Investment in Unconsolidated Affiliates

Tecumseh

The Company owns a 50 percent interest in an unconsolidated affiliate that acquired Tecumseh Products Company LLC (Tecumseh). The Company also owns a 50 percent interest in a second unconsolidated affiliate that provides financing to Tecumseh. These investments are recorded using the equity method of accounting, as the Company can exercise significant influence but does not own a majority equity interest or otherwise control the respective entities. Under the equity method of accounting, these investments are stated at initial cost and are adjusted for subsequent additional investments and the Company’s proportionate share of earnings or losses and distributions.

The Company records its proportionate share of the investees’ income or loss, net of foreign taxes, one quarter in arrears as income (loss) from unconsolidated affiliates, net of foreign tax, in the Condensed Consolidated Statements of Income and its proportionate share of the investees’ other comprehensive income (loss), net of income taxes, in the Condensed Consolidated Statements of Comprehensive Income. The U.S. tax effect of the Company’s proportionate share of Tecumseh’s income or loss is recorded in income tax expense in the Condensed Consolidated Statements of Income. In general, the equity investment in unconsolidated affiliates is equal to the current equity investment plus the investees’ undistributed earnings.

The following tables present summarized financial information derived from the Company’s equity method investees’ combined consolidated financial statements, which are prepared in accordance with U.S. GAAP.



(In thousands)	June 30, 2018		December 30, 2017

Current assets	$	236,856	$	246,127
Noncurrent assets	127,783		139,200
Current liabilities	172,658		174,710
Noncurrent liabilities	58,214		58,334



	For the Quarter Ended					For the Six Months Ended
(In thousands)	June 30, 2018		July 1, 2017			June 30, 2018			July 1, 2017

Net sales	$	126,205	$	132,600		$	250,305		$	258,900
Gross profit	11,749		19,600			23,849			35,200
Net income (loss)	471		(217		)	(17,860		)	(2,704		)

The Company’s loss from unconsolidated affiliates, net of foreign tax, for the quarter ended June 30, 2018 included net losses of $6.7 million, offset by a gain of $7.0 million related to a settlement with the Brazilian Federal Revenue Agency for Tecumseh.

The Company’s loss from unconsolidated affiliates, net of foreign tax, for the six months ended June 30, 2018 included net losses of $12.9 million and charges of $3.0 million related to certain labor claim contingencies, offset by a gain of $7.0 million related to a settlement with the Brazilian Federal Revenue Agency for Tecumseh.

Bahrain

On December 30, 2015, the Company entered into a joint venture agreement with Cayan Ventures and Bahrain Mumtalakat Holding Company to build a copper tube mill in Bahrain. The business will operate and brand its products under the Mueller Industries family of brands. The Company has invested approximately $4.5 million of cash to date and will be the technical and marketing lead in return for 40 percent ownership in the joint venture.

The Company’s loss from unconsolidated affiliates, net of foreign tax, for the quarter and six months ended June 30, 2018 included net losses of $0.5 million and $1.6 million, respectively, for Bahrain.