Investments in Unconsolidated Affiliates

3 Months Ended

Apr. 01, 2023

Equity Method Investments and Joint Ventures [Abstract]

Investments in Unconsolidated Affiliates

Investments in Unconsolidated Affiliates

Tecumseh

The Company owns a 50 percent interest in an unconsolidated affiliate that acquired Tecumseh Products Company LLC (Tecumseh) and an entity that provides financing to Tecumseh.  This investment is 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 entity.  Under the equity method of accounting, this investment is stated at initial cost and is 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 investee’s net 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 investee’s other comprehensive income (loss), net of income taxes, in the Condensed Consolidated Statements of Comprehensive Income and the Condensed Consolidated Statements of Changes in Equity. 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 investee’s net accumulated losses. 

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

(In thousands)	April 1, 2023		December 31, 2022
Current assets	$	217,674	$	248,808
Noncurrent assets	93,532		77,395
Current liabilities	175,645		190,746
Noncurrent liabilities	44,455		43,003

	For the Quarter Ended
(In thousands)	April 1, 2023		March 26, 2022
Net sales	$	113,418	$	125,967
Gross profit	19,816		18,775
Net loss	(4,717)		(1,206)

The Company’s loss from unconsolidated affiliates, net of foreign tax, for the quarter ended April 1, 2023 included net losses of $2.4 million for Tecumseh.

The Company’s income from unconsolidated affiliates, net of foreign tax, for the quarter ended March 26, 2022 included net losses of $0.6 million for Tecumseh.

Retail Distribution

The Company owns a 17 percent noncontrolling equity interest in a limited liability company in the retail distribution business. This investment is recorded using the equity method of accounting. The Company records its proportionate share of the investee’s net income or loss one month in arrears as income (loss) from unconsolidated affiliates in the Condensed Consolidated Statements of Income. The Company’s proportionate share of the investee’s other comprehensive income (loss), net of income taxes, is recorded in the Condensed Consolidated Statements of Comprehensive Income and Condensed Consolidated Statement of Changes in Equity.

The Company’s loss from unconsolidated affiliates, net of foreign tax, for the quarter ended April 1, 2023 included net income of $1.4 million for the retail distribution business.

The Company’s income from unconsolidated affiliates, net of foreign tax, for the quarter ended March 26, 2022 included net income of $0.7 million for the retail distribution business.