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Note 9 - Equity Method Investment

3 Months Ended

Mar. 31, 2015

Equity Method Investment [Abstract]

Equity Method Investment [Text Block]

Note 9. Equity Method Investment

In May 2011, we acquired a 49.0% interest in TEL for $1.5 million in cash. Additionally, TEL's majority owners were eligible to receive an earn-out of up to $4.5 million for TEL's results through December 31, 2012, of which $1.0 million was earned based on TEL's 2011 results and $2.4 million was earned based on TEL's 2012 results. The earn-out payments increased our investment balance and there are no additional possible earn-outs.

TEL is a tractor and trailer equipment leasing company and used equipment reseller. We have not guaranteed any of TEL's debt and have no obligation to provide funding, services, or assets. We have an option to acquire 100% of TEL through May 31, 2016, by purchasing the majority owners' interest based on a multiple of TEL's average earnings before interest and taxes, adjusted for certain items including cash and debt balances as of the acquisition date. Subsequent to May 31, 2016, TEL's majority owners have the option to acquire our interest based on the same terms detailed above. During the three-month period ended March 31, 2015, we sold tractors and trailers to TEL totaling $3.6 million and received $0.3 million for providing various maintenance services, certain back-office functions, and for miscellaneous equipment. We recognized net deferred gains of $0.1 million representing 49% of the gains on units sold to TEL less any gains previously deferred and recognized when the equipment was subsequently sold to a third party. The deferred gains, totaling $0.9 million at March 31, 2015, are being carried as a reduction in our investment in TEL. At March 31, 2015 and December 31, 2014, we had a receivable from TEL for $2.9 million and $2.2 million, respectively, related to cash disbursements made pursuant to a cash management agreement and related to providing various maintenance services, certain back-office functions, and for miscellaneous equipment.

We have accounted for our investment in TEL using the equity method of accounting and thus our financial results include our proportionate share of TEL's 2015 net income through March 31, 2015, or $1.4 million. Our investment in TEL, totaling $13.5 million and $12.2 million, at March 31, 2015 and December 31, 2014, respectively, is included in other assets in the accompanying condensed consolidated balance sheets. Our investment in TEL is comprised of the $4.9 million cash investment noted above and our equity in TEL's earnings since our investment, partially offset by dividends received since our investment for minimum tax withholdings and the abovementioned gains on sales of equipment to TEL.

See TEL's summarized financial information below:

(in thousands)		As of March 31, 2015				As of December 31, 2014
Current Assets		$	9,748			$	14,525
Non-current Assets			80,984				64,731
Current Liabilities			5,329				16,733
Non-current Liabilities			65,794				45,687
Total Equity		$	19,609			$	16,836

		For the three months ended March 31, 2015				For the three months ended March 31, 2014
Revenue		$	29,025			$	17,646
Operating Expenses			25,552				15,536
Operating Income			3,473				2,110
Net Income		$	2,773			$	1,661