Investments in affiliated companies that we do not control, either through majority ownership or otherwise, are accounted for using the equity method. At November 30, 2019, the Company held investments in the following affiliated companies: 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 Worthington”) (50%), Worthington Armstrong Venture (“WAVE”) (50%), Zhejiang Nisshin Worthington Precision Specialty Steel Co., Ltd. (“Nisshin”) (10%) and the Cabs joint venture (20%).

During the first quarter of fiscal 2020, the Company began the process of exploring the potential exit of its interest in the Nisshin joint venture in China. As a result, the Company evaluated its investment for potential impairment. The Company concluded the remaining book value of the investment was fully impaired, resulting in an impairment charge of $4,236,000 within equity income during the three months ended August 31, 2019. On December 19, 2019, the Company finalized an agreement to transfer the risks and rewards related to its 10% interest to the other joint venture partners. As a result, the Company has no further rights or obligations as it relates to the Nisshin joint venture.

During the second quarter of fiscal 2020, the Company’s exploration of strategic alternatives relating to its investment in ArtiFlex resulted in the need to evaluate this investment for potential impairment. Based on the analysis performed, the Company concluded its investment was not impaired, as current and projected cash flows were deemed sufficient to recover the remaining book value of $54,566,000. However, it is possible the Company’s estimate of future cash flows could decline to a level that no longer supports the current book value of the investment. Factors which could have an adverse impact on the current cash flow projections, include, but are not limited to deteriorating market conditions as well as potential outcomes that may result from management’s review of strategic alternatives.

On November 1, 2019, we reached an agreement with an affiliate of Angeles Equity Partners, LLC to contribute substantially all of the net assets of our Engineered Cabs business to a newly-formed joint venture, in which we retained a 20% noncontrolling interest. Immediately following the contribution, the Cabs joint venture acquired the net assets of Crenlo. Our contributions to the Cabs joint venture consisted of the net assets of its primary manufacturing facilities located in Greeneville, Tennessee and Watertown, South Dakota. Our investment in the Cabs joint venture is accounted for under the equity method, due to lack of control.

We received distributions from unconsolidated affiliates totaling $57,316,000 during the six months ended November 30, 2019. We have received cumulative distributions from WAVE in excess of our investment balance, which resulted in an amount recorded within other liabilities on our consolidated balance sheets of $97,243,000 at November 30, 2019. In accordance with the applicable accounting guidance, we reclassified the negative investment balance 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 the investment balance becomes positive, it will again be shown as an asset on our consolidated balance sheet. If it becomes probable that any excess distribution may not be returned (upon joint venture liquidation or otherwise), we will recognize any negative investment 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.

The following tables summarize combined financial information for our unconsolidated affiliates as of the dates, and for the periods presented:

	November 30,		May 31,
(in thousands)	2019		2019
Cash	$	31,641	$	37,471
Other current assets		633,772		594,959
Current assets for discontinued operations		-		35,793
Noncurrent assets		390,433		360,925
Total assets	$	1,055,846	$	1,029,148

Current liabilities	$	202,450	$	236,781
Current liabilities for discontinued operations		-		9,610
Short-term borrowings		1,965		15,162
Current maturities of long-term debt		2,582		33,003
Long-term debt		346,223		321,791
Other noncurrent liabilities		42,144		18,192
Equity		460,482		394,609
Total liabilities and equity	$	1,055,846	$	1,029,148

	Three Months Ended November 30,					Six Months Ended November 30,
(in thousands)	2019			2018		2019			2018
Net sales	$	458,859		$	480,716	$	946,134		$	979,261
Gross margin		97,329			75,515		198,944			179,327
Operating income		63,452			44,592		132,857			116,968
Depreciation and amortization		7,538			6,581		14,627			13,058
Interest expense		3,139			3,382		6,506			6,307
Income tax expense		1,576			3,568		2,578			8,093
Net earnings from continuing operations		104,431			36,523		165,572			101,417
Net earnings (loss) from discontinued operations		(3,990	)		2,028		(1,178	)		3,712
Net earnings		100,441			38,551		164,394			105,129

The amounts presented within the discontinued operations captions in the tables above reflect the international operations of our WAVE joint venture prior to their sale on September 30, 2019. Upon closing of the transaction, the related net assets were deconsolidated resulting in a pre-tax gain within net earnings from continuing operations of $46,238,000, subject to certain post-closing adjustments. The sale of these operations was closed as part of a broader transaction between the joint venture partner, Armstrong World Industries, Inc. (“AWI”), and Knauf Ceilings and Holding GmbH (“Knauf”), a family-owned manufacturer of building materials headquartered in Germany. Our portion of the net gain was $23,119,000 and has been recognized within equity in net income of unconsolidated affiliates.