Good afternoon and welcome to the Worthington Industriessecond quarter earnings results conference call. (Operator Instructions) Iwould now like to introduce your speaker, Ms. AllisonSanders, Director of Investor Relations. Ms. Sanders, you may begin.

Thank you, Hope, and good afternoon,everyone. Welcome to our quarterly earnings conference call. Before we beginour presentation, I want to remind everyone that certain statements made inthis conference call are forward-looking statements within the meaning of thePrivate Securities Litigation Reform Act of 1995. These statements are subjectto risks and uncertainties which could cause actual results to differ fromthose suggested. Please refer to the press release for more detail on factorsthat could cause actual results to differ materially. For those who are interested in listening to this conferencecall again, a replay will be available on the home page of our website atwww.worthingtonindustries.com. With me in the room today are John McConnell, Chairman andChief Executive Officer; John Christie, President and Chief Financial Officer; GeorgeStoe, Executive Vice President and Chief Operating Officer; and Richard Welch,Controller. John McConnell will begin. John.

Allison, thank you. Good afternoon. Thank you for joining usto review our second quarter results. And while I am certainly not pleased withthe results we reported this morning, I have to tell you I am very pleased withwhat we have accomplished during the quarter, which will produce much improvedresults for the second half of fiscal 2008. We will provide some more detail throughout the call onthose things but first, some high level comments on metal framing. Over the past six months, we identified some real issueswell beyond “market conditions” that were driving our poor performance.Further, we developed and have implemented a plan to turn the organizationaround. I am confident in the plan and the pace of implementation to date. In the process, I am also happy to tell you we found manyexcellent people inside the metal framing organization who quickly engaged andembraced the need for change. There are many aspects to turning this companyaround -- better meeting our customers’ expectations, improving our utilizationof our assets, and eliminating costs are all encompassed in various elements ofthe turnaround plan and importantly, all are getting traction. I am not declaring victory by any means, which of coursewould be unwise to declare under any circumstance for any company, but many elementsof this turnaround plan have yet to be played out and they are being executedin a market that is very competitive and may experience some lessening demandfrom the current high levels in the months ahead. What I am saying to you is our metal framing business is todayin a much strong position than its second quarter performance represents.You’ll see improvements in this segment’s results going forward and thereforein Worthington’s total performance. Now I am going to turn this call over to John Christie toreview our financial performance for the quarter.

Thank you, John. Good afternoon, everybody. For our secondquarter of fiscal 2008, which ended on November 30, 2007, we reported earningsper share of $0.18. Excluding $0.03 per share in plant closure relatedrestructuring charges, most of which were non-cash, earnings per share were$0.21 compared to last year’s $0.31. Second quarter sales of $714 million were down 2% from the$729 million during the same period last year. The sales decrease was due tolower average selling prices in all three business segments, which more thanoffset volume increases in each. The gross profit margin fell from 11.5% to 9.8% as a resultof narrower spreads between raw material costs and selling prices in the threebusiness segments. SG&A expense increased $1 million due to higherdepreciation expense associated with our new ERP system. As a percentage ofsales, SG&A expense was 7.7% during the current quarter compared to 7.3% inthe year-ago period. Despite the ongoing impact of higher depreciation expense,SG&A expense is down $10 million on a year-to-date basis and is expected tofall further in coming quarters as our cost reduction initiatives areimplemented. As a result of the lower gross margin, quarterly operatingincome declined from $31 million in the year-ago quarter to $15 million,excluding the impact of restructuring charges. Operating income does not include $15 million in equityincome from what are now nine unconsolidated joint ventures. While the majorityof total equity income comes from our WAVE joint venture, which had recordsecond quarter earnings, equity income was relatively flat as earnings from ournew Mexican joint venture were offset by a decline in earnings at TWB andstart-up expenses at two other newer joint ventures. As a group, the joint ventures generated $177 million insales during the three months corresponding with our second quarter and paid us$15 million in dividends, favorably impacting cash flow. Miscellaneous expense increased $2 million, due primarily…

