had these amounts been recognized on a gross basis, the aggregate impact would have been a $300,000 decrease in receivables with a corresponding decrease in accounts payable.

Cash Flow Hedges

We enter into derivative instruments to hedge our exposure to changes in cash flows attributable to interest rates and commodity price fluctuations associated with certain forecasted transactions. These derivative instruments are designated and qualify as cash flow hedges. Accordingly, the effective portion of the gain or loss on the derivative instrument is reported as a component of OCI and reclassified into earnings in the same financial statement caption associated with the forecasted transaction and in the same period during which the hedged transaction affects earnings. The ineffective portion of the gain or loss on the derivative instrument is recognized in earnings immediately.

The following table summarizes our cash flow hedges outstanding at February 28, 2017:

(in thousands)	Notional Amount		Maturity Date
Commodity contracts	$	40,570	March 2017 - December 2018
Interest rate contracts		16,183	September 2019

The following table summarizes the gain (loss) recognized in OCI and the gain (loss) reclassified from accumulated OCI into earnings for derivative instruments designated as cash flow hedges during the three months ended February 28, 2017 and February 29, 2016:

				Location of				Location of
				Gain (Loss)	Gain (Loss)			Gain	Gain
				Reclassified	Reclassified			(Ineffective	(Ineffective
	Gain (Loss)			from	from			Portion)	Portion)
	Recognized			Accumulated	Accumulated			and Excluded	and Excluded
	in OCI			OCI	OCI			from	from
	(Effective			(Effective	(Effective			Effectiveness	Effectiveness
(in thousands)	Portion)			Portion)	Portion)			Testing	Testing
For the three months ended February 28, 2017:
Commodity contracts	$	2,037		Cost of goods sold	$	3,397		Cost of goods sold	$	-
Interest rate contracts		25		Interest expense		(36	)	Interest expense		-
Totals	$	2,062			$	3,361			$	-
For the three months ended February 29, 2016:
Commodity contracts	$	707		Cost of goods sold	$	(7,775	)	Cost of goods sold	$	-
Interest rate contracts		(107	)	Interest expense		(130	)	Interest expense		-
Totals		600				(7,905	)			-

The following table summarizes the gain (loss) recognized in OCI and the gain (loss) reclassified from accumulated OCI into earnings for derivative instruments designated as cash flow hedges during the nine months ended February 28, 2017 and February 29, 2016:

				Location of				Location of
				Gain (Loss)	Gain (Loss)			Gain	Gain
				Reclassified	Reclassified			(Ineffective	(Ineffective
	Gain (Loss)			from	from			Portion)	Portion)
	Recognized			Accumulated	Accumulated			and Excluded	and Excluded
	in OCI			OCI	OCI			from	from
	(Effective			(Effective	(Effective			Effectiveness	Effectiveness
(in thousands)	Portion)			Portion)	Portion)			Testing	Testing
For the nine months ended February 28, 2017:
Commodity contracts	$	9,963		Cost of goods sold	$	8,882		Interest expense	$	-
Interest rate contracts		149		Interest expense		(606	)	Cost of goods sold		-
Totals	$	10,112			$	8,276			$	-
For the nine months ended February 29, 2016:
Commodity contracts	$	(17,629	)	Cost of goods sold	$	(23,422	)	Interest expense	$	-
Interest rate contracts		(274	)	Interest expense		(415	)	Cost of goods sold		-
Foreign currency contracts		-		Miscellaneous income, net		(4	)	Miscellaneous income, net		-
Totals	$	(17,903	)		$	(23,841	)		$	-

The estimated net amount of the losses recognized in accumulated OCI at February 28, 2017 expected to be reclassified into net earnings within the succeeding twelve months is $10,088,000 (net of tax of $5,725,000). This amount was computed using the fair value of the cash flow hedges at February 28, 2017, and will change before actual reclassification from OCI to net earnings during the fiscal years ending May 31, 2017 and 2018.

Economic (Non-designated) Hedges

We enter into foreign currency contracts to manage our foreign currency exchange rate exposure related to inter-company and financing transactions that do not meet the requirements for hedge accounting treatment. We also enter into certain commodity contracts that do not qualify for hedge accounting treatment. Accordingly, these derivative instruments are adjusted to current market value at the end of each period through earnings.

The following table summarizes our economic (non-designated) derivative instruments outstanding at February 28, 2017:

(in thousands)	Notional Amount		Maturity Date(s)
Commodity contracts	$	22,971	March 2017 - December 2018
Foreign currency contracts		15,450	March 2017 - August 2017

The following table summarizes the gain recognized in earnings for economic (non-designated) derivative financial instruments during the three months ended February 28, 2017 and February 29, 2016:

			Gain (Loss) Recognized
			in Earnings for the
			Three Months Ended
(in thousands)	Location of Gain (Loss) Recognized in Earnings		February 28, 2017			February 29, 2016
Commodity contracts		Cost of goods sold	$	258		$	173
Foreign currency contracts		Miscellaneous income, net		(172	)		47
Total			$	86		$	220

The following table summarizes the gain (loss) recognized in earnings for economic (non-designated) derivative financial instruments during the nine months ended February 28, 2017 and February 29, 2016:

			Gain (Loss) Recognized
			in Earnings for the
			Nine Months Ended
(in thousands)	Location of Gain (Loss) Recognized in Earnings		February 28, 2017			February 29, 2016
Commodity contracts		Cost of goods sold	$	5,169		$	(7,972	)
Foreign currency contracts		Miscellaneous income, net		(837	)		117
Total			$	4,332		$	(7,855	)

The gain (loss) on the foreign currency derivatives significantly offsets the gain (loss) on the hedged item.

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Fair Value

9 Months Ended

Feb. 28, 2017

Fair Value

NOTE O – Fair Value

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is an exit price concept that assumes an orderly transaction between willing market participants and is required to be based on assumptions that market participants would use in pricing an asset or a liability. Current accounting guidance establishes a three-tier fair value hierarchy as a basis for considering such assumptions and for classifying the inputs used in the valuation methodologies. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair values are as follows:

Level 1	–	Observable prices in active markets for identical assets and liabilities.
Level 2	–	Inputs other than quoted prices included within Level 1 that are observable for the assets and liabilities, either directly or indirectly.
Level 3	–	Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities.

Recurring Fair Value Measurements

At February 28, 2017, our 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 instruments (1)	$	-	$	17,704	$	-	$	17,704
Total assets	$	-	$	17,704	$	-	$	17,704
Liabilities
Derivative instruments (1)	$	-	$	580	$	-	$	580
Contingent consideration obligations (2)		-		-		4,557		4,557
Total liabilities	$	-	$	580	$	4,557	$	5,137

At May 31, 2016, our 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 instruments (1)	$	-	$	21,790	$	-	$	21,790
Total assets	$	-	$	21,790	$	-	$	21,790
Liabilities
Derivative instruments (1)	$	-	$	2,013	$	-	$	2,013
Contingent consideration obligations (2)		-		-		4,519		4,519
Total liabilities	$	-	$	2,013	$	4,519	$	6,532

(1) The fair value of our derivative instruments 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 N – 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 measurement was based on Level 3 inputs not observable in the market.

The fair value of non-derivative financial instruments included in the carrying amounts of cash and cash equivalents, receivables, notes receivable, income taxes receivable, other assets, accounts payable, short-term borrowings, accrued compensation, contributions to employee benefit plans and related taxes, other accrued items, income taxes payable and other liabilities approximate carrying value due to their short-term nature. The fair value of long-term debt, including current maturities, based upon models utilizing market observable (Level 2) inputs and credit risk, was $602,907,000 and $609,245,000 at February 28, 2017 and May 31, 2016, respectively. The carrying amount of long-term debt, including current maturities, was $576,880,000 and $578,353,000 at February 28, 2017 and May 31, 2016, respectively.

