Noncontrolling and Redeemable Noncontrolling Interests

9 Months Ended

Sep. 30, 2023

Noncontrolling and Redeemable Noncontrolling Interests

8. Noncontrolling and Redeemable Noncontrolling Interests

When acquiring less than 100% ownership of an entity, the Company may enter into agreements that give the Company an option to purchase, or require the Company to purchase, the incremental ownership interests under certain circumstances. Where the option to purchase the incremental ownership is within the Company’s control, the amounts are recorded as Noncontrolling interests within Shareholder’s Equity in the Unaudited Consolidated Balance Sheets. Where the incremental purchase may be required of the Company, the amounts are recorded as Redeemable noncontrolling interests in mezzanine equity in the Unaudited Consolidated Balance Sheets at their estimated acquisition date redemption value and adjusted at each reporting period for changes to their estimated redemption value through Retained earnings (but not less than their initial redemption value), except for foreign currency translation adjustments.

The following table presents Net income (loss) attributable to noncontrolling and redeemable noncontrolling interests between holders of Class C common stock, par value $0.00001 per share (the “Class C Common Stock”) and other equity interest holders for the three and nine months ended September 30, 2023 and 2022:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(dollars in thousands)
Net income (loss) attributable to Class C shareholders	$	33	$	19,286	$	(7,684)	$	51,027
Net income attributable to other equity interest holders	1,001		2,287		1,221		4,083
Net income (loss) attributable to noncontrolling interests	$	1,034	$	21,573	$	(6,463)	$	55,110
Net income (loss) attributable to redeemable noncontrolling interests	1,430		3,092		(2,085)		4,558
Net income (loss) attributable to noncontrolling and redeemable noncontrolling interests	$	2,464	$	24,665	$	(8,548)	$	59,668

The following table presents noncontrolling interests between holders of Class C Common Stock and other equity interest holders as of September 30, 2023 and December 31, 2022:


	September 30, 2023		December 31, 2022
	(dollars in thousands)
Noncontrolling interest of Class C shareholders	$	393,763	$	428,406
Noncontrolling interest of other equity interest holders	29,674		33,691
Total noncontrolling interests	$	423,437	$	462,097

The following table presents changes in redeemable noncontrolling interests:


	September 30, 2023		December 31, 2022
	(dollars in thousands)
Beginning balance	$	39,111	$	43,364
Redemptions (1)	(22,172)		(1,400)

Distributions	(5,374)		(2,822)
Changes in redemption value	621		(8,711)

Net income (loss) attributable to redeemable noncontrolling interests	(2,085)		8,135
Other	(16)		545
Ending balance	$	10,085	$	39,111

(1) Redemptions for the nine months ended September 30, 2023, is associated with redeemable noncontrolling interest of a certain brand we did not previously own. The amount was reclassified as a deferred acquisition contingent obligation (see Note 5).

The noncontrolling shareholders’ ability to exercise any such option right is subject to the satisfaction of certain conditions, including conditions requiring notice in advance of exercise and specific employment termination conditions. In addition, these rights cannot be exercised prior to specified staggered exercise dates. The exercise of these rights at their earliest contractual date would result in obligations of the Company to fund the related amounts during 2023 to 2027. It is not determinable, at this time, if or when the owners of these rights will exercise all or a portion of these rights.

The redeemable noncontrolling interest of $10.1 million as of September 30, 2023, consists of $6.2 million, assuming that the subsidiaries meet certain performance metrics, and $3.9 million upon termination of such owner’s employment with the applicable subsidiary or death.

These adjustments will not impact the calculation of earnings (loss) per share if the redemption values are less than the estimated fair values. As such, there is no related impact on the Company’s earnings per share calculations for the three and nine months ended September 30, 2023 and 2022.

Comprehensive Loss Attributable to Noncontrolling and Redeemable Noncontrolling Interests

For the three months ended September 30, 2023, comprehensive loss attributable to the noncontrolling and redeemable noncontrolling interests was $5.5 million, which consists of $2.5 million of net income and $7.9 million of other comprehensive loss.

For the nine months ended September 30, 2023, comprehensive loss attributable to the noncontrolling and redeemable noncontrolling interests was $34.8 million, which consists of $8.5 million of net loss and $26.3 million of other comprehensive loss.