Investments in Unconsolidated Affiliates

9 Months Ended

Sep. 28, 2024

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 Company’s net income from unconsolidated affiliates, net of foreign tax, for the quarter ended September 28, 2024 included losses of $0.1 million for Tecumseh. The Company’s net loss from unconsolidated affiliates, net of foreign tax, for the quarter ended September 30, 2023 included losses of $4.9 million for Tecumseh.

The Company’s net loss from unconsolidated affiliates, net of foreign tax, for the nine months ended September 28, 2024 and September 30, 2023 included losses of $14.4 million and $7.9 million, respectively, for Tecumseh.

During the first nine months of 2024, the Company advanced Tecumseh $12.5 million, which was comprised of a capital contribution of $8.7 million and a note receivable of $3.8 million. These advances did not change the Company’s proportionate ownership of Tecumseh.

Retail Distribution

The Company owns a 28 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 net income from unconsolidated affiliates, net of foreign tax, for the quarter ended September 28, 2024 included income of $3.3 million for the retail distribution business. The Company’s net loss from unconsolidated affiliates, net of foreign tax, for the quarter ended September 30, 2023 included income of $2.5 million for the retail distribution business.

The Company’s net loss from unconsolidated affiliates, net of foreign tax, for the nine months ended September 28, 2024 and September 30, 2023 included income of $8.5 million and $5.2 million, respectively, for the retail distribution business.