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Basis of Presentation (Policies)

9 Months Ended

Feb. 28, 2017

Recently Adopted Accounting Standards

Recently Adopted Accounting Standards

In February 2015, amended accounting guidance was issued that revised consolidation requirements in order to provide financial statement users with a more useful presentation of an entity’s economic and operational results. The amended guidance revises the consolidation requirements for limited partnerships, the considerations surrounding the primary beneficiary determination and the consolidation of certain investment funds. The Company adopted this amended guidance on a prospective basis effective June 1, 2016. The adoption of this guidance did not impact our consolidated financial position or results of operations.

In April 2015, amended accounting guidance was issued that requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of the corresponding debt liability itself. The amended guidance does not apply to line-of-credit arrangements. Accordingly, issuance costs related to line-of-credit arrangements will continue to be presented as an asset and amortized ratably over the term of the arrangement. The Company adopted this guidance on a retrospective basis effective June 1, 2016. As a result, debt issuance costs totaling $2,233,000 and $2,491,000 as of February 28, 2017 and May 31, 2016, respectively, have been presented as a component of the carrying amount of long-term debt reported in our consolidated balance sheets. Fiscal 2016 amounts were previously capitalized and reported within other assets.

In September 2015, amended accounting guidance was issued regarding adjustments to provisional amounts recorded in conjunction with a business combination. The amended guidance requires the acquirer to recognize adjustments to provisional amounts identified during the measurement period in the reporting period in which such adjustments are identified, rather than retrospectively adjusting previously reported amounts. The Company adopted this amended guidance on a prospective basis effective June 1, 2016. The adoption of this guidance did not impact our consolidated financial position or results of operations.

In March 2016, amended accounting guidance was issued that simplifies the accounting for share-based payments. The amended guidance impacts several aspects of the accounting for share-based payment transactions, including the income tax consequences, forfeitures, statutory withholding requirements, and classification in the statement of cash flows. The Company early adopted this guidance during the fourth quarter of fiscal 2016. As required for early adoption in an interim period, all adjustments have been reflected as of the beginning of fiscal 2016. Accordingly, income tax expense for the three and nine months ended February 29, 2016 has been restated to reflect excess tax benefits associated with share-based payments totaling $271,000 and $965,000, respectively, in income tax expense, rather than in paid-in capital.

Recently Issued Accounting Standards

Recently Issued Accounting Standards

In May 2014, amended accounting guidance was issued that replaces most existing revenue recognition guidance under U.S. GAAP. The amended guidance requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. Subsequently, additional guidance was issued on several areas including guidance intended to improve the operability and understandability of the implementation of principal versus agent considerations and clarifications on the identification of performance obligations and implementation of guidance related to licensing. The amended guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The amended guidance permits the use of either the retrospective or cumulative effect transition method. We are in the process of evaluating the effect this guidance will have on the presentation of our consolidated financial statements and related disclosures. While we have not yet identified any material changes in the timing of revenue recognition, our evaluation is ongoing and not complete. We plan to adopt the amended guidance in the first quarter of fiscal 2019 and expect to make a determination as to the method of adoption by the end of fiscal 2017.

In July 2015, amended accounting guidance was issued regarding the measurement of inventory. The amended guidance requires that inventory accounted for under the first-in, first-out (FIFO) or average cost methods be measured at the lower of cost and net realizable value, where net realizable value represents the estimated selling price of inventory in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The amended guidance has no impact on inventory accounted for under the last-in, first-out (LIFO) or retail inventory methods. The amended guidance is effective prospectively for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted as of the beginning of an interim or annual reporting period. We do not expect the adoption of this amended accounting guidance to have a material impact on our consolidated financial position or results of operations.

In February 2016, amended accounting guidance was issued that replaces most existing lease accounting guidance under U.S. GAAP. Among other changes, the amended guidance requires that lease assets and liabilities be recognized on the balance sheet by lessees for those leases classified as operating leases under previous guidance. The amended guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted, and the change is to be applied using a modified retrospective approach as of the beginning of the earliest period presented. We are in the process of evaluating the effect this guidance will have on our consolidated financial position, results of operations and cash flows, and we have not determined the effect of the amended guidance on our ongoing financial reporting.

In March 2016, amended accounting guidance was issued regarding derivative instruments designated as hedging instruments. The amended guidance clarifies that a change in the counterparty to such a hedging instrument does not, in and of itself, require dedesignation of that hedging relationship provided that all other hedge accounting criteria continue to be met. The amended guidance is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted, and the change may be applied either prospectively or retrospectively. We do not expect the adoption of this amended accounting guidance to have a material impact on our consolidated financial position or results of operations.

In June 2016, amended accounting guidance was issued related to the measurement of credit losses on financial instruments. The amended guidance changes the impairment model for most financial assets to require measurement and recognition of expected credit losses for financial assets held. The amended guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. We are in the process of evaluating the effect this guidance will have on our consolidated financial position and results of operations, and we have not determined the effect of the amended guidance on our ongoing financial reporting.

In August 2016, amended accounting guidance was issued to clarify the proper cash flow presentation of certain specific types of cash payments and cash receipts. The amended guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. We are in the process of evaluating the effect this guidance will have on our consolidated financial position, results of operations and cash flows, and we have not determined the effect of the amended guidance on our ongoing financial reporting.

In October 2016, amended accounting guidance was issued that requires the income tax consequences of an intra-entity transfer of an asset other than inventory to be recognized when the transfer occurs. The amended guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. We are in the process of evaluating the effect this guidance will have on our consolidated financial position, results of operations and cash flows, and have not determined the effect of the amended guidance on our ongoing financial reporting.

In November 2016, amended accounting guidance was issued that requires amounts generally described as restricted cash and restricted cash equivalents to be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amended guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. We do not expect the adoption of this amended guidance to have a material impact on our consolidated cash flows.

In January 2017, amended accounting guidance was issued to clarify the definition of a business to provide additional guidance to assist in evaluating whether transactions should be accounted for as an acquisition (or disposal) of either an asset or business. The amended guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. We do not expect the adoption of this amended guidance to have a material impact on our consolidated financial position or results of operations.

In January 2017, amended accounting guidance was issued to simplify the goodwill impairment calculation, by removing Step 2 of the goodwill impairment test. Goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of the goodwill. The amended guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. We are in the process of evaluating the effect this guidance will have on our consolidated financial position and results of operations, and have not determined the effect on our ongoing financial reporting.

Economic (Non-designated) Hedges

Economic (Non-designated) Hedges

We enter into foreign currency contracts to manage our foreign currency exchange rate exposure related to inter-company and financing transactions that do not meet the requirements for hedge accounting treatment. We also enter into certain commodity contracts that do not qualify for hedge accounting treatment. Accordingly, these derivative instruments are adjusted to current market value at the end of each period through earnings.

Cash Flow Hedges

Cash Flow Hedges

Cash Flow Hedges

We enter into derivative instruments to hedge our exposure to changes in cash flows attributable to interest rates and commodity price fluctuations associated with certain forecasted transactions. These derivative instruments are designated and qualify as cash flow hedges. Accordingly, the effective portion of the gain or loss on the derivative instrument is reported as a component of OCI and reclassified into earnings in the same financial statement caption associated with the forecasted transaction and in the same period during which the hedged transaction affects earnings. The ineffective portion of the gain or loss on the derivative instrument is recognized in earnings immediately.

