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Investments in Companies Accounted for Using the Equity Method

12 Months Ended

Apr. 30, 2021

Investments in Companies Accounted for Using the Equity Method

Investments in Companies Accounted for Using the Equity Method

9.           Investments in Companies Accounted for Using the Equity Method

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In December of 2017, the Company and SoftBank formed a joint venture, HAPSMobile, which is a Japanese corporation. As of April 30, 2021, the Company’s ownership stake in HAPSMobile was approximately 7%, with the remaining 93% held by SoftBank. In connection with the formation of the joint venture on December 27, 2017, the Company initially purchased shares of HAPSMobile representing a 5% ownership interest in exchange for an investment of 210,000,000 yen ($1,860,000). The Company subsequently purchased additional shares of HAPSMobile in order to maintain a 5% ownership stake in the joint venture. The first such purchase occurred on April 17, 2018, at which time the Company invested 150,000,000 yen ($1,407,000) for the purchase of additional shares of HAPSMobile. On January 29, 2019, the Company invested an additional 209,500,000 yen ($1,926,000) to maintain its 5% ownership stake. On February 9, 2019, the Company elected to purchase 632,800,000 yen ($5,671,000) of additional shares of HAPSMobile to increase the Company’s ownership in the joint venture from 5% to 10%, and on May 10, 2019, the Company purchased 500,000,000 yen ($4,569,000) of additional shares of HAPSMobile to maintain its 10% ownership stake. The Company’s ownership percentage was subsequently diluted from 10% to approximately 5%. On December 4, 2019, the Company purchased 540,050,000 yen ($4,982,000) of additional shares of HAPSMobile to increase its ownership stake to approximately 7%.

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As the Company has the ability to exercise significant influence over the operating and financial policies of HAPSMobile pursuant to the applicable Joint Venture Agreement and related organizational documents, the Company’s investment is accounted for as an equity method investment. At April 30, 2021, 2020 and 2019, the Company recorded

its ownership percentage of the net loss of HAPSMobile, or $10,530,000, $4,982,000 and $3,944,000, respectively, in equity method investment loss, net of tax in the consolidated statements of income. During the fiscal year ended April 30, 2021, the Company recorded its proportion of a loss for HAPSMobile’s impairment of its investment in Loon LLC in the amount of $8,363,000. HAPSMobile initially made its investment in Loon LLC in April 2019. The impairment recorded by HAPSMobile is included in realized and unrealized losses on investments in the summarized financial information shown below. At April 30, 2021 and 2020, the carrying value of the investment in HAPSMobile of $0 and $10,455,000, respectively, was recorded in other assets, long-term.

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Investment in Limited Partnership Fund

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In July 2019, the Company made its initial capital contribution to a limited partnership fund focusing on highly relevant technologies and start-up companies serving defense and industrial markets. The Company made additional contributions of $1,173,000, $977,000 and $525,000 on July 15, 2020, January 4, 2021 and March 24, 2021, respectively. Under the terms of the limited partnership agreement, the Company has committed to make additional capital contributions of $2,377,000 to the fund. The Company accounts for investments in limited partnerships as equity method investments as the Company is deemed to have influence when it holds more than a minor interest. At April 30, 2021 and 2020, the Company recorded its ownership percentage of the net (gain) loss of the limited partnership, or $(49,000) and $394,000, respectively, in equity method investment loss, net of deferred taxes of $11 and $111,000, respectively, in the consolidated statements of income. At April 30, 2021 and 2020, the carrying value of the investment in the limited partnership of $7,168,000 and $4,442,000, respectively, was recorded in available-for-sale long-term investments.

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Summarized financial information of the equity method investments are as follows:

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​	​	​	​	​	​	​	​	​	​	​
​	​	​	April 30,					​	​	​
​		​	2021			2020			​	​
​	​	​	(In thousands)					​	​	​
Current assets	​	​	$	9,106	​	$	67,387	​	​	​
Noncurrent assets	​	​		65,717	​		170,602	​	​	​
Current liabilities	​	​		76,492	​		72,505	​	​	​
​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​
​	​	​	Year Ended April 30,
​	​	​	2021			2020			2019
​	​	​	(In thousands)
Revenues	​	​	$	159	​	$	25	​	$	—
Gross loss	​	​	​	(1,241)	​	​	(1,331)	​	​	—
Realized and unrealized losses on investments	​	​	​	(131,971)	​	​	(7,028)	​	​	—
Net loss	​	​	​	(190,454)	​	​	(85,818)	​	​	(63,107)

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- References

No definition available.

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- Definition

The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 323
-URI http://asc.fasb.org/topic&trid=2196965

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