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Investments in Unconsolidated Affiliates
9 Months Ended
Feb. 28, 2022
Equity Method Investments And Joint Ventures [Abstract]  
Investments in Unconsolidated Affiliates

NOTE E – 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, 2022, the Company held non-controlling investments in the following affiliated companies:  ArtiFlex Manufacturing, LLC (“ArtiFlex”) (50%), Clarkwestern Dietrich Building Systems LLC (“ClarkDietrich”) (25%), Serviacero Planos, S. de R. L. de C.V. (“Serviacero Worthington”) (50%), Taxi Workhorse Holdings, LLC (“Cabs”) (20%), and Worthington Armstrong Venture (“WAVE”) (50%).  

 

We received distributions from unconsolidated affiliates totaling $77,504,000 during the nine months ended February 28, 2022.  We have received cumulative distributions from WAVE in excess of our investment balance amounting to $87,413,000, which is shown as a separate liability on our consolidated balance sheet at February 28, 2022.  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:  

 

February 28,

 

 

May 31,

 

(in thousands)

2022

 

 

2021

 

Cash

$

12,434

 

 

$

11,651

 

Other current assets

 

1,108,325

 

 

 

733,834

 

Noncurrent assets

 

380,016

 

 

 

382,585

 

Total assets

$

1,500,775

 

 

$

1,128,070

 

 

 

 

 

 

 

 

 

Current liabilities

$

330,237

 

 

$

232,626

 

Short-term borrowings

 

19,101

 

 

 

1,155

 

Current maturities of long-term debt

 

28,690

 

 

 

30,209

 

Long-term debt

 

303,647

 

 

 

311,871

 

Other noncurrent liabilities

 

98,838

 

 

 

92,209

 

Equity

 

720,262

 

 

 

460,000

 

Total liabilities and equity

$

1,500,775

 

 

$

1,128,070

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

February 28,

 

 

February 28,

 

(in thousands)

2022

 

 

2021

 

 

2022

 

 

2021

 

Net sales

$

789,483

 

 

$

470,988

 

 

$

2,392,643

 

 

$

1,327,506

 

Gross margin

 

187,602

 

 

 

103,035

 

 

 

603,778

 

 

 

292,645

 

Operating income

 

144,575

 

 

 

79,090

 

 

 

475,341

 

 

 

201,933

 

Depreciation and amortization

 

7,831

 

 

 

11,228

 

 

 

23,907

 

 

 

27,630

 

Interest expense

 

2,661

 

 

 

2,774

 

 

 

7,833

 

 

 

8,551

 

Income tax expense

 

4,478

 

 

 

1,159

 

 

 

20,938

 

 

 

5,211

 

Net earnings

 

136,346

 

 

 

76,048

 

 

 

449,149

 

 

 

193,564