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Investments in Unconsolidated Affiliates (Tables)

9 Months Ended

Feb. 28, 2017

Unconsolidated Affiliates

Financial Information

Combined financial information for our unconsolidated affiliates is summarized as follows:

(in thousands)	February 28, 2017		May 31, 2016
Cash	$	62,723	$	112,122
Other current assets		511,798		446,796
Noncurrent assets		365,343		352,370
Total assets	$	939,864	$	911,288
Current liabilities	$	141,266	$	112,491
Short-term borrowings		6,285		11,398
Current maturities of long-term debt		4,207		3,297
Long-term debt		268,032		266,942
Other noncurrent liabilities		20,558		21,034
Equity		499,516		496,126
Total liabilities and equity	$	939,864	$	911,288

	Three Months Ended				Nine Months Ended
(in thousands)	February 28, 2017		February 29, 2016		February 28, 2017		February 29, 2016
Net sales	$	384,261	$	376,448	$	1,188,568	$	1,170,096
Gross margin		84,645		83,251		305,383		257,036
Operating income		55,140		54,801		216,902		171,857
Depreciation and amortization		6,983		7,905		20,776		24,070
Interest expense		2,089		2,038		6,388		6,333
Income tax expense		5,065		2,625		16,128		7,348
Net earnings		49,098		51,994		198,609		186,063

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Restructuring and Other Expense (Tables)

9 Months Ended

Feb. 28, 2017

Schedule of Progression of Liabilities Associated with Restructuring Activities, Combined with Reconciliation to Restructuring and Other Expense

A progression of the liabilities associated with our restructuring activities, combined with a reconciliation to the restructuring and other expense financial statement caption in our consolidated statement of earnings for the nine months ended February 28, 2017 is summarized as follows:

(in thousands)	Beginning Balance		Expense		Payments			Adjustments		Ending Balance (1)
Early retirement and severance	$	1,831	$	1,795	$	(3,071	)	$	58	$	613
Facility exit and other costs		653		3,190		(3,369	)		45		519
	$	2,484		4,985	$	(6,440	)	$	103	$	1,132
Net loss on sale of assets				1,009
Restructuring and other expense			$	5,994

1) The total liability as of February 28, 2017 is expected to be paid in the next twelve months.

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Other Comprehensive Income (Tables)

9 Months Ended

Feb. 28, 2017

Summary of Tax Effects on Each Component of OCI

The following table summarizes the tax effects on each component of OCI for the three months ended:

	February 28, 2017								February 29, 2016
	Before-Tax			Tax		Net-of-Tax			Before-Tax			Tax			Net-of-Tax
(in thousands)
Foreign currency translation	$	905		$	-	$	905		$	8,646		$	-		$	8,646
Pension liability adjustment		(117	)		82		(35	)		(90	)		-			(90	)
Cash flow hedges		(1,299	)		378		(921	)		8,505			(3,075	)		5,430
Other comprehensive income (loss)	$	(511	)	$	460	$	(51	)	$	17,061		$	(3,075	)	$	13,986

The following table summarizes the tax effects on each component of OCI for the nine months ended:

	February 28, 2017									February 29, 2016
	Before-Tax			Tax			Net-of-Tax			Before-Tax			Tax			Net-of-Tax
(in thousands)
Foreign currency translation	$	(7,277	)	$	-		$	(7,277	)	$	1,255		$	-		$	1,255
Pension liability adjustment		(117	)		82			(35	)		(98	)		-			(98	)
Cash flow hedges		1,836			(480	)		1,356			5,938			(2,401	)		3,537
Other comprehensive income (loss)	$	(5,558	)	$	(398	)	$	(5,956	)	$	7,095		$	(2,401	)	$	4,694

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Changes in Equity (Tables)

9 Months Ended

Feb. 28, 2017

Summary of Changes in Total Equity, Shareholders' Equity Attributable to Controlling Interest, and Equity Attributable to Noncontrolling Interests

The following table provides a summary of the changes in total equity, shareholders’ equity attributable to controlling interest, and equity attributable to noncontrolling interests for the nine months ended February 28, 2017:

	Controlling Interest
(in thousands)	Additional Paid-in Capital			Accumulated Other Comprehensive Loss, Net of Tax			Retained Earnings			Total			Non- controlling Interests			Total
Balance at May 31, 2016	$	298,984		$	(28,565	)	$	522,952		$	793,371		$	126,475		$	919,846
Net earnings		-			-			148,021			148,021			9,333			157,354
Other comprehensive loss		-			(5,821	)		-			(5,821	)		(135	)		(5,956	)
Common shares issued, net of withholding tax		(9,225	)		-			-			(9,225	)		-			(9,225	)
Common shares in NQ plans		1,058			-			-			1,058			-			1,058
Stock-based compensation		10,599			-			-			10,599			-			10,599
Cash dividends declared		-			-			(38,600	)		(38,600	)		-			(38,600	)
Dividends to noncontrolling interest		-			-			-			-			(10,141	)		(10,141	)
Purchase of noncontrolling interest in dHybrid (1)		(935	)		-			-			(935	)		(1,953	)		(2,888	)
Balance at February 28, 2017	$	300,481		$	(34,386	)	$	632,373		$	898,468		$	123,579		$	1,022,047

1) On January 1, 2017, the Company acquired the minority membership interests in dHybrid Systems, LLC (“dHybrid”) from the noncontrolling member in a non-cash transaction.

Components of Changes in Accumulated Other Comprehensive Loss

The components of the changes in accumulated other comprehensive loss were as follows:

(in thousands)	Foreign Currency Translation			Pension Liability Adjustment			Cash Flow Hedges			Accumulated Other Comprehensive Loss
Balance as of May 31, 2016	$	(18,728	)	$	(17,061	)	$	7,224		$	(28,565	)
Other comprehensive income (loss) before reclassifications		(7,142	)		(117	)		10,112			2,853
Reclassification adjustments to income (a)		-			-			(8,276	)		(8,276	)
Income taxes		-			82			(480	)		(398	)
Balance as of February 28, 2017	$	(25,870	)	$	(17,096	)	$	8,580		$	(34,386	)

(a) The statement of earnings classification of amounts reclassified to income for cash flow hedges is disclosed in “NOTE N – Derivative Instruments and Hedging Activities.”

