Worthington Reports Fourth Quarter and Fiscal Year Results

COLUMBUS, Ohio--Worthington Industries, Inc. today reported results for the three- and twelve-month periods ended May 31, 2007.

(U.S. dollars in millions, except per share data)

	4Q2007	3Q2007	4Q2006	12M2007	12M2006
Net sales	$ 786.6	$ 677.3	$ 822.0	$ 2,971.8	$ 2,897.2
Operating income	41.7	2.2	54.8	129.1	157.6
Equity income	16.7	13.5	20.8	63.2	56.3
Net earnings	38.2	5.5	59.4	113.9	146.0
Earnings per share	$ 0.45	$ 0.06	$ 0.67	$ 1.31	$ 1.64

EBITDA(a)	$ 71.4	$ 30.0	$ 115.7	$ 249.4	$ 298.1

(a)Earnings before interest, taxes, depreciation and amortization. See reconciliation on consolidated statement of earnings.

Fourth Quarter and Year-End Highlights

Annual earnings were the third best in the company’s history, after fiscal 2005 and fiscal 2006.
Quarterly net sales, operating income and units shipped for the Pressure Cylinders segment were a record $169.3 million, $26.1 million, and 13.6 million, respectively. Annual net sales and operating income for the Pressure Cylinders segment were also records in fiscal 2007.
Equity income, from six unconsolidated joint ventures, totaled $16.7 million for the quarter and $63.2 million for the year. Worthington Armstrong Venture (WAVE) had record sales and earnings for the year.

Cash dividends received from joint ventures totaled $44.8 million for the quarter and $131.7 million for the year. WAVE contributed $40.5 million and $121.5 million of the cash dividends received for those periods.
Cash provided by operating activities was $180.4 million for fiscal 2007 compared to $227.1 million for fiscal 2006 while capital expenditures were $57.7 million and $60.1 million for the same periods.
During the fourth quarter, $14.4 million was paid to shareholders in a regular quarterly dividend. For the year, dividends paid to shareholders totaled $59.0 million. At year end, the dividend yielded a 3.2% annualized return.
During fiscal 2007, the company repurchased 4,449,594 common shares, reducing total outstanding shares to 84.9 million at year end. Over five million shares remain on the existing share repurchase authorization.

Consolidated Results

For the fourth quarter, net sales were $786.6 million, compared to $822.0 million for the fourth quarter of fiscal 2006, a decline of 4%. For the full year, net sales of $2,971.8 million rose 3% from $2,897.2 million last year.

Fourth quarter 2007 net earnings of $38.2 million, or $0.45 per diluted share, fell 36% from fourth quarter 2006 net earnings of $59.4 million, or $0.67 per diluted share. Earnings in 2006 were aided by a $26.6 million pre-tax gain, or $0.14 per share, on the April 2006 sale of a 50% interest in a Mexican steel processing joint venture. Excluding the gain in the prior year period, fiscal 2007 fourth quarter earnings per share fell 15%.

Net earnings for the full year of $113.9 million, or $1.31 per diluted share, were down 22% from $146.0 million, or $1.64 per diluted share, for the same period last year. Excluding the 2006 gain mentioned above, earnings per share declined 13% from fiscal 2006, the second best year in the company’s history.

“The fourth quarter was significant in that it represented an impressive turnaround from the third quarter and helped make fiscal 2007 our third best year,” said John McConnell, Chairman and CEO of Worthington Industries. “Our Pressure Cylinders segment and WAVE joint venture were major contributors with their record results. In addition, results in our Steel Processing segment were better than expected given the weak conditions in its two major end markets, automotive and construction. Lastly, our Metal Framing segment was significantly improved,” concluded McConnell.

Quarterly Segment Results

In the Steel Processing segment, quarterly net sales fell 14%, or $57.6 million, to $360.5 million from $418.1 million in the comparable quarter of fiscal 2006. The decrease in net sales was the result of lower volumes (down 14%) relative to the prior year, as average selling prices were flat. The average spread between selling prices and material costs improved 11%, due primarily to the new stainless processing business, but significantly lower volume with automotive and construction-related customers resulted in a decline in operating income this quarter compared to the prior year period.

