[WORTHINGTON LOGO]
December 1, 2004
Rufus Decker
Accounting Branch Chief
Securities and Exchange Commission
Division of Corporation Finance
Washington, D.C. 20549-0510
Re: Comment letter dated November 16, 2004, File No. 1-8399
Dear Mr. Decker:
This letter is in response to your comments related to the Form 10-K for the
period ended May 31, 2004 and the Form 10-Q for the quarter ended August 31,
2004 of Worthington Industries, Inc. (the "Company"). We take very seriously our
responsibility to provide complete and accurate disclosures to the users of the
financial information included in our filings. In preparing this information, we
review the disclosure requirements established by the various governing bodies
and reach a conclusion as to what is appropriate. We also consult with our
independent auditors and our legal counsel. We feel this process ensures that
what we report is in material compliance with the requirements. We will continue
to employ this process in monitoring the changing disclosure requirements to
ensure that we are in compliance. The following information consists of our
responses to your letter and each response has been numbered to match the
comments in your letter.
SEGMENT OPERATIONS
2. As disclosed in the segment footnote, the "Other" category includes
corporate related items, results of immaterial operations and income and
expense not allocable to the reportable segments. The operating loss for
this "Other" category was $1.0 million in fiscal 2004 compared to a loss of
$10.0 million for fiscal 2003. This $9.0 million improvement is mainly due
to a $4.3 million and a $2.7 million improvement in the Worthington Machine
Technology ("WMT") and the Steelpac operations, respectively. In fiscal
2003, management decided that WMT would stop servicing external customers
and focus only on the internal needs of Worthington Industries. This
decision resulted in the elimination in fiscal 2004 of the $2.6 million
operating loss recorded in fiscal 2003 and also in fiscal 2003 we recorded
a $1.7 million reserve for severance and other items. The fiscal 2004
operations of Steelpac improved by $2.0 million over fiscal 2003. In
addition, $0.7 million of equipment was written-off by Steelpac in fiscal
2003.
In future filings, significant fluctuations in operating income (loss) for
the "Other" category will be discussed in the segment MD&A.
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CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS
3. a. In future filings, the table of contractual cash obligations will
include estimated interest payments on debt. The estimated interest
expense for our debt for the periods reviewed is:
AS OF MAY 31, 2004 PAYMENTS DUE BY PERIOD
-----------------------------------------------------
LESS THAN 1 - 3 4 - 5 AFTER
IN MILLIONS TOTAL 1 YEAR YEARS YEARS 5 YEARS
----- ------ ----- ----- -------
Estimated interest payments
on long-term debt $ 78.6 $ 19.9 $ 29.6 $ 19.4 $ 9.7
AS OF AUGUST 31, 2004 PAYMENTS DUE BY PERIOD
-----------------------------------------------------
LESS THAN 1 - 3 4 - 5 AFTER
IN MILLIONS TOTAL 1 YEAR YEARS YEARS 5 YEARS
----- ------ ----- ----- -------
Estimated interest payments
on long-term debt $ 73.7 $ 19.9 $ 29.6 $ 19.4 $ 4.8
b. We plan to fund our pension obligations based upon the annually
calculated minimum funding requirements of ERISA. This calculation is
zero for fiscal 2005. Therefore, there is no planned amount to
disclose. In addition, the Company does not have any post-retirement
benefit obligations.
NOTE A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General
-------
4. In the future, we will include in our summary of significant accounting
policies the following disclosure:
Shipping and Handling Fees and Costs: Shipping and handling fees billed
to customers are included in net sales and shipping and handling costs
incurred by the Company are included in cost of goods sold.
Property and Depreciation
-------------------------
5. In the future, we will include in our summary of significant accounting
policies under the Property and Depreciation heading the following
disclosure:
Buildings and improvements are depreciated over 10 to 40 years and
machinery and equipment over 3 to 20 years.
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NOTE B. SHAREHOLDERS' EQUITY
6. We have not disclosed the reclassification adjustments for other
comprehensive income because there has either not been an adjustment or any
such adjustment has been immaterial. The only reclassification adjustment
for fiscal 2004 was $248,000 related to the cash flow hedges. If these
adjustments become material in the future, we will disclose them as
required by SFAS 130.
7. Based on the amount of zinc and natural gas commodity usage hedged, the
estimated net gains reported in other comprehensive income at May 31, 2004
expected to be reclassified into net earnings within the next twelve months
was $1,653,000. We will disclose this information in our next filing on
Form 10-K.
NOTE H. INDUSTRY SEGMENT DATA
8. Net sales for the Canadian operations have not been separately disclosed
because they only comprise approximately 1% of total consolidated sales. In
our next filing on Form 10-K, we will adjust our geographic disclosure as
follows:
Net sales for the years ended May 31 for our locations grouped in the following
geographic areas are as follows:
IN THOUSANDS 2004 2003 2002
---- ---- ----
United States 2,259,609 2,103,491 1,654,976
Canada 24,680 24,639 18,912
South America - - 4,600
Europe 94,815 91,760 66,473
---------- ---------- ----------
TOTAL $2,379,104 $2,219,890 $1,744,961
========== ========== ==========
Long-lived assets grouped in the same manner are as follows:
IN THOUSANDS 2004 2003 2002
---- ---- ----
United States $ 528,596 $ 712,530 $ 739,169
Canada 2,552 3,139 3,426
South America - - -
Europe 24,246 27,375 24,001
---------- ---------- ----------
TOTAL $ 555,394 $ 743,044 $ 766,596
========== ========== ==========
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In responding to your comments, we acknowledge that:
- we are responsible for the adequacy and accuracy of the disclosure in our
filings;
- staff comments or changes to disclosure in response to staff comments do
not foreclose the Commission from taking any action with respect to the
filing; and
- we may not assert staff comments as a defense in any proceeding initiated
by the Commission or any person under the federal securities laws of the
United States.
We believe the above explanations have been responsive to your comments. Should
you need further information, please contact Richard Welch at 614-840-3437.
Sincerely,
/s/ John S. Christie
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John S. Christie
President and Chief Financial Officer
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