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Stock-Based Compensation (Tables)

9 Months Ended

Feb. 28, 2017

Non-Qualified Stock Options

Assumptions to Value Stock Options

The following assumptions were used to value these stock options:

Dividend yield	2.59	%
Expected volatility	36.86	%
Risk-free interest rate	1.15	%
Expected term (years)	6.0

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Earnings per Share (Tables)

9 Months Ended

Feb. 28, 2017

Computation of Basic and Diluted Earnings Per Share Attributable to Controlling Interest

The following table sets forth the computation of basic and diluted earnings per share attributable to controlling interest for the three and nine months ended February 28, 2017 and February 29, 2016:

	Three Months Ended				Nine Months Ended
(in thousands, except per share amounts)	February 28, 2017		February 29, 2016		February 28, 2017		February 29, 2016
Numerator (basic & diluted):
Net earnings attributable to controlling interest-income available to common shareholders	$	35,889	$	29,847	$	148,021	$	85,191
Denominator:
Denominator for basic earnings per share attributable to controlling interest—weighted average common shares		62,750		61,747		62,325		62,810
Effect of dilutive securities		2,227		2,124		2,433		2,113
Denominator for diluted earnings per share attributable to controlling interest—adjusted weighted average common shares		64,977		63,871		64,758		64,923
Basic earnings per share attributable to controlling interest	$	0.57	$	0.48	$	2.37	$	1.36
Diluted earnings per share attributable to controlling interest	$	0.55	$	0.47	$	2.29	$	1.31

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Segment Operations (Tables)

9 Months Ended

Feb. 28, 2017

Financial Information for Reportable Segments

Summarized financial information for our reportable segments is shown in the following table:

	Three Months Ended						Nine Months Ended
(in thousands)	February 28, 2017			February 29, 2016			February 28, 2017			February 29, 2016
Net sales
Steel Processing	$	478,174		$	419,026		$	1,492,654		$	1,377,638
Pressure Cylinders		198,433			200,721			598,303			626,288
Engineered Cabs		23,547			25,553			71,591			92,869
Other		3,282			1,780			6,217			8,248
Total net sales	$	703,436		$	647,080		$	2,168,765		$	2,105,043
Operating income (loss)
Steel Processing	$	26,026		$	21,294		$	116,256		$	71,574
Pressure Cylinders		10,071			8,969			35,480			15,479
Engineered Cabs		(2,001	)		(4,053	)		(7,225	)		(17,634	)
Other		224			(1,138	)		(2,249	)		(1,379	)
Total operating income	$	34,320		$	25,072		$	142,262		$	68,040
Impairment of long-lived assets
Steel Processing	$	-		$	-		$	-		$	-
Pressure Cylinders		-			-			-			22,962
Engineered Cabs		-			-			-			3,000
Other		-			-			-			-
Total impairment of long-lived assets	$	-		$	-		$	-		$	25,962
Restructuring and other expense (income)
Steel Processing	$	212		$	1,068		$	1,496		$	3,788
Pressure Cylinders		1,056			(1,031	)		3,165			(316	)
Engineered Cabs		169			416			1,379			3,059
Other		(43	)		249			(46	)		(1,237	)
Total restructuring and other expense	$	1,394		$	702		$	5,994		$	5,294

(in thousands)	February 28, 2017		May 31, 2016
Total assets
Steel Processing	$	885,244	$	819,853
Pressure Cylinders		751,131		787,786
Engineered Cabs		65,633		75,124
Other		545,167		378,501
Total assets	$	2,247,175	$	2,061,264

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Derivative Instruments and Hedging Activities (Tables)

9 Months Ended

Feb. 28, 2017

Schedule of Fair Value of Derivative Instruments

The following table summarizes the fair value of our derivative instruments and the respective financial statement caption in which they were recorded in our consolidated balance sheet at February 28, 2017:

	Asset Derivatives				Liability Derivatives
(in thousands)	Balance Sheet Location		Fair Value		Balance Sheet Location		Fair Value
Derivatives designated as hedging instruments:
Commodity contracts		Receivables	$	14,053		Accounts payable	$	-
		Other assets		176		Other liabilities		-
				14,229				-
Interest rate contracts		Receivables		-		Accounts payable		83
		Other assets		-		Other liabilities		228
				-				311
Totals			$	14,229			$	311
Derivatives not designated as hedging instruments:
Commodity contracts		Receivables	$	2,964		Accounts payable	$	233
		Other assets		-		Other liabilities		36
				2,964				269
Foreign currency contracts		Receivables		511		Accounts payable		-
Totals			$	3,475			$	269
Total derivative instruments			$	17,704			$	580

The following table summarizes the fair value of our derivative instruments and the financial statement caption in which they were recorded in the consolidated balance sheet at May 31, 2016:

	Asset Derivatives				Liability Derivatives
(in thousands)	Balance Sheet Location		Fair Value		Balance Sheet Location		Fair Value
Derivatives designated as hedging instruments:
Commodity contracts		Receivables	$	13,224		Accounts payable	$	696
		Other assets		3,589		Other liabilities		80
				16,813				776
Interest rate contracts		Receivables		-		Accounts payable		155
		Other assets		-		Other liabilities		306
				-				461
Totals			$	16,813			$	1,237
Derivatives not designated as hedging instruments:
Commodity contracts		Receivables	$	4,660		Accounts payable	$	761
		Other assets		317		Other liabilities		-
				4,977				761
Foreign currency contracts		Receivables		-		Accounts payable		15
				-				15
Totals			$	4,977			$	776
Total derivative instruments			$	21,790			$	2,013

Schedule of Derivatives Designated as Cash Flow Hedging Instruments

The following table summarizes the gain (loss) recognized in OCI and the gain (loss) reclassified from accumulated OCI into earnings for derivative instruments designated as cash flow hedges during the three months ended February 28, 2017 and February 29, 2016:

				Location of				Location of
				Gain (Loss)	Gain (Loss)			Gain	Gain
				Reclassified	Reclassified			(Ineffective	(Ineffective
	Gain (Loss)			from	from			Portion)	Portion)
	Recognized			Accumulated	Accumulated			and Excluded	and Excluded
	in OCI			OCI	OCI			from	from
	(Effective			(Effective	(Effective			Effectiveness	Effectiveness
(in thousands)	Portion)			Portion)	Portion)			Testing	Testing
For the three months ended February 28, 2017:
Commodity contracts	$	2,037		Cost of goods sold	$	3,397		Cost of goods sold	$	-
Interest rate contracts		25		Interest expense		(36	)	Interest expense		-
Totals	$	2,062			$	3,361			$	-
For the three months ended February 29, 2016:
Commodity contracts	$	707		Cost of goods sold	$	(7,775	)	Cost of goods sold	$	-
Interest rate contracts		(107	)	Interest expense		(130	)	Interest expense		-
Totals		600				(7,905	)			-

The following table summarizes the gain (loss) recognized in OCI and the gain (loss) reclassified from accumulated OCI into earnings for derivative instruments designated as cash flow hedges during the nine months ended February 28, 2017 and February 29, 2016:

				Location of				Location of
				Gain (Loss)	Gain (Loss)			Gain	Gain
				Reclassified	Reclassified			(Ineffective	(Ineffective
	Gain (Loss)			from	from			Portion)	Portion)
	Recognized			Accumulated	Accumulated			and Excluded	and Excluded
	in OCI			OCI	OCI			from	from
	(Effective			(Effective	(Effective			Effectiveness	Effectiveness
(in thousands)	Portion)			Portion)	Portion)			Testing	Testing
For the nine months ended February 28, 2017:
Commodity contracts	$	9,963		Cost of goods sold	$	8,882		Interest expense	$	-
Interest rate contracts		149		Interest expense		(606	)	Cost of goods sold		-
Totals	$	10,112			$	8,276			$	-
For the nine months ended February 29, 2016:
Commodity contracts	$	(17,629	)	Cost of goods sold	$	(23,422	)	Interest expense	$	-
Interest rate contracts		(274	)	Interest expense		(415	)	Cost of goods sold		-
Foreign currency contracts		-		Miscellaneous income, net		(4	)	Miscellaneous income, net		-
Totals	$	(17,903	)		$	(23,841	)		$	-

Schedule of Gain (Loss) Recognized in Earnings for Economic (Non-Designated) Derivative Financial Instruments

The following table summarizes the gain recognized in earnings for economic (non-designated) derivative financial instruments during the three months ended February 28, 2017 and February 29, 2016:

