Affiliated Companies

9 Months Ended

Sep. 30, 2020

Equity Method Investments and Joint Ventures [Abstract]

Affiliated Companies

Affiliated Companies

At September 30, 2020 and December 31, 2019, the aggregate carrying amount of our investment in affiliated companies that are accounted for under the equity method was $194.2 million and $179.3 million, respectively, and the aggregate carrying amount of our investment in affiliated companies that are not accounted for under the equity method was $15.4 million and $13.4 million at September 30, 2020 and December 31, 2019, respectively. We have elected to record these investments, for which fair value was not readily determinable, at cost, less impairment, adjusted for subsequent observable price changes. We test these investments for impairment whenever circumstances indicate that the carrying value of the investments may not be recoverable.

On November 1, 2019, in connection with the amendment of certain commercial agreements with Daikyo Seiko, Ltd. (“Daikyo”), we increased our ownership interest from 25% to 49% in Daikyo in exchange for $85.1 million in cash and $4.9 million in shares of our treasury stock to certain stockholders of Daikyo. We believe that the increase in ownership interest will not have a material impact on our financial statements.

Our purchases from, and royalty payments made to, affiliates totaled $36.6 million and $97.0 million, respectively, for the three and nine months ended September 30, 2020, as compared to $33.0 million and $85.2 million, respectively, for the same period in 2019. As of September 30, 2020 and December 31, 2019, the payable balance due to affiliates was $28.5 million and $20.8 million, respectively. The majority of these transactions related to a distributorship agreement with Daikyo that allows us to purchase and re-sell Daikyo products.

Sales to affiliates were $2.7 million and $7.7 million, respectively, for the three and nine months ended September 30, 2020, as compared to $2.2 million and $6.9 million, respectively, for the same periods in 2019. As of September 30, 2020 and December 31, 2019, the receivable balance due from affiliates was $1.7 million and $1.9 million, respectively.

Please refer to Note 7, Affiliated Companies, to the consolidated financial statements in our 2019 Annual Report for additional details.