NOTE 9. EQUITY INVESTMENTS

Investment in joint venture as of December 31, 2017 reflected the equity interest in our 50% investment in our WAVE joint venture. The WAVE joint venture is reflected within the Mineral Fiber segment 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 2017, 2016 and 2015, 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 2017, 2016 and 2015 were $69.1 million, $86.9 million, and $64.2 million, 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 $31.2 million, $29.8 million and $29.9 million for the years ended 2017, 2016 and 2015, respectively.

Our recorded investment in WAVE was higher than our 50% share of the carrying values reported in WAVE’s consolidated financial statements by $161.0 million as of December 31, 2017 and $166.6 million as of December 31, 2016. These differences are due to our adoption of fresh-start reporting upon emergence from Chapter 11 in October 2006, 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, 2017		December 31, 2016
Property, plant and equipment	$	0.4	$	0.4
Other intangibles		130.2		135.8
Goodwill		30.4		30.4
Total	$	161.0	$	166.6

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. On November 17, 2017, in connection with the Purchase Agreement we entered into with Knauf, the corresponding European and Pacific Rim businesses of WAVE will also be sold. Accordingly, WAVE’s European and Pacific Rim historical financial statement results have been reflected in WAVE’s consolidated financial statements as a discontinued operation for all periods presented. Our equity earnings in joint venture reflected as a component of earnings from continuing operations included $1.7 million, $2.8 million and $2.6 million of equity earnings from WAVE’s European and Pacific Rim businesses in 2017, 2016 and 2015, respectively. Condensed financial data for WAVE is summarized below.

	December 31, 2017		December 31, 2016
Current assets	$	96.8	$	96.3
Current assets of discontinued operations		36.4		16.8
Noncurrent assets		32.6		32.9
Noncurrent assets of discontinued operations		-		17.4
Current liabilities		18.1		33.1
Current liabilities of discontinued operations		8.1		8.2
Other noncurrent liabilities		246.6		244.0

	2017		2016		2015
Net sales	$	344.5	$	330.7	$	309.7
Gross profit		192.7		192.4		172.1
Net earnings		144.3		151.9		136.5

Management evaluated its investment in WAVE for impairment as a result of WAVE’s anticipated sale of its European and Pacific Rim businesses. Based on that evaluation, management concluded that as of December 31, 2017, its investment in WAVE was not impaired.

See discussion in Note 26 to the Consolidated Financial Statements for additional information on this related party.