			Gain (Loss) Recognized
			in Earnings for the
			Three Months Ended
(in thousands)	Location of Gain (Loss) Recognized in Earnings		February 28, 2017			February 29, 2016
Commodity contracts		Cost of goods sold	$	258		$	173
Foreign currency contracts		Miscellaneous income, net		(172	)		47
Total			$	86		$	220

The following table summarizes the gain (loss) recognized in earnings for economic (non-designated) derivative financial instruments during the nine months ended February 28, 2017 and February 29, 2016:

			Gain (Loss) Recognized
			in Earnings for the
			Nine Months Ended
(in thousands)	Location of Gain (Loss) Recognized in Earnings		February 28, 2017			February 29, 2016
Commodity contracts		Cost of goods sold	$	5,169		$	(7,972	)
Foreign currency contracts		Miscellaneous income, net		(837	)		117
Total			$	4,332		$	(7,855	)

Cash Flow Hedges

Schedule of Summary of Derivative Hedges

The following table summarizes our cash flow hedges outstanding at February 28, 2017:

(in thousands)	Notional Amount		Maturity Date
Commodity contracts	$	40,570	March 2017 - December 2018
Interest rate contracts		16,183	September 2019

Derivatives Not Designated As Hedging Instruments

Schedule of Summary of Derivative Hedges

The following table summarizes our economic (non-designated) derivative instruments outstanding at February 28, 2017:

(in thousands)	Notional Amount		Maturity Date(s)
Commodity contracts	$	22,971	March 2017 - December 2018
Foreign currency contracts		15,450	March 2017 - August 2017

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Fair Value (Tables)

9 Months Ended

Feb. 28, 2017

Schedule of Assets and Liabilities Measured at Fair Value on Recurring Basis

At February 28, 2017, our 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 instruments (1)	$	-	$	17,704	$	-	$	17,704
Total assets	$	-	$	17,704	$	-	$	17,704
Liabilities
Derivative instruments (1)	$	-	$	580	$	-	$	580
Contingent consideration obligations (2)		-		-		4,557		4,557
Total liabilities	$	-	$	580	$	4,557	$	5,137

At May 31, 2016, our 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 instruments (1)	$	-	$	21,790	$	-	$	21,790
Total assets	$	-	$	21,790	$	-	$	21,790
Liabilities
Derivative instruments (1)	$	-	$	2,013	$	-	$	2,013
Contingent consideration obligations (2)		-		-		4,519		4,519
Total liabilities	$	-	$	2,013	$	4,519	$	6,532

(1) The fair value of our derivative instruments 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 N – 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 measurement was based on Level 3 inputs not observable in the market.

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Basis of Presentation - Additional Information (Detail)	3 Months Ended	9 Months Ended
	Feb. 29, 2016 USD ($)	Feb. 28, 2017 USD ($) Entity	Feb. 29, 2016 USD ($)	May 31, 2016 USD ($)
Accounting Standards Update 2015-03
Significant Accounting Policies [Line Items]
Debt issuance cost		$ 2,233,000		$ 2,491,000
Accounting Standards Update 2016-09
Significant Accounting Policies [Line Items]
Excess tax benefits associated with share-based payments	$ 271,000		$ 965,000
Amended accounting guidance, description		In March 2016, amended accounting guidance was issued that simplifies the accounting for share-based payments. The amended guidance impacts several aspects of the accounting for share-based payment transactions, including the income tax consequences, forfeitures, statutory withholding requirements, and classification in the statement of cash flows. The Company early adopted this guidance during the fourth quarter of fiscal 2016. As required for early adoption in an interim period, all adjustments have been reflected as of the beginning of fiscal 2016. Accordingly, income tax expense for the three and nine months ended February 29, 2016 has been restated to reflect excess tax benefits associated with share-based payments totaling $271,000 and $965,000, respectively, in income tax expense, rather than in paid-in capital.
Joint Venture Transactions
Significant Accounting Policies [Line Items]
Number of joint ventures | Entity		5
Spartan | Joint Venture Transactions
Significant Accounting Policies [Line Items]
Percent of controlling interest by the Company		52.00%
TWB | Joint Venture Transactions
Significant Accounting Policies [Line Items]
Percent of controlling interest by the Company		55.00%
Worthington Aritas | Joint Venture Transactions
Significant Accounting Policies [Line Items]
Percent of controlling interest by the Company		75.00%
WEI | Joint Venture Transactions
Significant Accounting Policies [Line Items]
Percent of controlling interest by the Company		75.00%
Worthington Specialty Processing | Joint Venture Transactions
Significant Accounting Policies [Line Items]
Percent of controlling interest by the Company		51.00%

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Investments in Unconsolidated Affiliates - Additional Information (Detail)	9 Months Ended
	Feb. 28, 2017 USD ($)
WAVE
Investments in and Advances to Affiliates [Line Items]
Cumulative distributions in excess of investment	$ 67,722,000
Unconsolidated Affiliates
Investments in and Advances to Affiliates [Line Items]
Distributions from unconsolidated affiliates	$ 84,183,000
Joint Venture Transactions | ArtiFlex
Investments in and Advances to Affiliates [Line Items]
Percent of interest by unconsolidated affiliates	50.00%
Joint Venture Transactions | ClarkDietrich
Investments in and Advances to Affiliates [Line Items]
Percent of interest by unconsolidated affiliates	25.00%
Joint Venture Transactions | Samuel Steel Pickling Company
Investments in and Advances to Affiliates [Line Items]
Percent of interest by unconsolidated affiliates	31.25%
Joint Venture Transactions | Serviacero
Investments in and Advances to Affiliates [Line Items]
Percent of interest by unconsolidated affiliates	50.00%
Joint Venture Transactions | WAVE
Investments in and Advances to Affiliates [Line Items]
Percent of interest by unconsolidated affiliates	50.00%
Joint Venture Transactions | Zhejiang Nisshin Worthington Precision Specialty Steel Co
Investments in and Advances to Affiliates [Line Items]
Percent of interest by unconsolidated affiliates	10.00%

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Schedule of Combined Financial Information for Unconsolidated Affiliates (Detail) - Unconsolidated Affiliates - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Feb. 28, 2017	Feb. 29, 2016	Feb. 28, 2017	Feb. 29, 2016	May 31, 2016
Investments in and Advances to Affiliates [Line Items]
Cash	$ 62,723		$ 62,723		$ 112,122
Other current assets	511,798		511,798		446,796
Noncurrent assets	365,343		365,343		352,370
Total assets	939,864		939,864		911,288
Current liabilities	141,266		141,266		112,491
Short-term borrowings	6,285		6,285		11,398
Current maturities of long-term debt	4,207		4,207		3,297
Long-term debt	268,032		268,032		266,942
Other noncurrent liabilities	20,558		20,558		21,034
Equity	499,516		499,516		496,126
Total liabilities and equity	939,864		939,864		$ 911,288
Net sales	384,261	$ 376,448	1,188,568	$ 1,170,096
Gross margin	84,645	83,251	305,383	257,036
Operating income	55,140	54,801	216,902	171,857
Depreciation and amortization	6,983	7,905	20,776	24,070
Interest expense	2,089	2,038	6,388	6,333
Income tax expense	5,065	2,625	16,128	7,348
Net earnings	$ 49,098	$ 51,994	$ 198,609	$ 186,063

