Investments in Nonconsolidated Affiliates

The company has certain investments in entities that are accounted for using the equity method (“nonconsolidated affiliates”). The investments are included in Other assets in the Consolidated Balance Sheets and the equity earnings are included in Equity earnings from nonconsolidated affiliates, net of tax in the Consolidated Statements of Comprehensive Income. Refer to the tables below for the investment balances that are included in the Consolidated Balance Sheets and for the equity earnings that are included in the Consolidated Statements of Comprehensive Income.



(in millions)	June 3, 2017		May 28, 2016		May 30, 2015
Equity earnings from nonconsolidated affiliates	$	1.6	$	0.4	$	0.1

The company had an ownership interest in five nonconsolidated affiliates at June 3, 2017. Refer to the company's ownership percentages shown below:



Ownership Interest	June 3, 2017	May 28, 2016
Kvadrat Maharam Arabia DMCC	50.0%	50.0%
Kvadrat Maharam Pty Limited	50.0%	50.0%
Kvadrat Maharam Turkey JSC	50.0%	50.0%
Danskina B.V.	50.0%	50.0%
Naughtone Holdings Limited	50.0%	—%

Kvadrat Maharam

The Kvadrat Maharam nonconsolidated affiliates are distribution entities that are engaged in selling decorative upholstery, drapery and wall covering products. At June 3, 2017 and May 28, 2016, the company's investment value in Kvadrat Maharam Pty was $1.8 million more than the company's proportionate share of the underlying net assets. This difference was driven by a step-up in fair value of the investment in Kvadrat Maharam Pty, stemming from the Maharam business combination. This amount is considered to be a permanent basis difference.

Naughtone

On June 3, 2016, the company acquired 50 percent of the outstanding equity of Naughtone Holdings Limited ("Naughtone"), a leader in soft seating products, stools, occasional and meeting tables, for $12.4 million in consideration. Consequently, the company acquired a noncontrolling equity interest in Naughtone that is accounted for under the equity method. In the second quarter of fiscal 2017, the company paid additional purchase consideration of approximately $0.6 million as part of the final net equity adjustment.

As of the June 3, 2016 acquisition date, the company's investment value in Naughtone was $11.3 million more than the company's proportionate share of the underlying net assets. This amount represented the difference between the price that the company paid to acquire 50 percent of the outstanding equity and the carrying value of the net assets of Naughtone. Of this difference, $2.9 million was being amortized over the remaining useful lives of the assets while, $8.4 million was considered a permanent difference.

At June 3, 2017, the company's investment value in Naughtone was $9.8 million more than the company's proportionate share of the underlying net assets, of which $2.3 million was being amortized over the remaining useful lives of the assets, while $7.5 million was considered a permanent basis difference. The change in the permanent basis difference from the prior year was due to changes in foreign currency exchange rates.

Transactions with Nonconsolidated Affiliates

Sales to and purchases from nonconsolidated affiliates were as follows for the periods presented below:



(in millions)	June 3, 2017		May 28, 2016		May 30, 2015
Sales to nonconsolidated affiliates	$	4.0	$	2.5	$	2.5
Purchases from nonconsolidated affiliates	$	4.2	$	0.9	$	0.5

Balances due to or due from nonconsolidated affiliates were as follows for the periods presented below:



(in millions)	June 3, 2017		May 28, 2016
Receivables from nonconsolidated affiliates	$	0.8	$	0.4
Payables to nonconsolidated affiliates	$	0.5	$	0.1

(in millions)

June 3, 2017

May 28, 2016

Investments in nonconsolidated affiliates