Variable Interest Entities

Under GAAP, the Company must determine whether each entity, including joint ventures in which it participates, is a VIE. This determination focuses on identifying which owner or joint venture partner, if any, has the power to direct the activities of the entity and the obligation to absorb losses of the entity or the right to receive benefits from the entity disproportionate to its interest in the entity, which could have the effect of requiring the Company to consolidate the entity in which we have a noncontrolling variable interest. Where the Company has determined that it is appropriate to consolidate a VIE which it owns a 50% or less interest, the equity held by the remaining owners and their portions of net income (loss) are reflected in the balance sheet line item “Noncontrolling interests” in “Equity” and the statement of operations line item “Noncontrolling owners’ interests in earnings of subsidiaries,” unless the equity interest is deemed to be mandatorily redeemable. Refer to Note 2 regarding the Company’s mandatorily redeemable obligations.

On August 1, 2011, the Company purchased a 50% limited partner interest in Myers. Myers is a construction limited partnership located in California and was acquired in order to expand the geographic scope of the Company’s operations into California. The Company has determined that Myers is a VIE for which the Company is the primary beneficiary and has consolidated Myers into the Company’s financial statements.

The determination that Myers is a VIE and that the Company is the primary beneficiary is primarily due to the following factors. The partnership agreement requires that Sterling provide funding as needed, when available, to the limited partnership. In addition, the partnership is relying on the Company’s surety bonding capacity in order to bid and perform large construction jobs resulting in the Company having joint and several liability for completion of such jobs, and the Company will provide management to the partnership to oversee bidding and management of larger projects. Although the Company will receive 50% of the income from the partnership, it may suffer more than 50% of any losses as a result of its obligation to provide funding and its obligations under the surety bonds. Because the Company exercises primary control over activities of the partnership and it is exposed to the majority of potential losses of the partnership, the Company consolidated Myers within the Company’s financial statements from August 1, 2011, the date of acquisition.

The financial information of Myers, which is reflected in our consolidated balance sheets and statements of operations, is as follows (amounts in thousands):

	As of December 31,
	2015		2014
Assets:
Current assets:
Cash and cash equivalents	$	3,226	$	148
Contracts receivable, including retainage		19,941		21,327
Other current assets		15,887		7,656
Total current assets		39,054		29,131
Property and equipment, net		10,080		9,303
Goodwill		1,501		1,501
Total assets	$	50,635	$	39,935
Liabilities:
Current liabilities:
Accounts payable	$	20,596	$	15,795
Other current liabilities		10,986		9,000
Total current liabilities		31,582		24,795
Long-term liabilities:
Other long-term liabilities		3,370		16
Total liabilities	$	34,952	$	24,811

	Year Ended December 31,
	2015		2014		2013
Revenues	$	175,691	$	144,837	$	82,421
Operating income		7,371		9,319		3,764
Net income attributable to Sterling common stockholders		3,681		4,657		1,879