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Impairment of Long-Lived Assets - Additional Information (Detail) $ in Thousands	9 Months Ended
	Feb. 28, 2017 USD ($)	Feb. 29, 2016 USD ($) Facility
Impaired Long-Lived Assets Held and Used [Line Items]
Impairment of long-lived assets	$ 0	$ 25,962
Engineered Cabs
Impaired Long-Lived Assets Held and Used [Line Items]
Impairment of long-lived assets		3,000
Pressure Cylinders
Impaired Long-Lived Assets Held and Used [Line Items]
Impairment of long-lived assets		22,962
Pressure Cylinders | Oil and Gas Equipment Reporting Unit
Impaired Long-Lived Assets Held and Used [Line Items]
Impairment of long-lived assets		$ 22,962
Number of equipment facilities | Facility		2

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Schedule of Progression of Liabilities Associated with Restructuring Activities, Combined with Reconciliation to Restructuring and Other Expense (Detail) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Feb. 28, 2017	Feb. 29, 2016	Feb. 28, 2017	Feb. 29, 2016
Restructuring Cost and Reserve [Line Items]
Beginning Balance				$ 2,484
Expense				4,985
Payments				(6,440)
Adjustments				103
Ending Balance	[1]	$ 1,132		1,132
Net (gain) loss on sale of assets				1,009
Restructuring and other expense		1,394	$ 702	5,994	$ 5,294
Early Retirement And Severance
Restructuring Cost and Reserve [Line Items]
Beginning Balance				1,831
Expense				1,795
Payments				(3,071)
Adjustments				58
Ending Balance	[1]	613		613
Facility Exit And Other Costs
Restructuring Cost and Reserve [Line Items]
Beginning Balance				653
Expense				3,190
Payments				(3,369)
Adjustments				45
Ending Balance	[1]	$ 519		$ 519

[1] The total liability as of February 28, 2017 is expected to be paid in the next twelve months.

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Restructuring and Other Expense - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Feb. 28, 2017	Feb. 29, 2016	Feb. 28, 2017	Feb. 29, 2016
Restructuring Cost and Reserve [Line Items]
Net gain (loss) on sale of assets	$ (1,875)	$ 3,385	$ (3,358)	$ 7,633
Cryogenics Facility in Istanbul, Turkey, to its Greenfield Facility in Bandirma, Turkey
Restructuring Cost and Reserve [Line Items]
Severance expense			640
Facility exit costs			1,113
Closure of Precision Specialty Metals, Inc
Restructuring Cost and Reserve [Line Items]
Facility exit costs			1,666
Severance expense credit			(106)
Other Non-significant Restructuring Activities
Restructuring Cost and Reserve [Line Items]
Severance expense credit			(95)
Net gain (loss) on sale of assets			(86)
Facility exit costs credit			(48)
Pressure Cylinders
Restructuring Cost and Reserve [Line Items]
Severance expense			1,356
Engineered Cabs | Facility Closing | Florence, South Carolina
Restructuring Cost and Reserve [Line Items]
Facility exit costs			459
Net gain (loss) on sale of assets			(101)
Engineered Cabs | Advanced Component Technologies, Inc
Restructuring Cost and Reserve [Line Items]
Cash proceeds from sale of business			700
Loss on sale of business			$ (822)

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Guarantees - Additional Information (Detail)	9 Months Ended
	Feb. 28, 2017 USD ($)
Stand-by Letters of Credit
Guarantor Obligations [Line Items]
Letter of credit amount outstanding	$ 15,893,000
Drawn amount of letter of credit outstanding	0
Operating Lease of Aircraft
Guarantor Obligations [Line Items]
Maximum potential obligation	$ 9,566,000

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Debt and Receivables Securitization - Additional Information (Detail)	9 Months Ended
	Feb. 28, 2017 USD ($)
Debt And Receivables Securitization [Line Items]
Remaining borrowing capacity	$ 486,400,000
Securities Sold under Agreements to Repurchase
Debt And Receivables Securitization [Line Items]
Maximum borrowing capacity	$ 100,000,000
Maturity date	2018-01
Borrowings outstanding	$ 0
Number of days past due trade accounts receivables are ineligible for securitization	90 days
Unsecured Revolving Credit Facility
Debt And Receivables Securitization [Line Items]
Maximum borrowing capacity	$ 500,000,000
Maturity date	2020-04
Borrowings outstanding	$ 0
Unsecured Revolving Credit Facility | Maximum
Debt And Receivables Securitization [Line Items]
Debt maturity period	1 year
Letter of Credit
Debt And Receivables Securitization [Line Items]
Letter of credit amount outstanding	$ 13,600,000
Stand-by Letters of Credit
Debt And Receivables Securitization [Line Items]
Letter of credit amount outstanding	15,893,000
Drawn amount of letter of credit outstanding	$ 0

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Summary of Tax Effects on Each Component of OCI (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Feb. 28, 2017	Feb. 29, 2016	Feb. 28, 2017	Feb. 29, 2016
Components Of Other Comprehensive Income Loss [Line Items]
Other comprehensive income (loss), before tax	$ (511)	$ 17,061	$ (5,558)	$ 7,095
Other comprehensive income (loss), tax	460	(3,075)	(398)	(2,401)
Other comprehensive income (loss)	(51)	13,986	(5,956)	4,694
Foreign Currency Translation
Components Of Other Comprehensive Income Loss [Line Items]
Other comprehensive income (loss), before tax	905	8,646	(7,277)	1,255
Other comprehensive income (loss)	905	8,646	(7,277)	1,255
Pension Liability Adjustment
Components Of Other Comprehensive Income Loss [Line Items]
Other comprehensive income (loss), before tax	(117)	(90)	(117)	(98)
Other comprehensive income (loss), tax	82		82
Other comprehensive income (loss)	(35)	(90)	(35)	(98)
Cash Flow Hedges
Components Of Other Comprehensive Income Loss [Line Items]
Other comprehensive income (loss), before tax	(1,299)	8,505	1,836	5,938
Other comprehensive income (loss), tax	378	(3,075)	(480)	(2,401)
Other comprehensive income (loss)	$ (921)	$ 5,430	$ 1,356	$ 3,537

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Summary of Changes in Total Equity, Shareholders' Equity Attributable to Controlling Interest, and Equity Attributable to Noncontrolling Interests (Detail) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Feb. 28, 2017	Feb. 29, 2016	Feb. 28, 2017	Feb. 29, 2016
Balance as of May 31, 2016				$ 919,846
Net earnings		$ 38,951	$ 34,143	157,354	$ 94,889
Other comprehensive loss		(51)	$ 13,986	(5,956)	$ 4,694
Common shares issued, net of withholding tax				(9,225)
Common shares in NQ plans				1,058
Stock-based compensation				10,599
Cash dividends declared				(38,600)
Dividends to noncontrolling interest				(10,141)
Purchase of noncontrolling interest in dHybrid	[1]			(2,888)
Balance as of February 28, 2017		1,022,047		1,022,047
Additional Paid-in Capital
Balance as of May 31, 2016				298,984
Common shares issued, net of withholding tax				(9,225)
Common shares in NQ plans				1,058
Stock-based compensation				10,599
Purchase of noncontrolling interest in dHybrid	[1]			(935)
Balance as of February 28, 2017		300,481		300,481
Accumulated Other Comprehensive Loss, Net of Tax
Balance as of May 31, 2016				(28,565)
Other comprehensive loss				(5,821)
Balance as of February 28, 2017		(34,386)		(34,386)
Retained Earnings
Balance as of May 31, 2016				522,952
Net earnings				148,021
Cash dividends declared				(38,600)
Balance as of February 28, 2017		632,373		632,373
Parent
Balance as of May 31, 2016				793,371
Net earnings				148,021
Other comprehensive loss				(5,821)
Common shares issued, net of withholding tax				(9,225)
Common shares in NQ plans				1,058
Stock-based compensation				10,599
Cash dividends declared				(38,600)
Purchase of noncontrolling interest in dHybrid	[1]			(935)
Balance as of February 28, 2017		898,468		898,468
Noncontrolling Interest
Balance as of May 31, 2016				126,475
Net earnings				9,333
Other comprehensive loss				(135)
Dividends to noncontrolling interest				(10,141)
Purchase of noncontrolling interest in dHybrid	[1]			(1,953)
Balance as of February 28, 2017		$ 123,579		$ 123,579

[1] On January 1, 2017, the Company acquired the minority membership interests in dHybrid Systems, LLC ("dHybrid") from the noncontrolling member in a non-cash transaction.

