

5.	Consolidated 50% Owned Subsidiaries, including Variable Interest Entities ("VIE")

The Company has a 50% interest in two subsidiaries (Myers and RHB); both subsidiaries have individual provisions which obligate the Company to purchase each partner's 50% interests for $20.0 million ($40.0 million in the aggregate), due to circumstances outlined in the partner agreements that are certain to occur. Therefore, the Company has consolidated these two entities and classified these obligations as mandatorily redeemable and has recorded a liability in “Members' interest subject to mandatory redemption and undistributed earnings” on the condensed consolidated balance sheets. In addition, all undistributed earnings at the time of the noncontrolling owners’ death or permanent disability are also mandatorily payable. In the event of either Mr. Buenting’s or Mr. Myers's death, the Company purchased two separate $20.0 million death and permanent total disability insurance policies to mitigate the Company’s cash draw if such events were to occur.

The liability consists of the following (amounts in thousands):



	June 30, 2018		December 31, 2017
Members’ interest subject to mandatory redemption	$	40,000	$	40,000
Net accumulated earnings	7,837		7,386
Total liability	$	47,837	$	47,386

Fifty percent of the earnings of these consolidated 50% owned subsidiaries for the three and six months ended June 30, 2018 were $4.7 million, and $5.3 million, respectively and for the three and six months ended June 30, 2017 were $2.6 million and $2.5 million, respectively. These amounts were included in “Other operating expense, net” on the Company’s condensed consolidated statements of operations.

The Company must determine whether any of its entities, including these two 50% owned subsidiaries, in which it participates, is a VIE. The Company determined Myers is a VIE, as we are the primary beneficiary, as pursuant to the terms of the Myers Operating Agreement we are exposed to the majority of potential losses of the partnership. As such, the following table presents the condensed financial information of Myers, which is reflected in the Company’s condensed consolidated balance sheets and statements of operations, as follows (amounts in thousands):



	June 30, 2018		December 31, 2017
Assets:
Current assets:
Cash and cash equivalents	$	—	$	8,590
Contracts receivable, including retainage	27,557		26,844
Other current assets	11,629		15,672
Total current assets	39,186		51,106
Property and equipment, net	8,107		9,001
Goodwill	1,501		1,501
Total assets	$	48,794	$	61,608
Liabilities:
Current liabilities:
Accounts payable	$	21,753	$	28,448
Other current liabilities	9,715		11,798
Total current liabilities	31,468		40,246
Long-term liabilities:
Other long-term liabilities	104		3,491
Total liabilities	$	31,572	$	43,737



	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Revenues	$	45,795	$	38,783	$	85,970	$	62,067
Operating income	1,632		2,246		2,740		2,640
Net income attributable to Sterling common stockholders	816		1,121		1,370		1,316