Thank you, John. I’ll speak to each business from anoperations viewpoint. I am going to focus first on Dietrich Metal Framing. JohnRoberts has done an excellent job of leading this business during a difficulttime. In just a little over three months, John has taken decisive actions andput together a turnaround team at Dietrich to move as quickly as possible toreturn it to profitability. John has made some important changes in his leadership teamand has worked to consolidated under-performing facilities. By the end of thefiscal year, Dietrich will have consolidated five facilities, reducing theirfootprint and increasing their operational efficiencies. John also announced this month the closing of Dietrich’sPittsburgh corporate office. He and his team will be moving to Columbus to ourcorporate headquarters by the end of our fiscal year. Not only is it a costsaving move in terms of headcount, office space, and eliminating redundantcorporate functions, but having his team here to interact with the executiveteam, staff functions like purchasing, and other business segments will bebeneficial on many fronts. Dietrich announced a price increase in mid-October, whichwas followed by our competition. We have also announced an additional priceincrease for the beginning of January. We have confidence that these increaseswill be absorbed in the marketplace because the steel mills are faced withdramatically escalating costs as coking coal, iron ore, and transportationcosts are seeing significant increases. As a result, the mills are very firm intheir pricing going into 2008. Dietrich’s turnaround team has developed a plan to reducetheir operating platform, reduce material and operating costs, increase thetransactional market price, and improve customer service. Because of the positive changes in process, we believeDietrich had its low point in the most recent quarter and will continue toimprove with each month of the new calendar year. While their actions are notevident in today’s results, we do…

Thank you, George. I’ll be brief. Continued improvement inmetal framing and to a lesser extent, steel processing, is important to ourfuture and both are making good strides to improve results for the remaininghalf of our fiscal year. In addition, we are very pleased with our continuedadvancement of our two internal start-ups, Worthington Integrated BuildingSystems, our mid-rise and residential framing company, and Steelpac, our metalpackaging company. Our building systems company continued profitable trendswith both divisions this quarter. The residential group, concentrating onmilitary projects, has expanded operations on two mainland bases, Fort Campbelland Fort Knox. In the mid-rise division, our sharpened marketing effortshave resulted in doubling our quotation activity and backlog in the hospitalityindustry. We believe the hospitality industry will continue its positive growthin new prototypes over the next several years and our products are extremelywell-positioned. Steelpac is continuing to generate much interest around thesteel palette which offers a needed alternative and is 100% recyclable solutionto moving goods. Our first automated line remains on track for productdeliveries in February. At this point, we’d be happy to invite your questions.

Hope, will you set up the questions?

(Operator Instructions) Sal Tharani, you may ask yourquestion and please state your company name.

A quick question on your comment in the press release on theEuropean business on pressure cylinder, that you are seeing some increasedproduction at competitors. Can you elaborate a little bit on that? Are thesenew entrants or are these people who are already there?

I think it’s a combination of both, Sal, but I’m going tolet George expand on that for you.

Primarily, there is a competitor of ours in Poland that isadding capacity from what they have done before. They’ve been coming on withthat capacity slower. Because of the weakness of the dollar, we’ve also seensome competition coming from here in North America with people trying to shiphigh pressure cylinders into Europe to take advantage of the current marketconditions.

Are you guys exporting anything?

Yes, we are.

And then next thing, you mentioned that mills are very firmin raising the prices early next year, and I know you always mention that yourcontract business is always back-to-back. Are you having any difficulty inpassing those price increases to the contracts?

We are not.

So it’s -- I mean, your primary contractors are -- I mean,counter-parties are -- and they are accepting those?

Are you asking me is the price increases, are contractualcommitments already made going to be broken on either side?

No, I’m asking for the new contracts, for rollovers.

Those we have not resigned yet.

Okay, but do you expect them to be acceptable? Do you thinkthere’s a -- you mentioned the mills are very firm that they are going to raiseprices. Do you think that your customers will be able to accept that?

I think the information out in the public sector aboutwhat’s going on in the steel business, their clarity in what they are going todo is all there, so yes, I think they will understand the situation. Nobodyreally likes rising prices but I do think the industry has prepared and pavedthe pathway for these increases that are coming.

Okay, great. Thank you very much.

Our next question is from Bob Richards.

The metal framing business quarter over quarter, I see salesprice degrading just slightly, $11.38 to $11.19, but [coking coal] price, thisis just on an AMM index, kind of came up about -- I don’t know, $30 or so, $25.How confident are you going forward into ’08 in realizing a greater price forthese metal framing products because I certainly see maybe margin squeeze ifyou don’t realize that.

We are very confident.

Fair enough. Thanks very much.