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Components of Changes in Accumulated Other Comprehensive Loss (Detail) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Feb. 28, 2017	Feb. 29, 2016	Feb. 28, 2017	Feb. 29, 2016
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance as of May 31, 2016				$ 919,846
Income taxes		$ 460	$ (3,075)	(398)	$ (2,401)
Balance as of February 28, 2017		1,022,047		1,022,047
Foreign Currency Translation
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance as of May 31, 2016				(18,728)
Other comprehensive income (loss) before reclassifications				(7,142)
Balance as of February 28, 2017		(25,870)		(25,870)
Pension Liability Adjustment
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance as of May 31, 2016				(17,061)
Other comprehensive income (loss) before reclassifications				(117)
Income taxes				82
Balance as of February 28, 2017		(17,096)		(17,096)
Cash Flow Hedges
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance as of May 31, 2016				7,224
Other comprehensive income (loss) before reclassifications				10,112
Reclassification adjustments to income	[1]			(8,276)
Income taxes				(480)
Balance as of February 28, 2017		8,580		8,580
Accumulated Other Comprehensive Loss, Net of Tax
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance as of May 31, 2016				(28,565)
Other comprehensive income (loss) before reclassifications				2,853
Reclassification adjustments to income	[1]			(8,276)
Income taxes				(398)
Balance as of February 28, 2017		$ (34,386)		$ (34,386)

[1] The statement of earnings classification of amounts reclassified to income for cash flow hedges is disclosed in "NOTE N - Derivative Instruments and Hedging Activities."

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Stock-Based Compensation - Additional Information (Detail)	9 Months Ended
	Feb. 28, 2017 USD ($) $ / shares shares
Non-Qualified Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Non-qualified stock options, granted | shares	111,000
Non-qualified stock option, per share price | $ / shares	$ 42.30
Non-qualified stock option, fair value, per share price | $ / shares	$ 11.60
Pre-tax stock-based compensation | $	$ 1,146,000
Pre-tax stock-based compensation, period of recognition	3 years
Service-Based Restricted Common Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Pre-tax stock-based compensation, period of recognition	3 years
Performance share awards granted | shares	520,850
Restricted common shares, fair value per share | $ / shares	$ 42.27
Pre-tax stock-based compensation | $	$ 19,695,000
Performance Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Pre-tax stock-based compensation, period of recognition	3 years
Performance share awards granted | shares	66,200
Pre-tax stock-based compensation | $	$ 2,973,000

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Assumptions To Value Stock Options (Detail) - Non-Qualified Stock Options	9 Months Ended
	Feb. 28, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Dividend yield	2.59%
Expected volatility	36.86%
Risk-free interest rate	1.15%
Expected term (years)	6 years

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Income Taxes - Additional Information (Detail)	9 Months Ended
	Feb. 28, 2017	Feb. 29, 2016
Income Taxes [Line Items]
Estimated annual effective income tax rate	27.20%	29.60%

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Computation of Basic and Diluted Earnings Per Share Attributable to Controlling Interest (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Feb. 28, 2017	Feb. 29, 2016	Feb. 28, 2017	Feb. 29, 2016
Numerator (basic & diluted):
Net earnings attributable to controlling interest-income available to common shareholders	$ 35,889	$ 29,847	$ 148,021	$ 85,191
Denominator:
Denominator for basic earnings per share attributable to controlling interest-weighted average common shares	62,750	61,747	62,325	62,810
Effect of dilutive securities	2,227	2,124	2,433	2,113
Denominator for diluted earnings per share attributable to controlling interest-adjusted weighted average common shares	64,977	63,871	64,758	64,923
Basic earnings per share attributable to controlling interest	$ 0.57	$ 0.48	$ 2.37	$ 1.36
Diluted earnings per share attributable to controlling interest	$ 0.55	$ 0.47	$ 2.29	$ 1.31

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Earnings Per Share - Additional Information (Detail) - shares	3 Months Ended		9 Months Ended
	Feb. 28, 2017	Feb. 29, 2016	Feb. 28, 2017	Feb. 29, 2016
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Shares excluded from computation of diluted earnings per share	107,224	352,830	97,638	343,454

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Financial Information for Reportable Segments (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Feb. 28, 2017	Feb. 29, 2016	Feb. 28, 2017	Feb. 29, 2016	May 31, 2016
Segment Reporting Information [Line Items]
Net sales	$ 703,436	$ 647,080	$ 2,168,765	$ 2,105,043
Operating income (loss)	34,320	25,072	142,262	68,040
Impairment of long-lived assets			0	25,962
Restructuring and other expense (income)	1,394	702	5,994	5,294
Total assets	2,247,175		2,247,175		$ 2,061,264
Steel Processing
Segment Reporting Information [Line Items]
Net sales	478,174	419,026	1,492,654	1,377,638
Operating income (loss)	26,026	21,294	116,256	71,574
Restructuring and other expense (income)	212	1,068	1,496	3,788
Total assets	885,244		885,244		819,853
Pressure Cylinders
Segment Reporting Information [Line Items]
Net sales	198,433	200,721	598,303	626,288
Operating income (loss)	10,071	8,969	35,480	15,479
Impairment of long-lived assets				22,962
Restructuring and other expense (income)	1,056	(1,031)	3,165	(316)
Total assets	751,131		751,131		787,786
Engineered Cabs
Segment Reporting Information [Line Items]
Net sales	23,547	25,553	71,591	92,869
Operating income (loss)	(2,001)	(4,053)	(7,225)	(17,634)
Impairment of long-lived assets				3,000
Restructuring and other expense (income)	169	416	1,379	3,059
Total assets	65,633		65,633		75,124
Other
Segment Reporting Information [Line Items]
Net sales	3,282	1,780	6,217	8,248
Operating income (loss)	224	(1,138)	(2,249)	(1,379)
Restructuring and other expense (income)	(43)	$ 249	(46)	$ (1,237)
Total assets	$ 545,167		$ 545,167		$ 378,501

