

4.	CONSOLIDATED 50% OWNED SUBSIDIARIES

The Company has a 50% interest in two subsidiaries (“Myers” and “RHB”). Both subsidiaries have provisions obligating the Company to purchase each partner’s 50% interests for $20,000 ($40,000 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. All undistributed earnings at the time of the noncontrolling owners’ death or permanent disability for both of these subsidiaries are also mandatorily payable. The Company has purchased two separate $20,000 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:



	September 30, 2019		December 31, 2018
Members’ interest subject to mandatory redemption	$	40,000	$	40,000
Net accumulated earnings	11,272		9,343
Total liability	$	51,272	$	49,343

Fifty percent of the earnings of these consolidated 50% owned subsidiaries for the three and nine months ended September 30, 2019 were approximately $5,500 and $8,200, respectively and for the three and nine months ended September 30, 2018 were $5,100 and $10,400, 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 variable interest entity (“VIE”). The Company determined Myers is a VIE, as Sterling is the primary beneficiary, as pursuant to the terms of the Myers Operating Agreement the Company is exposed to the majority of potential losses of the partnership.

The following table presents the condensed financial information of Myers, which is reflected in the Company’s Condensed Consolidated Balance Sheets:



	September 30, 2019		December 31, 2018
Assets
Current assets:
Cash and cash equivalents	$	11,202	$	8,745
Accounts receivable, including retainage	24,314		24,109
Other current assets	15,079		14,533
Total current assets	50,595		47,387
Property and equipment, net	6,008		7,219
Operating lease right-of-use assets	3,020		—
Goodwill	1,501		1,501
Total assets	$	61,124	$	56,107
Liabilities
Current liabilities:
Accounts payable	$	21,869	$	22,211
Other current liabilities	15,459		9,811
Total current liabilities	37,328		32,022
Other long-term liabilities	1,123		1,976
Total liabilities	$	38,451	$	33,998