Equity Investments

12 Months Ended

Dec. 31, 2013

NOTE 10. EQUITY INVESTMENTS

Investment in joint venture at December 31, 2013 reflected the equity interest in our 50% investment in our Worthington Armstrong Venture (“WAVE”) joint venture. The WAVE joint venture is reflected in our consolidated financial statements using the equity method of accounting.

We use the equity in earnings method to determine the appropriate classification of distributions from WAVE within our cash flow statement. During 2013, 2012 and 2011, WAVE distributed amounts in excess of our capital contributions and proportionate share of retained earnings. Accordingly, the distributions in these years were reflected as a return of investment in cash flows from investing activity in our Consolidated Statement of Cash Flows. Distributions from WAVE in 2013, 2012 and 2011 were $61.1 million, $63.5 million, and $102.4 million (including a special distribution of $50.1 million in December 2011), respectively.

In certain markets, we sell WAVE products directly to customers pursuant to specific terms of sale. In those circumstances, we record the sales and associated costs within our consolidated financial statements. The total sales associated with these transactions were $111.7 million, $114.3 million and $119.0 million for the years ended 2013, 2012 and 2011, respectively.

Our recorded investment in WAVE was higher than our 50% share of the carrying values reported in WAVE’s consolidated financial statements by $183.3 million as of December 31, 2013 and $188.9 million as of December 31, 2012. These differences are due to our adoption of fresh-start reporting upon emergence from Chapter 11, while WAVE’s consolidated financial statements do not reflect fresh-start reporting. The differences are composed of the following fair value adjustments to assets:


	December 31, 2013	December 31, 2012
Property, plant and equipment	$ 0.6	$ 0.7
Other intangibles	152.3	157.8
Goodwill	30.4	30.4
Total	$ 183.3	$ 188.9

Other intangibles include customer relationships, trademarks and developed technology. Customer relationships are amortized over 20 years and developed technology is amortized over 15 years. Trademarks have an indefinite life.

See Exhibit 99.1 for WAVE’s consolidated financial statements. Condensed financial data for WAVE is summarized below:


	December 31, 2013	December 31, 2012
Current assets	$ 122.6	$ 113.3
Non-current assets	40.7	38.5
Current liabilities	28.4	24.9
Other non-current liabilities	240.9	243.2


	2013	2012	2011
Net sales	$ 381.8	$ 368.0	$ 367.2
Gross profit	172.9	163.7	155.7
Net earnings	132.4	125.5	123.7

See discussion in Note 29 to the Consolidated Financial Statements for additional information on this related party.

- 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+ Details