Note 17 - Related Party Transactions

12 Months Ended

Dec. 31, 2012

17.	Related Party Transactions

RLW has historically performed construction contracts for entities owned by its noncontrolling interest owners. These noncontrolling interest owners are also executive managers of RLW, including Mr. Kip Wadsworth who is a member of the board of directors of the Company. During 2011, the Company recognized approximately $283,000 in revenue and $46,000 in gross profit from a few smaller projects owned by the noncontrolling interest owners’ privately-owned entities. These related party contracts had a total contract value of $3.2 million. Collections on account related to these projects during 2011 approximated $525,000. During 2011, one of these contractors filed for bankruptcy and as a result $24,000 billed to such entity was deemed uncollectible. Total related party contract amounts for 2012 were less than $102,000.

The noncontrolling interest owners are also majority owners of a company with which RLW has a service agreement to provide monthly professional and other services (accounting, payroll, reimbursement, computer and postage) for which RLW is reimbursed on a monthly basis. Billings for these services totaled $1.0 million in 2012 and $615,000 in 2011. The Company leases its main office for its Utah operations from a second company which is 98% owned by these owners for $228,500 annually plus common area maintenance charges of $80,800 per year. The office lease expires in 2022. In addition, the Company leases its equipment maintenance shop for its Utah operations from a third company, which is 98% owned by those owners, for $178,300 annually, plus common area maintenance charges of $71,700 per year. The shop lease expires in 2022. The Company also leases field housing for its Utah operations from a company owned by the noncontrolling interest owners for $47,000 annually. This lease expires in 2014. During 2012 and 2011, the Company also paid $52,000 and $72,300, respectively, for aircraft services to a company owned 100% by the noncontrolling interest owners of RLW.

In June 2012, RLW signed a lease for eighteen months with KIWA Properties LLC for the use of property located in Mesa, Arizona to be used in conjunction with one of RLW’s construction contracts. KIWA Properties LLC is owned by the former owner of JBC who has continued as an employee of JBC.

JBC leases office and shop space from the former owner who has continued as an employee of JBC. Monthly rent is approximately $8,000, and the leases expire in August 2016. Rentals under these leases totaled $95,000 and $40,000 in 2012 and 2011, respectively.

During 2012, the Company paid $34,000 for aircraft service to a company owned 100% by the noncontrolling interest owner of RHB. During 2012 and 2011, the Company paid approximately $243,000 and $274,000 to businesses owned by family members of Myers’ management for services, materials and partnership distributions.

The Company entered into a business combination with Richard Buenting, the President and Chief Executive Officer of RHB. Refer to Note 2 for a description of the related party transaction.

An independent member of senior management of the Company reviewed all related party purchases before they were transacted.