In the Metal Framing segment, net sales decreased 11%, or $23.5 million, to $195.6 million from $219.1 million in the comparable quarter of fiscal 2006. Relative to the prior year, the decrease in net sales was the result of lower volumes (down 8%) and lower pricing (down 3%). Although Metal Framing had a small operating loss, the results represented a significant turnaround from the third quarter of fiscal 2007. Compared to the prior quarter, volumes rose 14% and the spread between selling prices and material costs rose 37%, approaching more normal levels, as higher priced inventory was depleted.

In the Pressure Cylinders segment, net sales increased 23%, or $31.6 million, to a record $169.3 million from $137.7 million in the comparable quarter of fiscal 2006. The increase in net sales was due to higher volumes (up 10%) and higher average selling prices (up 12%). Average selling prices improved as a result of price increases in certain product lines and product mix. Strong performance in Europe and North America was the culmination of several multi-year initiatives to reduce costs, exit unprofitable product lines, introduce new product lines, consolidate facilities and grow profitable lines through capacity and geographic expansion. These actions, along with a strong overall sales effort, led to a 29% improvement in operating income for the quarter. Operating income set a record for both the quarter and the year.

Worthington’s joint ventures added significantly to fourth quarter results. Equity in the net income of six unconsolidated affiliates totaled $16.7 million for the quarter, compared to a record $20.8 million in the year ago quarter. Fiscal 2007 was the best year in the history of the WAVE joint venture for both sales and earnings.

Cost Reduction Initiatives

As part of its continuing efforts to improve the profitability of the company, management has undertaken a review of each of its businesses and established clear profitability goals and objectives for each of them. In addition, management has targeted $35 million to $40 million of incremental reductions to its cost structure through a combination of facility closures, productivity improvements and headcount reductions to be implemented during fiscal 2008. Updates on the progress of this initiative, including its impact on fiscal 2008 results, will be reported in subsequent earnings calls.

Other

Dividend Declared

On May 15, 2007, the board of directors declared a quarterly cash dividend of $0.17 per share payable June 29, 2007, to shareholders of record on June 15, 2007.

Conference Call

Worthington will review fourth quarter results during its quarterly conference call today, June 28, 2007, at 1:30 p.m. Eastern Daylight Time. Details on the conference call can be found on the company web site at www.WorthingtonIndustries.com

Corporate Profile

Worthington Industries is a leading diversified metal processing company with annual sales of approximately $3 billion. The Columbus, Ohio, based company is North America’s premier value-added steel processor and a leader in manufactured metal products such as metal framing, pressure cylinders, automotive past model service stampings, metal ceiling grid systems and laser welded blanks. Worthington employs more than 8,000 people and operates 64 facilities in 10 countries.

Founded in 1955, the company operates under a long-standing corporate philosophy rooted in the golden rule, with earning money for its shareholders as the first corporate goal. This philosophy, an unwavering commitment to the customer, and one of the strongest employee/employer partnerships in American industry serve as the company’s foundation.

Safe Harbor Statement

The company wishes to take advantage of the Safe Harbor provisions included in the Private Securities Litigation Reform Act of 1995 (the “Act”). Statements by the company relating to future or expected performance, sales, operating results and earnings per share; projected capacity and working capital needs; pricing trends for raw materials and finished goods; anticipated capital expenditures and asset sales; projected timing, results, costs, charges and expenditures related to acquisitions or to facility dispositions, shutdowns and consolidations; targeted savings through head count reductions, facility closures and other expense reductions; new products and markets; expectations for company and customer inventories, jobs and orders; expectations for the economy and markets; expected benefits from new initiatives; effects of judicial rulings and other non-historical matters constitute “forward-looking statements” within the meaning of the Act. Because they are based on beliefs, estimates and assumptions, forward-looking statements are inherently subject to risks and uncertainties that could cause actual results to differ materially from those projected. Any number of factors could affect actual results, including, without limitation, product demand and pricing; changes in product mix, product substitution and market acceptance of the company’s products; fluctuations in 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 consolidation and other changes within the steel, automotive, construction and related industries; failure to maintain appropriate levels of inventories; the ability to realize targeted expense reductions such as head count reductions, facility closures and other expense reductions; the ability to realize other cost savings and operational efficiencies on a timely basis; the overall success of, and the ability to integrate, newly-acquired businesses and achieve synergies therefrom; capacity levels and efficiencies within facilities and within the industry as a whole; financial difficulties (including bankruptcy filings) of customers, suppliers, joint venture partners and others with whom the company does business; the effect of national, regional and worldwide economic conditions generally and within major product markets, including a prolonged or substantial economic downturn; the effect of disruption in business of suppliers, customers, facilities and shipping operations due to adverse weather, casualty events, equipment breakdowns, acts of war or terrorist activities or other causes; changes in customer inventories, spending patterns, product choices, and supplier choices; risks associated with doing business internationally, including economic, political and social instability, and foreign currency exposure; the ability to improve and maintain processes and business practices to keep pace with the economic, competitive and technological environment; adverse claims experience with respect to workers compensation, product recalls or liability, casualty events or other matters; deviation of actual results from estimates and/or assumptions used by the company in the application of its significant accounting policies; level of imports and import prices in the company’s markets; the impact of judicial rulings and governmental regulations, both in the United States and abroad; and other risks described from time to time in the company’s filings with the United States Securities and Exchange Commission.