Timothy Hayes, you may ask your question and pleasestate your company name. Tim Hayes - Davenport& Company: A couple of questions on metal framing; just on the priceincreases there were announced in mid-October, there was a 10% increase. Yousaid a portion of that was accepted by customers. How much are we talking thatstuck?

It’s always a continuing saga, so when you announce a priceincrease, as you all know, the price doesn’t change the next day. We have torun out commitments that were made prior to that date on buildings that wereout in the future, so throughout the rest of the quarter, throughout theremaining month-and-a-half, you saw the price increase continue to grow andtake form. At the end of November, you’d find a number that was closerto the 10 than closer to a 5, and we expect that will continue to grow as thisone goes on and another one is coming in January. Tim Hayes - Davenport& Company: The one in January, what’s the percentage on that?

It’s also 10. Tim Hayes - Davenport& Company: And the mix continued to deteriorate. I think that’s thesecond, at least the second quarter in a row. How much could this deteriorationcontinue, or is it to the point where housing has hit such a weak point thatthe mix is about as bad as it can get?

I would say the mix is about as bad as it is going to get.We are not, when we talk about improving results, we are not factoring in anypick-up on the high margin products that go into residential. So we arediscounting any improvement there but we don’t expect it to get worse. Tim Hayes - Davenport& Company: My final question is on the cost savings, some of thespecifics. In the first quarter release, you detailed out the $20 million invery good detail, where and when it was going to hopefully be achieved. Anyupdate on that? Because we were looking for at least $2 million cost savings inmetal framing in the second quarter, maybe some others, some more savings inSG&A and more in metal framing. I just wanted to get an update -- how muchwas achieved in Q2, where do we stand on your $20 million that you’ve targeted,et cetera?

Really, in SG&A, which true SG&A, we took out about$1.7 million to $2 million. However, we had increases -- that would becorporate SG&A and the Dietrich division and other things. We also had someoffsets to that which would be freight, utilities, et cetera. But as far asday-to-day operations of normal administrative SG&A, we probably took outabout $1.5 million in this quarter. Tim Hayes - Davenport& Company: Okay, so that -- so basically $1.5 million has been achievedwith a $20 million -- $20 million that you’ve taken steps that you know you aregoing to get over the next several quarters, correct?

Well, a lot of -- I think we spelled out last time that theywould be broken into plant closure expenses, various items like that. As JohnMcConnell said, we are on track with that and those savings will be recognized.The remaining part of 2008, ’09, and the first part of 2010. Tim Hayes - Davenport& Company: Okay, and then my final question, I guess on the metalframing that hopefully the second quarter is the worst. My only concern thereas we head into the winter months and some seasonality, is that -- isseasonality a factor and have you accounted for that? Why wouldn’t the Februaryquarter be actually maybe a little worse than the second quarter?

We absolutely factored that in. When we look at nextquarter, we’re starting in a hole. December is always a bad month in thisdivision and always will be. You lose probably over half the month with peopleshutting down and sometimes weather gets in the way. However, starting in January is when we talk aboutmonth-over-month improvement in ’08. That we see that things will continue toopen back up volume wise and continue to build throughout the year. Obviouslyas you get into spring and summer, the volume rates ought to continue to comeup. There’s been a lot of mix news on where this segment ofconstruction goes on the commercial side. One of the most recent data points welooked at on the architectural building index would indicate that there iscertainly a lot being put in the pipeline that would say this will not slowdown. As prices rise, going back to other things we’ve talkedabout here, as mills increase their price and as we have to increase ours, youcould always get some slow down in what’s in that pipeline. And even if itfalls off some, that’s the way we are thinking of things today, that it mayslow down somewhat but we all have to remember that they are relatively stronglevels today. Tim Hayes - Davenport& Company: Very good. Thank you.

Michelle Applebaum, you may ask your question and pleasestate your company name.

I was going to ask you, when we spoke about a year ago aboutsome of the challenges that the processing business has had the last few yearsin a steel recovery, I thought you made some good points about the basic issueis your supply base is consolidated but your competitive situation in theprocessing business is not and your customers are relatively consolidated andunder pressure. And you said that there were probably two things that couldmake a big difference for you. One was that if you were able to improve yourpenetration into transplant markets and then the other was if there were someconsolidation on the processor side. So in the last year, we have notnecessarily seen either and in fact, we’ve seen conditions deteriorate in yourcustomer base and most probably conditions in your supplier base tighten interms of the reduction in imports, perhaps, and the economics of imports, andfurther consolidation in terms of the mills domestically, particularly Stelco. So I’m just wondering, when you say that you think that theprices that you are getting in these new contracts for next year could bepassed through, I’m wondering number one, why and what’s changed? And numbertwo, just wondering what can be done to structurally improve performance inthat business?