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Schedule of Fair Value of Derivative Instruments (Detail) - USD ($) $ in Thousands	Feb. 28, 2017	May 31, 2016
Derivative [Line Items]
Asset Derivatives at Fair Value	$ 17,704	$ 21,790
Liability Derivatives at Fair Value	580	2,013
Derivatives Designated As Hedging Instruments
Derivative [Line Items]
Asset Derivatives at Fair Value	14,229	16,813
Liability Derivatives at Fair Value	311	1,237
Derivatives Designated As Hedging Instruments | Commodity Contracts
Derivative [Line Items]
Asset Derivatives at Fair Value	14,229	16,813
Liability Derivatives at Fair Value		776
Derivatives Designated As Hedging Instruments | Commodity Contracts | Other Liabilities
Derivative [Line Items]
Liability Derivatives at Fair Value		80
Derivatives Designated As Hedging Instruments | Commodity Contracts | Receivables
Derivative [Line Items]
Asset Derivatives at Fair Value	14,053	13,224
Derivatives Designated As Hedging Instruments | Commodity Contracts | Other Assets
Derivative [Line Items]
Asset Derivatives at Fair Value	176	3,589
Derivatives Designated As Hedging Instruments | Commodity Contracts | Accounts Payable
Derivative [Line Items]
Liability Derivatives at Fair Value		696
Derivatives Designated As Hedging Instruments | Interest Rate Contracts
Derivative [Line Items]
Liability Derivatives at Fair Value	311	461
Derivatives Designated As Hedging Instruments | Interest Rate Contracts | Other Liabilities
Derivative [Line Items]
Liability Derivatives at Fair Value	228	306
Derivatives Designated As Hedging Instruments | Interest Rate Contracts | Accounts Payable
Derivative [Line Items]
Liability Derivatives at Fair Value	83	155
Derivatives Not Designated As Hedging Instruments
Derivative [Line Items]
Asset Derivatives at Fair Value	3,475	4,977
Liability Derivatives at Fair Value	269	776
Derivatives Not Designated As Hedging Instruments | Commodity Contracts
Derivative [Line Items]
Asset Derivatives at Fair Value	2,964	4,977
Liability Derivatives at Fair Value	269	761
Derivatives Not Designated As Hedging Instruments | Commodity Contracts | Other Liabilities
Derivative [Line Items]
Liability Derivatives at Fair Value	36
Derivatives Not Designated As Hedging Instruments | Commodity Contracts | Receivables
Derivative [Line Items]
Asset Derivatives at Fair Value	2,964	4,660
Derivatives Not Designated As Hedging Instruments | Commodity Contracts | Other Assets
Derivative [Line Items]
Asset Derivatives at Fair Value		317
Derivatives Not Designated As Hedging Instruments | Commodity Contracts | Accounts Payable
Derivative [Line Items]
Liability Derivatives at Fair Value	233	761
Derivatives Not Designated As Hedging Instruments | Foreign Currency Contracts
Derivative [Line Items]
Liability Derivatives at Fair Value		15
Derivatives Not Designated As Hedging Instruments | Foreign Currency Contracts | Receivables
Derivative [Line Items]
Asset Derivatives at Fair Value	$ 511
Derivatives Not Designated As Hedging Instruments | Foreign Currency Contracts | Accounts Payable
Derivative [Line Items]
Liability Derivatives at Fair Value		$ 15

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Derivative Instruments and Hedging Activities - Additional Information (Detail) - USD ($)	9 Months Ended	12 Months Ended
	Feb. 28, 2017	May 31, 2016
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Aggregate impact to fair value of derivative assets and liabilities as a result of recognition on a net basis	$ 91,000	$ (300,000)
Losses in accumulated other comprehensive income expected to be reclassified into net earnings	(10,088,000)
Losses in accumulated other comprehensive income expected to be reclassified into net earnings, tax	$ (5,725,000)

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Schedule of Summary of Derivative Hedges (Detail) $ in Thousands	9 Months Ended
	Feb. 28, 2017 USD ($)
Commodity Contracts | Derivatives Not Designated As Hedging Instruments
Derivative [Line Items]
Notional Amount	$ 22,971
Commodity Contracts | Derivatives Not Designated As Hedging Instruments | Minimum
Derivative [Line Items]
Maturity Date	2017-03
Commodity Contracts | Derivatives Not Designated As Hedging Instruments | Maximum
Derivative [Line Items]
Maturity Date	2018-12
Foreign Currency Contracts | Derivatives Not Designated As Hedging Instruments
Derivative [Line Items]
Notional Amount	$ 15,450
Foreign Currency Contracts | Derivatives Not Designated As Hedging Instruments | Minimum
Derivative [Line Items]
Maturity Date	2017-03
Foreign Currency Contracts | Derivatives Not Designated As Hedging Instruments | Maximum
Derivative [Line Items]
Maturity Date	2017-08
Cash Flow Hedges | Commodity Contracts
Derivative [Line Items]
Notional Amount	$ 40,570
Cash Flow Hedges | Commodity Contracts | Minimum
Derivative [Line Items]
Maturity Date	2017-03
Cash Flow Hedges | Commodity Contracts | Maximum
Derivative [Line Items]
Maturity Date	2018-12
Cash Flow Hedges | Interest Rate Contracts
Derivative [Line Items]
Notional Amount	$ 16,183
Maturity Date	2019-09

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Schedule of Derivatives Designated as Cash Flow Hedging Instruments (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Feb. 28, 2017	Feb. 29, 2016	Feb. 28, 2017	Feb. 29, 2016
Derivative [Line Items]
Gain (Loss) Recognized in OCI (Effective Portion)	$ 2,062	$ 600	$ 10,112	$ (17,903)
Gain (Loss) Reclassified from Accumulated OCI (Effective Portion)	3,361	(7,905)	8,276	(23,841)
Commodity Contracts
Derivative [Line Items]
Gain (Loss) Recognized in OCI (Effective Portion)	2,037	707	9,963	(17,629)
Commodity Contracts | Cost of Goods Sold
Derivative [Line Items]
Gain (Loss) Reclassified from Accumulated OCI (Effective Portion)	3,397	(7,775)	8,882	(23,422)
Interest Rate Contracts
Derivative [Line Items]
Gain (Loss) Recognized in OCI (Effective Portion)	25	(107)	149	(274)
Interest Rate Contracts | Interest Expense
Derivative [Line Items]
Gain (Loss) Reclassified from Accumulated OCI (Effective Portion)	$ (36)	$ (130)	$ (606)	(415)
Foreign Currency Contracts | Miscellaneous Income, Net
Derivative [Line Items]
Gain (Loss) Reclassified from Accumulated OCI (Effective Portion)				$ (4)

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Schedule of Gain (Loss) Recognized in Earnings for Economic (Non-Designated) Derivative Financial Instruments (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Feb. 28, 2017	Feb. 29, 2016	Feb. 28, 2017	Feb. 29, 2016
Derivative [Line Items]
Gain (Loss) Recognized in Earnings	$ 86	$ 220	$ 4,332	$ (7,855)
Commodity Contracts | Cost of Goods Sold
Derivative [Line Items]
Gain (Loss) Recognized in Earnings	258	173	5,169	(7,972)
Foreign Currency Contracts | Miscellaneous Income, Net
Derivative [Line Items]
Gain (Loss) Recognized in Earnings	$ (172)	$ 47	$ (837)	$ 117

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Schedule of Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) - USD ($) $ in Thousands		Feb. 28, 2017	May 31, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets		$ 17,704	$ 21,790
Liabilities		5,137	6,532
Derivative Instruments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	[1]	17,704	21,790
Liabilities	[1]	580	2,013
Contingent consideration obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities	[2]	4,557	4,519
Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets		17,704	21,790
Liabilities		580	2,013
Significant Other Observable Inputs (Level 2) | Derivative Instruments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	[1]	17,704	21,790
Liabilities	[1]	580	2,013
Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities		4,557	4,519
Significant Unobservable Inputs (Level 3) | Contingent consideration obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities	[2]	$ 4,557	$ 4,519

[1] The fair value of our derivative instruments 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 N - 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 measurement was based on Level 3 inputs not observable in the market.

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Fair Value - Additional Information (Detail) - Long-term Debt - USD ($) $ in Thousands	Feb. 28, 2017	May 31, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term debt at fair value including current maturities	$ 602,907	$ 609,245
Long-term debt at carrying amount including current maturities	$ 576,880	$ 578,353