

6.	Construction Joint Ventures

Sterling participates in joint ventures with other major construction companies and other partners, typically for large, technically complex projects, including design-build projects, when it is desirable to share risk and resources in order to seek a competitive advantage. Joint venture partners typically provide independently prepared estimates, furnish employees and equipment, enhance bonding capacity and often also bring local knowledge and expertise. These projects generally have joint and several liability. Sterling selects its joint venture partners based on its analysis of their construction and financial capabilities, expertise in the type of work to be performed and past working relationships with the Company, among other criteria.

For these joint ventures, the equity held by the remaining owners and their portions of net income (loss) are reflected in the balance sheet line item “Noncontrolling interests” in “Equity” and the statement of operations line item “Noncontrolling interests in earnings,” respectively. Refer to Note 6 of the Notes to Consolidated Financial Statements in the 2017 Form 10-K for further information about Sterling's joint ventures.

The following table summarizes the changes in noncontrolling interests (amounts in thousands):



	Nine Months Ended September 30,
	2018			2017
Balance, beginning of period	$	4,856		$	656
Net income attributable to noncontrolling interest included in equity	3,409			2,966
Distributions to noncontrolling interest owners	(1,350		)	—
Balance, end of period	$	6,915		$	3,622

Where Sterling is a noncontrolling venture partner, the Company accounts for their share of the operations of such construction joint ventures on a pro-rata basis using proportionate consolidation on its condensed consolidated statements of operations and as a single line item (“Receivables from and equity in construction joint ventures”) in the condensed consolidated balance sheets. This method is an acceptable modification of the equity method of accounting which is a common practice in the construction industry. Condensed combined financial amounts of joint ventures in which the Company has a noncontrolling interest and the Company’s share of such amounts which are included in the Company’s condensed consolidated financial statements are shown below (amounts in thousands):



	September 30, 2018			December 31, 2017
Total combined:
Current assets	$	64,957		$	64,574
Less current liabilities	(72,617		)	(78,349		)
Net liabilities	$	(7,660	)	$	(13,775	)

Sterling’s receivables from and equity in noncontrolling construction joint ventures	$	11,521		$	11,380



	Three Months Ended September 30,					Nine Months Ended September 30,
	2018		2017			2018		2017
Total combined:
Revenues	$	29,557	$	27,703		$	89,010	$	61,210
Income before tax	1,728		(6,281		)	7,324		(3,611		)
Sterling’s noncontrolling interest:
Revenues	$	12,820	$	13,664		$	41,739	$	28,826
Income before tax	858		(1,629		)	3,716		(358		)

The caption “Receivables from and equity in construction joint ventures” includes undistributed earnings and receivables owed to the Company. Undistributed earnings are typically released to the joint venture partners after the customer accepts the project as complete and the warranty period, if any, has passed.