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, 2012.

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 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, 2012 ("fiscal 2012") includes additional information about us, our operations and our financial position and should be read in conjunction with this Quarterly Report on Form 10-Q.

We are primarily a diversified metal processing company, focused on value-added steel processing, pressure cylinders and custom-engineered cabs and operator stations for heavy mobile equipment. As of August 31, 2012, excluding our joint ventures, we operated 35 manufacturing facilities worldwide, principally in three reportable business segments: Steel Processing, Pressure Cylinders and the recently-formed Engineered Cabs. Our remaining operating segments, which do not meet the applicable aggregation criteria or quantitative thresholds for separate disclosure, are combined and reported in the "Other" category. These include the Steel Packaging, Commercial Stairs, Construction Services and Worthington Energy Innovations operating segments.

During the first quarter of fiscal 2013, we made certain organizational changes impacting the internal reporting and management structure of our former Global Group operating segment. As a result of these organizational changes, management responsibilities and internal reporting were re-aligned resulting in three new operating segments: Commercial Stairs, Construction Services and Worthington Energy Innovations. These organizational changes did not impact the composition of our reportable business segments.

Additionally, we no longer manage our residual metal framing assets in a manner that constitutes an operating segment. Accordingly, the activity related to the wind-down of our former Metal Framing operating segment, consisting primarily of the sale of assets, has been reported in the "Other" category. Segment information reported in previous periods has been restated to conform to this new presentation.

We also held equity positions in 12 joint ventures, which operated 45 manufacturing facilities worldwide, as of August 31, 2012.

Overview

The Company's performance during the first quarter of fiscal 2013 was strong, aided by significant volume increases in our Pressure Cylinders operating segment, steady performance in our Steel Processing operating segment and solid earnings from our recently-formed Engineered Cabs operating segment.

Volume growth was mixed in the first quarter. Cylinder volumes were very strong, up 47%, driven by acquisitions and improvement in both our domestic and European cylinder businesses. Steel Processing volumes were down 1%, but after excluding volumes from the MISA Metals acquisition, most of which was wound down or sold during the past year, volumes were up 4%.

Equity income from our joint ventures during the quarter was down 8% over last year driven by lower income at Serviacero and ClarkDietrich. However, all of our major joint ventures operated at a profit during the quarter and we received $15.3 million in dividends from them.

The Company continues its strategy of optimizing existing operations and pursuing growth opportunities that add to our current businesses. We initiated the diagnostics phase of the Transformation Plan in our Pressure Cylinders operating segment in the first quarter of fiscal 2012, and these efforts are progressing through each facility. Additionally, during the first quarter of fiscal 2013, we initiated the diagnostics phase of the Transformation Plan in our Engineered Cabs operating segment. This operating segment contributed $64.5 million in net sales during the first quarter of fiscal 2013.

Recent Business Developments

- On August 10, 2012, we issued $150.0 million aggregate principal amount of 12-year unsecured Senior Notes due 2024 through a private placement with seven entities within the Prudential Capital Group. The Senior Notes bear interest at a fixed rate of 4.60%.

- On September 17, 2012, we acquired 100% of the outstanding common shares of Westerman, Inc. ("Westerman") for $70.0 million, of which approximately $6.0 million went to pay down Westerman debt. Westerman is a leading manufacturer of tanks and pressure vessels for the oil and gas and nuclear markets as well as hoists for marine applications. The acquired net assets became part of our Pressure Cylinders operating segment from the closing date.

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 first three months of fiscal 2013 and fiscal 2012 is illustrated in the following chart:

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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 56% of the net sales of our Steel Processing operating segment are to the automotive market. Nearly 40% of the net sales of our Steel Packaging operating segment are to the automotive market. North American vehicle production, primarily by Chrysler, Ford and General Motors (the "Detroit Three automakers"), has a considerable impact on the activity within this operating segment. The majority of the net sales of five of our unconsolidated affiliates are also to the automotive end market.

Approximately 10% of the net sales of our Steel Processing operating segment and substantially all of the net sales of our Commercial Stairs and Construction Services operating segments are to the construction market. 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 trends in the relative price of framing lumber and steel. The construction market is also the predominant end market of three of our unconsolidated joint ventures, WAVE, ClarkDietrich and WMSFMCo.

The net sales of our Pressure Cylinders and Engineered Cabs operating segments, and approximately 34% and 60% of the net sales of our Steel Processing and Steel Packaging operating segments, respectively, are to other markets such as leisure and recreation, industrial gas, HVAC, lawn and garden, agriculture, mining 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 this portion of our business. However, we believe that the trend in U.S. GDP growth is a good economic indicator for analyzing these operating segments.

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

                                                             Three Months Ended August 31,
                                                       2012              2011            Inc /(Dec)
U.S. GDP (% growth year-over-year) 1                       1.7 %            0.5 %                1.2 %
Hot-Rolled Steel ($ per ton) 2                      $      616          $   709         ($        93 )
Detroit Three Auto Build (000's vehicles) 3              2,021            1,898                  123
No. America Auto Build (000's vehicles) 3                3,639            3,122                  517
Zinc ($ per pound) 4                                $     0.84          $  1.03         ($      0.19 )
Natural Gas ($ per mcf) 5                           $     2.74          $  4.30         ($      1.56 )
On-Highway Diesel Fuel Prices ($ per gallon) 6      $     3.82          $  3.90         ($      0.08 )

1 2011 figures based on revised actuals 2 CRU Index; period average 3 CSM Autobase 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 for our products. A year-over-year increase in U.S. GDP growth rates is indicative of an improving economy, which generally increases demand for our products. Conversely, decreasing U.S. GDP growth rates generally have the opposite effect. 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 to cover current replacement costs.

The following table presents the average quarterly market price per ton of hot-rolled steel during fiscal 2013 (first quarter), fiscal 2012 and fiscal 2011:

(Dollars per ton 1)

                             Fiscal Year                           Inc  /  (Dec)
                      2013      2012      2011         2013 vs. 2012            2012 vs. 2011
        1st Quarter   $ 616     $ 709     $ 611     ($  93 )      -13.1 %     $  98         16.0 %
        2nd Quarter     N/A     $ 660     $ 557        N/A          N/A       $ 103         18.5 %
        3rd Quarter     N/A     $ 718     $ 699        N/A          N/A       $  19          2.7 %
        4th Quarter     N/A     $ 684     $ 851        N/A          N/A      ($ 167 )      -19.6 %
        Annual Avg.     N/A     $ 693     $ 680        N/A          N/A       $  13          1.9 %

1 CRU Hot-Rolled Index Average

No single customer contributed more than 10% of our consolidated net sales during the first quarter of fiscal 2013. 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 first quarter of fiscal 2013, vehicle production for the Detroit Three automakers was up 6% over the comparable period in the prior year. Additionally, North American vehicle production during the first quarter of fiscal 2013 increased 16% over the comparable period in the prior year.

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 plant operations and indirectly through transportation and freight expense.