Financial Statement Information Investments in Unconsolidated Subsidiaries (Policies)

9 Months Ended

Sep. 30, 2020

Investments in Unconsolidated Subsidiaries [Abstract]

Equity Method Investments [Policy Text Block]

Investments in Unconsolidated Subsidiaries

Our investment in unconsolidated subsidiaries was $148 million and $139 million as of September 30, 2020 and December 31, 2019, respectively.

Europe Segment

Our investment in unconsolidated subsidiaries in Europe was $129 million and $122 million as of September 30, 2020 and December 31, 2019, respectively. We recorded equity in earnings of $4 million and $5 million during the three and nine months ended September 30, 2020, respectively, and equity in earnings of $4 million and equity in losses of $35 million during the three and nine months ended September 30, 2019, respectively, mainly related to our investment in Mekonomen AB ("Mekonomen").    

On December 1, 2016, we acquired a 26.5% equity interest in Mekonomen for an aggregate purchase price of $181 million. In October 2018, we acquired an additional $48 million of equity in Mekonomen at a discounted share price as part of its rights issue, increasing our equity interest to 26.6%. We are accounting for our interest in Mekonomen using the equity method of accounting, as our investment gives us the ability to exercise significant influence, but not control, over the investee. As of September 30, 2020, our share of the book value of Mekonomen's net assets exceeded the book value of our investment in Mekonomen by $6 million; this difference is primarily related to Mekonomen's Accumulated Other Comprehensive Income balance as of our acquisition date in 2016. We are recording our equity in the net earnings of Mekonomen on a one quarter lag.

During the three months ended March 31, 2019, we recognized an other-than-temporary impairment charge of $40 million, which represented the difference between the carrying value and the fair value of our investment in Mekonomen. The fair value of our investment in Mekonomen was determined using the Mekonomen share price of SEK 65 as of March 31, 2019. The impairment charge was recorded in Equity in earnings (losses) of unconsolidated subsidiaries in our Unaudited Condensed Consolidated Statements of Income.

Mekonomen announced in March 2020 that it would not make a dividend payment in 2020. The Level 1 fair value of our equity investment in the publicly traded Mekonomen common stock at September 30, 2020 was $151 million (using the Mekonomen share price of SEK 93 as of September 30, 2020) compared to a carrying value of $118 million.     

North America Segment

Our investment in unconsolidated subsidiaries in the North America segment was $19 million and $18 million as of September 30, 2020 and December 31, 2019, respectively. We recorded equity in earnings of $0.4 million and equity in losses of $3 million during the three and nine months ended September 30, 2020, respectively. The equity in earnings for the North America equity investments was $0.4 million and $1 million during the three and nine months ended September 30, 2019, respectively.