WORTHINGTON INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share)


	Three Months Ended		Twelve Months Ended
	May 31,		May 31,
	2007	2006	2007	2006

Net sales	$ 786,576	$ 821,968	$ 2,971,808	$ 2,897,179
Cost of goods sold	686,712	707,996	2,610,176	2,525,545
Gross margin	99,864	113,972	361,632	371,634
Selling, general and administrative expense	58,171	59,131	232,487	214,030
Operating income	41,693	54,841	129,145	157,604
Other income (expense):
Miscellaneous expense	(2,530)	(1,464)	(4,446)	(1,524)
Gain on sale of Acerex	-	26,609	-	26,609
Interest expense	(4,892)	(6,122)	(21,895)	(26,279)
Equity in net income of unconsolidated affiliates	16,669	20,774	63,213	56,339
Earnings before income taxes	50,940	94,638	166,017	212,749
Income tax expense	12,717	35,240	52,112	66,759
Net earnings	$ 38,223	$ 59,398	$ 113,905	$ 145,990


Average common shares outstanding - basic	84,662	88,627	86,351	88,288
Earnings per share - basic	$ 0.45	$ 0.67	$ 1.32	$ 1.65


Average common shares outstanding - diluted	85,672	89,292	87,002	88,976
Earnings per share - diluted	$ 0.45	$ 0.67	$ 1.31	$ 1.64


Common shares outstanding at end of period	84,908	88,691	84,908	88,691

Cash dividends declared per share	$ 0.17	$ 0.17	$ 0.68	$ 0.68





Reconciliation of net earnings to EBITDA
Net earnings	$ 38,223	$ 59,398	$ 113,905	$ 145,990
Interest expense	4,892	6,122	21,895	26,279
Income taxes	12,717	35,240	52,112	66,759
Depreciation & amortization	15,597	14,983	61,469	59,116
EBITDA	$ 71,429	$ 115,743	$ 249,381	$ 298,144

WORTHINGTON INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)

	May 31,	May 31,
	2007	2006

Assets
Current assets:
Cash and cash equivalents	$ 38,277	$ 56,216
Short-term investments	25,562	2,173
Receivables, less allowances of $3,641 and $4,964 at May 31, 2007 and May 31, 2006	400,916	404,553
Inventories:
Raw materials	261,849	266,818
Work in process	97,633	104,244
Finished products	88,382	88,295
Total inventories	447,864	459,357
Assets held for sale	4,600	23,535
Deferred income taxes	13,067	15,854
Prepaid expenses and other current assets	39,097	34,553
Total current assets	969,383	996,241

Investments in unconsolidated affiliates	57,540	123,748
Goodwill	179,441	177,771
Other assets	43,553	55,733
Property, plant & equipment, net	564,265	546,904
Total assets	$ 1,814,182	$ 1,900,397

Liabilities and shareholders' equity
Current liabilities:
Accounts payable	$ 263,665	$ 362,883
Notes payable	31,650	7,684
Accrued compensation, contributions to employee benefit plans and related taxes	46,237	49,784
Dividends payable	14,440	15,078
Other accrued items	45,519	36,483
Income taxes payable	18,983	18,874
Total current liabilities	420,494	490,786

Other liabilities	57,383	55,249
Long-term debt	245,000	245,000
Deferred income taxes	105,983	114,610
Total liabilities	828,860	905,645

Minority interest	49,321	49,446
Shareholders' equity	936,001	945,306
Total liabilities and shareholders' equity	$ 1,814,182	$ 1,900,397

