Investments in affiliated companies that we do not control, either through majority ownership or otherwise, are accounted for using the equity method. At May 31, 2020, the Company held investments in the following affiliated companies: ArtiFlex Manufacturing, LLC (“ArtiFlex”) (50%), Cabs joint venture (20%), Clarkwestern Dietrich Building Systems LLC (“ClarkDietrich”) (25%), Serviacero Planos, S. de R. L. de C.V. (“Serviacero Worthington”) (50%), and Worthington Armstrong Venture (“WAVE”) (50%)

On December 31, 2019, the Company contributed the recently acquired operating net assets of Heidtman Steel Products, Inc.’s Cleveland facility (“Heidtman”) to the Samuel joint venture in exchange for an incremental 31.75% ownership interest in the Samuel joint venture, bringing our total ownership interest to 63%. The Samuel joint venture’s results have been consolidated within Steel Processing since that date. Refer to “NOTE P – Acquisitions” for additional information.

On November 1, 2019, we closed on an agreement with an affiliate of Angeles Equity Partners, LLC by which we contributed 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 our primary Engineered Cabs 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.

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 then 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.

During the fourth quarter of fiscal 2019, we determined our 10% ownership interest in our joint venture in China, Nisshin, was other than temporarily impaired due to current and projected operating losses. As a result, in the fourth quarter of fiscal 2019 an impairment charge of $4,017,000 was recognized within equity income in our consolidated statement of earnings to write down the investment to its estimated fair value of $3,700,000. 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 related to the Nisshin joint venture.

We received distributions from unconsolidated affiliates totaling $122,953,000, $161,079,000, and $89,787,000 in fiscal 2020, fiscal 2019 and fiscal 2018, respectively. 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 $103,837,000 and $121,948,000 at May 31, 2020 and 2019, respectively. In accordance with the applicable accounting guidance, we reclassified the negative balance to the liabilities section of our consolidated balance sheets. We will continue to record our equity in the net income of WAVE as a debit to the investment account, and if it becomes positive, it will again be shown as an asset on our consolidated balance sheets. If it becomes probable that any excess distribution may not be returned (upon joint venture liquidation or otherwise), we will recognize any balance classified as a liability as income immediately.

The following table presents combined information regarding the financial position of our unconsolidated affiliates accounted for using the equity method as of May 31:

The amounts presented within the discontinued operations captions in the table above reflect the international operations of our WAVE joint venture prior to their sale on September 30, 2019. When the sale of these operations closed, it generated a pre-tax gain of $46,238,000, subject to certain post-closing adjustments, that was recorded within net earnings from discontinued operations on WAVE’s books. This sale was 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. In May 2020, we received a cash distribution of $10,000,000 from WAVE related to the September 30, 2019 sale of the international operations. As of May 31, 2020, WAVE has a $5,900,000 receivable from AWI ($2,950,000 of which is Worthington’s portion), related to the remaining proceeds of the sale which are subject to post-closing adjustments as provided by the purchase agreement.

The following table presents summarized financial information for our four largest unconsolidated affiliates as of, and for the fiscal years ended May 31. All other unconsolidated affiliates are combined and presented in the Other category.

(in thousands)	2020			2019			2018
Net sales
WAVE	$	368,820		$	379,103		$	360,395
ClarkDietrich		855,994			892,758			790,887
Serviacero Worthington		273,276			351,671			315,098
ArtiFlex		175,428			201,526			197,061
Other		146,478			32,753			28,578
Total net sales	$	1,819,996		$	1,857,811		$	1,692,019

Gross margin (loss)
WAVE	$	208,040		$	205,909		$	201,581
ClarkDietrich		131,619			93,947			97,437
Serviacero Worthington		15,739			34,494			32,396
ArtiFlex		14,212			12,928			18,266
Other		7,320			(6,000	)		(6,399	)
Total gross margin	$	376,930		$	341,278		$	343,281

Operating income (loss)
WAVE	$	166,404		$	166,969		$	158,697
ClarkDietrich		66,952			33,384			39,153
Serviacero Worthington		7,513			25,636			24,232
ArtiFlex		6,248			5,524			11,395
Other		(23,596	)		(9,964	)		(10,584	)
Total operating income	$	223,521		$	221,549		$	222,893

Depreciation and amortization
WAVE	$	4,032		$	3,634		$	3,318
ClarkDietrich		11,869			11,600			11,864
Serviacero Worthington		4,324			4,319			3,919
ArtiFlex		5,605			6,055			5,515
Other		4,689			875			749
Total depreciation and amortization	$	30,519		$	26,483		$	25,365

Interest expense
WAVE	$	11,061		$	10,547		$	8,365
ClarkDietrich		378			912			114
Serviacero Worthington		87			493			397
ArtiFlex		801			1,443			1,333
Other		1,665			-			-
Total interest expense	$	13,992		$	13,395		$	10,209

Income tax expense (benefit)
WAVE	$	216		$	219		$	119
ClarkDietrich		-			-			-
Serviacero Worthington		3,267			7,629			5,141
ArtiFlex		(15	)		29			208
Other		(15	)		-			-
Total income tax expense	$	3,453		$	7,877		$	5,468

Net earnings (loss)
WAVE (1)	$	202,451		$	162,849		$	152,329
ClarkDietrich		68,899			34,560			39,138
Serviacero Worthington		2,573			16,155			17,577
ArtiFlex		5,461			4,051			9,854
Other		(19,934	)		(8,383	)		(11,922	)
Total net earnings	$	259,450		$	209,232		$	206,976

At May 31, 2020 and 2019, $39,995,000 and $46,838,000, respectively, of our consolidated retained earnings represented undistributed earnings of our unconsolidated affiliates, net of tax.