Equity Method Investments

3 Months Ended

Mar. 31, 2020

Equity Method Investments and Joint Ventures [Abstract]

Equity Method Investments

Note 4 – Equity Method Investments

The carrying value of the Company’s equity method investments as of December 31, 2019 and March 31, 2020 were as follows (in millions):

	As of
	December 31, 2019		March 31, 2020
MLU B.V.	$	1,224	$	1,244
Mission Bay 3 & 4 (1)	140		50
Other	—		5
Equity method investments	$	1,364	$	1,299

⁽¹⁾ Refer to Note 14 – Variable Interest Entities (“VIEs”) for further information on the Company’s interest in Mission Bay 3 & 4.

MLU B.V.

During the first quarter of 2018, the Company closed a transaction that contributed the net assets of its Uber Russia/CIS operations into a newly formed private limited liability company (“MLU B.V.” or “Yandex.Taxi joint venture”), with Yandex and the Company holding ownership interests in MLU B.V. In exchange for consideration contributed, the Company received a seat on MLU B.V.’s board and a 38% equity ownership interest consisting of common stock in MLU B.V. Certain contingent equity issuances of MLU B.V. may dilute the Company’s equity ownership interest to approximately 35%. The investment was determined to be an equity method investment due to the Company’s ability to exercise significant influence over MLU B.V. The initial fair value of the Company’s equity method investment in MLU B.V. was estimated using discounted cash flows of MLU B.V. The equity ownership interest in MLU B.V. was 38% as of March 31, 2020. For the three months ended March 31, 2020, an immaterial amount of loss was recognized from MLU B.V. equity method investment.

Included in the carrying value of MLU B.V. is the basis difference, net of amortization, between the original cost of the investment and the Company's proportionate share of the net assets of MLU B.V. The carrying value of the equity method investment is primarily adjusted for the Company’s share in the income or losses of MLU B.V. and amortization of basis differences. Equity method goodwill and intangible assets, net of accumulated amortization are also adjusted for currency translation adjustments representing fluctuations between the functional currency of the investee, the Ruble and the U.S. Dollar. The Ruble depreciated against the U.S. dollar by approximately 22% between December 31, 2019 and March 31, 2020. The movement in exchange rates will be reflected in the carrying value of the investment with a corresponding adjustment to other comprehensive income (loss) in the Company’s condensed consolidated financial statements at June 30, 2020 as the Company records its share of MLU B.V.’s earnings and reflects its share of MLU B.V.'s net assets on a one-quarter lag basis.

The table below provides the composition of the basis difference as of March 31, 2020 (in millions):

	As of March 31, 2020
Equity method goodwill	$	801
Intangible assets, net of accumulated amortization	112
Deferred tax liabilities	(25		)
Cumulative currency translation adjustments	(64		)
Basis difference	$	824

The Company amortizes the basis difference related to the intangible assets over the estimated useful lives of the assets that gave rise to the difference using the straight-line method. The weighted-average life of the intangible asset is approximately 4.6 years as of March 31, 2020. Equity method goodwill is not amortized. The investment balance is reviewed for impairment whenever factors indicate that the carrying value of the equity method investment may not be recoverable. As of March 31, 2020, the Company determined that there was no other-than-temporary impairment of its investment in MLU B.V. as there was no indication that fair value was below carrying value based, in particular, on consideration of the financial performance of the investee, indication of fair value of the investee and the limited impact of the pandemic in the market in which the investee operates through that date. Indicators of impairment, including any future effect of the pandemic and related government actions as well as other factors, will continue to be monitored.

Mission Bay 3 & 4

The Mission Bay 3 & 4 JV refers to Event Center Office Partners, LLC (“ECOP”), a joint venture entity established in March 2018, by Uber and two companies (“LLC Partners”) to manage the construction and operation of two office buildings owned by two ECOP wholly-owned subsidiaries. The Company contributed $136 million cash in exchange for a 45% interest in ECOP. The two LLC Partners own 45% and 10%, respectively. The amount of contributed cash was recorded as an equity method investment as of December 31, 2019.

In March 2020, two ECOP wholly-owned subsidiaries took out new loans. Upon closing the new financing, the proceeds were used to first pay off the existing construction loan, then to cover the required operation reserve as well as various financing cost, and last, the remaining proceeds were distributed back to the Uber and LLC Partners based on their ownership percentage. As a result, Uber received $91 million from the ECOP as a return of capital investment, and reduced the investment carrying value by the same amount.

As of March 31, 2020, the equity method investment for Mission Bay 3 & 4 was $50 million. The equity ownership interest in ECOP was 45% as of December 31, 2019 and March 31, 2020. For the three months ended March 31, 2020, an immaterial amount of equity earnings was recognized. As of December 31, 2019 and March 31, 2020, the Company determined that there was no impairment of its investment in ECOP.