WORTHINGTON INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

	Three Months Ended		Twelve Months Ended
	May 31,		May 31,
	2007	2006	2007	2006

Operating activities
Net earnings	$ 38,223	$ 59,398	$ 113,905	$ 145,990
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	15,597	14,983	61,469	59,116
Provision for deferred income taxes	(2,242)	(4,459)	(3,068)	(12,645)
Equity in net income of unconsolidated affiliates, net of distributions	28,089	7,098	68,510	702
Minority interest in net income of consolidated subsidiaries	1,848	1,909	5,409	6,088
Gain on sale of Acerex	-	(26,609)	-	(26,609)
Other adjustments	40	3,485	1,936	6,079
Changes in assets and liabilities:
Accounts receivable	(28,404)	(34,871)	8,312	11,616
Inventories	35,362	(13,718)	19,588	(33,788)
Prepaid expenses and other current assets	1,892	41	(2,078)	(9,186)
Other assets	1,578	(171)	4,898	(563)
Accounts payable and accrued expenses	40,339	57,103	(99,283)	79,114
Other liabilities	(290)	961	833	1,152
Net cash provided by operating activities	132,032	65,150	180,431	227,066

Investing activities
Investment in property, plant and equipment, net	(13,557)	(17,027)	(57,691)	(60,128)
Investment in aircraft	-	(185)	-	(16,435)
Acquisitions, net of cash acquired	-	-	(31,727)	(6,776)
Investment in unconsolidated affiliate	-	-	(1,000)	-
Proceeds from sale of assets	146	171	18,237	3,225
Proceeds from sale of Acerex	-	44,604	-	44,604
Purchases of short-term investments	(25,562)	(50,115)	(25,562)	(493,860)
Sales of short-term investments	-	90,013	2,173	491,687
Net cash provided (used) by investing activities	(38,973)	67,461	(95,570)	(37,683)

Financing activities
Proceeds from (payments on) short-term borrowings	(87,914)	7,684	23,966	7,684
Principal payments on long-term debt	-	(142,405)	(7)	(143,416)
Proceeds from issuance of common shares	7,308	2,006	9,866	9,138
Excess tax benefits - stock-based compensation	2,170	-	2,370	-
Payments to minority interest	(960)	-	(3,360)	(3,840)
Repurchase of common shares	-	-	(76,617)	-
Dividends paid	(14,354)	(15,050)	(59,018)	(59,982)
Net cash used by financing activities	(93,750)	(147,765)	(102,800)	(190,416)

Decrease in cash and cash equivalents	(691)	(15,154)	(17,939)	(1,033)
Cash and cash equivalents at beginning of period	38,968	71,370	56,216	57,249
Cash and cash equivalents at end of period	$ 38,277	$ 56,216	$ 38,277	$ 56,216

WORTHINGTON INDUSTRIES, INC.
SUPPLEMENTAL DATA
(In thousands)

This supplemental information is provided to assist in the analysis of the results of operations.


			Three Months Ended		Twelve Months Ended
			May 31,		May 31,
			2007	2006	2007	2006
Volume:
	Steel Processing (tons)		851	994	3,282	3,611
	Metal Framing (tons)		171	186	644	704
	Pressure Cylinders (units)		13,601	12,392	44,891	48,621

Net sales:
	Steel Processing		$ 360,486	$ 418,147	$ 1,460,665	$ 1,486,165
	Metal Framing		195,633	219,094	771,406	796,272
	Pressure Cylinders		169,301	137,730	544,826	461,875
	Other		61,156	46,997	194,911	152,867
		Total net sales	$ 786,576	$ 821,968	$ 2,971,808	$ 2,897,179

Material cost:
	Steel Processing		$ 268,764	$ 321,780	$ 1,106,471	$ 1,139,025
	Metal Framing		140,415	138,030	547,583	508,588
	Pressure Cylinders		80,022	64,584	251,052	221,756

Operating income (loss):
	Steel Processing		$ 14,732	$ 18,118	$ 55,382	$ 61,765
	Metal Framing		(540)	16,715	(9,159)	46,735
	Pressure Cylinders		26,053	20,226	84,649	49,275
	Other		1,448	(218)	(1,727)	(171)
		Total operating income	$ 41,693	$ 54,841	$ 129,145	$ 157,604