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, 2020, the Company held investments in the following affiliated companies: ArtiFlex Manufacturing, LLC (“ArtiFlex”) (50%), the 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%).

During the first quarter of fiscal 2020, the Company began the process of exploring the potential exit of its ownership interest in Nisshin, its former joint venture in China. As a result, the Company evaluated its investment for potential impairment and concluded the remaining book value of the investment was fully impaired, resulting in an impairment charge of $4,236,000 within equity in net income of unconsolidated affiliates in our consolidated statement of loss for 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 and from that point on, the Company had no further rights or obligations related to the Nisshin joint venture.

On December 31, 2019, the Company contributed the operating net assets, excluding working capital, of its Cleveland facility, (which the Company had previously acquired on October 7, 2019 from Heidtman Steel Products, Inc.) to the Samuel joint venture in exchange for an incremental 31.75% ownership interest in the joint venture. This increased our total ownership interest to 63% and the joint venture’s results have been consolidated within Steel Processing since that time.

On November 1, 2019, we closed on an agreement with an affiliate of Angeles Equity Partners, LLC by which we contributed the net assets of our primary Engineered Cabs manufacturing facilities located in Greeneville, Tennessee and Watertown, South Dakota to the newly-formed Cabs 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 investment in the Cabs joint venture is accounted for under the equity method, due to lack of control.

The Company’s contribution to the Cabs joint venture resulted in recognizing an impairment charge of $35,194,000 in the first quarter of fiscal 2020 when the disposal group met the criteria as assets held for sale. Certain non-core assets of the Engineered Cabs business, including the fabricated products facility in Stow, Ohio, and the steel packaging facility in Greensburg, Indiana, were retained. Refer to “NOTE E – Impairment of Long-Lived Assets” for additional information on the retained assets.

Upon closing of the transaction, the contributed net assets were deconsolidated, resulting in a net gain of $258,000 during fiscal 2020, as summarized below:

We received distributions from unconsolidated affiliates totaling $47,116,000 during the six months ended November 30, 2020. 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 $107,951,000 at November 30, 2020. 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)	2020		2020
Cash	$	49,957	$	68,730
Other current assets		564,359		528,631
Noncurrent assets		391,547		399,731
Total assets	$	1,005,863	$	997,092

Current liabilities	$	205,530	$	174,709
Short-term borrowings		-		500
Current maturities of long-term debt		10,700		37,542
Long-term debt		314,730		346,690
Other noncurrent liabilities		87,087		73,656
Equity		387,816		363,995
Total liabilities and equity	$	1,005,863	$	997,092

	Three Months Ended				Six Months Ended
	November 30,				November 30,
(in thousands)	2020		2019		2020		2019
Net sales	$	451,198	$	453,288	$	856,518	$	923,493
Gross margin		96,561		95,995		189,610		193,531
Operating income		64,890		62,414		122,843		128,637
Depreciation and amortization		8,672		7,538		16,402		14,627
Interest expense		2,832		3,139		5,777		6,506
Income tax expense		2,322		1,272		4,052		1,853
Net earnings from continuing operations		60,943		53,483		117,516		114,624
Net earnings from discontinued operations		-		46,958		-		49,770
Net earnings		60,943		100,441		117,516		164,394

The amount presented within the “Net earnings from discontinued operations” caption in the table above reflects the international operations of our WAVE joint venture prior to their sale on September 30, 2019. The 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. In September 2020, we received the final cash distribution of $2,950,000 for our portion of the remaining proceeds of the sale. The Company corrected certain amounts in the table above for the three and six months ended November 30, 2019, to reflect the international operations of our WAVE joint venture within discontinued operations prior to their sale on September 30, 2019, as those amounts were previously included in net sales, gross margin, operating income, and income tax expense.