We’ll have to get you a smaller filing cabinet if you’rekeeping notes from two years ago.

No, that was last year.

Okay, okay.

And I just moved to newer, bigger offices, so I can saveeven more.

Well, I’m glad you are on the call because I understoodearlier you might not make it, so a pleasant surprise. You’re right. I mean,certainly the broad dynamics of this business remain troubling. I don’t thinkit’s beyond our ability to impact it in a positive way, so first when you thinkback to Mr. Stoe’s comments earlier, one of the very -- one of the things weare very pleased with in Mark Russell and the sales group and steel in the lastsix -- four to six months, is that we have increased volumes in a fairlysignificant way for the first time in many years. We have been very aggressive in pricing to do so. In planningin this company, our first priority is to get volume running back through theveins of this company. As you know, it combines up and matches up with a veryaggressive cost reduction effort we have going on here that we believe we canrebolster any margin deterioration that occurred on an individual transactionbasis. The volume itself primarily offsets in gross margin dollarsany erosion in margin as it currently stands, so when you ask me about -- and Ihope I wasn’t misleading earlier, we will continue to be aggressive in ourpricing stances as we take on new contracts and new opportunities for volume. Ibelieve the increase will go through in some form. It may not be full form butwe’ll be very thoughtful about where and why we take any haircuts from whereour margin might currently be from the previous contracts or previous year withany particular customer. So we are very focused on volume and we are focused onreducing cost and therefore reducing any margin pressure that has been there inthis segment of the industry. The dynamics certainly apply margin pressurehere. There’s no question about it. Transplants, we continue to make in-roads in small ways butcontinue to keep contacts open and some business coming our way. It was kind ofinteresting that not in the steel company but through other things that we aredoing working with transplants, you would have found two transplant companiesin the top 25 in the second quarter. That was -- that’s a very positive thingfor us and a way that we continue to bring steel into the mix that we are doinga number of different tooling jobs now that relate to transplants that we hadnot been doing a year ago. So little by little, we keep [whittling] away with that,keep our name up front, putting the pressure of the full face of the company onthat issue, trying to get our name better known and them more comfortable withus as a producer.

Okay. That’s a great answer and you obviously are keepingyour files from a year ago also, because it’s consistent with your answer then.So then things are being worked from the ground up -- is there any way to seeany consolidation in this sector or is that just going to have to take care ofitself?

That’s a good question. I think it’s largely going to haveto take care of itself. I mean, we -- you also -- people listening to whatGeorge said, we are really focused, as we should be, I believe, in I think theword was scouring the planet for ways to grow our cylinder business. There aremany opportunities there. We have [fine] margins, it’s operating very well, sothat’s our focus for growth, is that vehicle, as well as WAVE. You know, we kind of look at steel and metal framing rightnow as you kind of have to earn the right to grow at this point, which does notmean there would never be an acquisition made by us in this space if we felt itwould help us stabilize that business.

And would there be any opportunities for allegiances orcross-share ownership or something with -- you know, in the past, we’ve seenJapanese companies typically don’t acquire steel companies here but they makean equity investment or create a joint venture that 20 years later turns intoan acquisition. Are you seeing interest from either traders or mills? I’veheard the Japanese would like to be doing more here in steel, that could helpWorthington particularly with the transplants but then also potentially withsupply? Is there anything like that that you would contemplate?

Well, you know, again, I’ve agreed with the fact that thissegment of our business is dynamically challenged, has been for well over 10years, so there -- and secondly, I would add that we have a clear record ofsuccessfully operating in a joint venture environment, so we would certainlyentertain anything that we thought was a good alternative for our long-termability to create shareholder value in this business segment. It is not an active part of our platform at the moment butit has certainly been discussed and will always be something to consider.

Okay, terrific. Thanks.

Bob Richards, you may ask your question and please stateyour company name.

John, this is kind of along those same lines that was askedjust recently here, but I appreciate that you were able to increase your volumesequentially quarter over quarter and I believe you said you went out and triedto build up your book a little bit. Was that more -- can you give us -- wasthat contract business or tolling business or traditional mix? Can you givesome color on that?

