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Investments in Unconsolidated Affiliates | 9 Months Ended
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Feb. 28, 2023
Equity Method Investments and Joint Ventures [Abstract] |
Investments in Unconsolidated Affiliates | Note D – Investments in Unconsolidated Affiliates Investments in affiliated companies that we do not control, either through majority ownership or otherwise, are accounted for using the equity method. At February 28, 2023, we held noncontrolling investments in the following affiliated companies: Clarkwestern Dietrich Building Systems LLC (“ClarkDietrich”) (25%); Serviacero Planos, S. de R. L. de C.V. (“Serviacero Worthington”) (50%); Taxi Workhorse Holdings, LLC (“Workhorse”) (20%); and Worthington Armstrong Venture (“WAVE”) (50%). On August 3, 2022, we sold our 50% noncontrolling equity interest in ArtiFlex Manufacturing, LLC (“ArtiFlex”) to the unaffiliated joint venture member for net proceeds of approximately $41,795,000, after adjustments for closing debt and final net working capital. Approximately $6,000,000 of the total cash proceeds were attributed to real property in Wooster, Ohio, with a net book value of approximately $6,300,000. This real property was owned by us and leased to ArtiFlex prior to closing of the transaction. For the nine months ended February 28, 2023, we recognized a pre-tax loss of $16,059,000 in equity income related to the sale, including a loss of $300,000 for the settlement of final transaction costs related to the sale during the three months ended February 28, 2023. We received distributions from unconsolidated affiliates totaling $189,910,000 during the nine months ended February 28, 2023. We have received cumulative distributions from WAVE in excess of our investment balance amounting to $116,825,000, which is shown as a separate liability on our consolidated balance sheet at February 28, 2023. In accordance with the applicable accounting guidance, we have reclassified the negative investment 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 the investment balance 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 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:
| February 28, |  |  | May 31, |
(in thousands) | 2023 |  |  | 2022 |
Cash and cash equivalents | $ | 83,482 |  |  | $ | 68,563 |
Other current assets |  | 820,978 |  |  |  | 1,148,029 |
Noncurrent assets |  | 308,512 |  |  |  | 369,608 |
Total assets | $ | 1,212,972 |  |  | $ | 1,586,200 |
Current liabilities |  | 213,496 |  |  |  | 345,097 |
Short-term borrowings |  | 10,000 |  |  |  | 5,943 |
Current maturities of long-term debt |  | 48,898 |  |  |  | 33,054 |
Long-term debt |  | 349,161 |  |  |  | 306,814 |
Other noncurrent liabilities |  | 66,538 |  |  |  | 76,437 |
Equity |  | 524,879 |  |  |  | 818,855 |
Total liabilities and equity | $ | 1,212,972 |  |  | $ | 1,586,200 |
| Three Months Ended |  | Nine Months Ended |
| February 28, |  | February 28, |
(in thousands) | 2023 |  |  | 2022 |  | 2023 |  |  | 2022 |
Net sales | $ | 626,527 |  |  | $ | 789,483 |  | $ | 2,162,134 |  |  | $ | 2,392,643 |
Gross margin |  | 150,698 |  |  |  | 187,602 |  |  | 479,402 |  |  |  | 603,778 |
Operating income |  | 107,994 |  |  |  | 144,575 |  |  | 353,177 |  |  |  | 475,341 |
Depreciation and amortization |  | 6,774 |  |  |  | 7,831 |  |  | 21,826 |  |  |  | 23,907 |
Interest expense |  | 4,607 |  |  |  | 2,661 |  |  | 11,197 |  |  |  | 7,833 |
Income tax expense (benefit) |  | (3,782 | ) |  |  | 4,478 |  |  | (410 | ) |  |  | 20,938 |
Net earnings |  | 111,135 |  |  |  | 136,346 |  |  | 349,556 |  |  |  | 449,149 |

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- Definition The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -URI https://asc.fasb.org/topic&trid=2196965 + Details
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