

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

The Company has two 50% owned subsidiaries, Myers and RHB, for which it is obligated to purchase its partners’ interests totaling $40.0 million, 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 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’ death, the Company has 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):



	As of December 31,
	2018		2017
Members’ interest subject to mandatory redemption	$	40,000	$	40,000
Net accumulated earnings	9,343		7,386
Total liability	$	49,343	$	47,386

Fifty percent of the earnings of these consolidated 50% owned subsidiaries for 2018, 2017 and 2016 was $15.1 million, $11.5 million and $8.9 million, respectively, and were recorded in “Other operating expense, net,” on the Company’s consolidated statements of operations.

The Company must determine whether each entity, including these two 50% owned subsidiaries, in which it participates, is a VIE. This determination focuses on identifying which owner or entity 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. The Company determined Myers is a VIE and we are the primary beneficiary as we exercise primary control over activities of the partnership as the operating/general partner and, pursuant to the terms of the Myers Operating Agreement, 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 consolidated balance sheets and statements of operations, as follows (amounts in thousands):



	As of December 31,
	2018		2017
Assets:
Current assets:
Cash and cash equivalents	$	8,745	$	8,590
Contracts receivable, including retainage	24,109		26,844
Other current assets	14,533		15,672
Total current assets	47,387		51,106
Property and equipment, net	7,219		9,001
Goodwill	1,501		1,501
Total assets	$	56,107	$	61,608
Liabilities:
Current liabilities:
Accounts payable	$	22,211	$	28,448
Other current liabilities	9,811		11,798
Total current liabilities	32,022		40,246
Long-term liabilities:
Other long-term liabilities	1,976		3,491
Total liabilities	$	33,998	$	43,737



	Years Ended December 31,
	2018		2017		2016
Revenues	$	193,677	$	181,589	$	156,202
Operating income	8,819		9,069		6,005
Net income attributable to Sterling common stockholders	$	4,415	$	4,531	$	2,993