

5.	CONSTRUCTION JOINT VENTURES

The Company 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. The Company 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 Condensed Consolidated Balance Sheets line item “Noncontrolling interests” in “Stockholders’ equity” and the Statement of Operations line item “Net income attributable to noncontrolling interests”, respectively.

The following table summarizes the changes in noncontrolling interests:



	Three Months Ended March 31,
	2019			2018
Balance, beginning of period	$	7,859		$	4,856
Net income attributable to noncontrolling interest included in equity	46			1,191
Distributions to noncontrolling interest owners	(5,100		)	—
Balance, end of period	$	2,805		$	6,047

Where the Company 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:



	March 31, 2019			December 31, 2018
Total combined:
Current assets	$	70,482		$	64,815
Less current liabilities	(81,857		)	(74,543		)
Net liabilities	$	(11,375	)	$	(9,728	)

Sterling’s receivables from and equity in noncontrolling construction joint ventures	$	11,625		$	10,720



	Three Months Ended March 31,
	2019		2018
Total combined:
Revenues	$	31,384	$	31,357
Income before tax	1,969		3,404
Sterling’s noncontrolling interest:
Revenues	$	15,684	$	15,065
Income before tax	984		1,691

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.