It was primarily all direct business. We have some tollingbusiness but that was not counted in that number that George spoke of, of a 10%year-over-year rise. It was not all necessarily contract business though, but itwas primarily out of our larger customer base that we were focused and probablypredominantly mixed with contract business.

Okay, thank you very much and best of luck.

Sal Tharani, you may ask your question.

Another question I have is on the tolling business. You saidyou have seen some increase in the tolling business and that I believe ismostly through the [Arrow] companies. Is this indicative that things are goodinto [Arrow] business? Or is it that you are getting share, market share, or isit that the nature of the business is changing where [Arrow] companies aredirectly buying from the mills and using service centers for tolling purposesonly, rather than buying through the service centers?

I think largely it is working the relationships we have withthe mills and as we look at the change we’ve made in our purchase departmentand how we approach this subject with everybody, and they are just doing a verygood job at acquiring business. I don’t know if George or John has anything toadd to that.

No, I think John was right on target. I think that we’veover the last probably two years really made a strong effort towards improvingthe relationships we have with our mill suppliers and I think some of that hasled to us getting some additional opportunities we might not have gotten in thepast.

So this is not the business you would have probably gottenas a contract directly with the end user and you sort of -- they decided to gothrough the tolling --

I’m not sure we can give you the perfect answer on that butI believe the answer is it is largely business that was in the tollingenvironment that we have gotten to come our way.

Okay, great. Thank you very much, guys.

Our next question is from Leo Larkin. You may ask yourquestion and please state your company name. Leo Larkin - Standard& Poor’s Equity Research: Could you remind us what CapEx and DD&A will be for thisyear? And also for fiscal ’09, if that’s possible?

The $60 million is [inaudible] DD&A and CapEx, and itwill probably be -- without acquisition, it will probably be very close to thatnext year. Leo Larkin - Standard& Poor’s Equity Research: Thank you.

Muhammed Rusi, you may ask your question and please stateyour company name.

Just a quick question on the metal framing division, youguys did mention that you are seeing increased competition. I guess in theconstruction environment on the residential side, it’s been impacted severelyon the negative side and people are -- there is sort of news out there thatcommercial might be seeing a little bit of a fall. The new competition, couldyou give a little bit more color in terms of where you are seeing increasedcompetition from?

If I start answering the question you didn’t ask, because Igot a little confused in there, jump in and tell me so. We have had certainly in the direct reduction of studs,increasing competition that really started back in ’04, let’s call it. Therewas a lot of money in the industry as steel prices were going up rapidly and anumber of smaller companies serving very local markets sprung up across the country. I believe the factors, and I haven’t gone back to thesenumbers for a while, but were in the 20% to 60% increase in competitivefootprint in various regions we compete in across the country. The industry, the commercial space itself in almost everyfacet from our distributors to framers that work directly in line with ourproduct, all are facing significantly increased competition as people who dosimilar things, primarily in residential markets, are out looking for workanywhere they can find it. So that’s another side where if you are referencingthat, we’ve had -- we say an increase in competition in the full channeldelivering this product. Did that help?

Yeah, no, that was perfect. Thank you.

Our next question comes from Timothy Hayes. You may ask yourquestion. Tim Hayes - Davenport& Company: Yes, just a follow-up on -- you were buying back stock inyour first quarter. I think if my math is right, it was around $21 a share.Given where the stock is today, would free cash flow, the highest priority offree cash flow go into buy back shares at this point?

Much of last quarter wasn’t so much price point, which we’venever really talked about, but as you would expect, we are always evaluatingthe opportunities we have that may call for capital. So buying back shares is always a high option on our list.Some of the things that would have required significant amounts of capital thatwe were looking at during the last quarter certainly have come to a point thatwe know they won’t require nearly as much as we might have thought, if we areable to get some of those opportunities over the goal line. So that will, until something else comes up, certainlyelevate our view of share buy-back. Tim Hayes - Davenport& Company: And just to clarify, some of those other opportunities arepossible acquisitions that you are looking at?

That would be correct. Tim Hayes - Davenport& Company: All right, very good. Thank you.

I am showing no further questions. (Operator Instructions) Iam showing no further questions at this time.

Thank you, Operator. In closing, let me just say that thenext six months are very critically important to us. I have told you that wewill generate stronger earnings in our third and fourth quarter. I am confidentin our plans to do so and we will. Thank you very much.

This concludes today’s conference. Thank you.