10.

EQUITY METHOD INVESTMENT

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'

2011

results and

$2.4

million was earned based on TEL'

2012

results. The earn-out payments increased our investment balance and there are no additional earn-outs payable for future results.

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. In

May

2016,

the operating agreement with TEL was amended to, among other things, remove the previously agreed to fixed date purchase options. Our option to acquire up to the remaining

51%

of TEL would have expired

May

31,

2016,

and TEL’s majority owners would have received the option to purchase our ownership in TEL. The options previously in effect were eliminated, and we are discussing with TEL’s owners a replacement option structure and other alternatives. TEL’s majority owners are generally restricted from transferring their interests in TEL, other than to certain permitted transferees, without our consent. For the years ended

December

31,

2016

and

2015,

we sold tractors and trailers to TEL for

$0.4

million and

$6.2

million, respectively, and received

$5.0

million and

$1.3

million, respectively, for providing various maintenance services, certain back-office functions, and for miscellaneous equipment. We reversed previously deferred gains of

$0.2

million and less than

$0.1

million for the years ending

December

31,

2016

and

2015,

respectively, representing

49%

of the gains on units sold to TEL less any gains previously deferred and recognized when the equipment was sold to a

third

party. Deferred gains totaling

$0.6

million and

$0.8

million at

December

31,

2016

and

December

31,

2015,

respectively, are being carried as a reduction in our investment in TEL. At

December

31,

2016

and

2015,

we had accounts receivable from TEL of

$3.7

million and

$5.3

million, respectively, related to cash disbursements made pursuant to our performance of certain back-office and maintenance functions on TEL's behalf.

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 net income, which amounted to

$3.0

million in

2016,

$4.6

million in

2015,

and

$3.7

million in

2014.

We received an equity distribution from TEL for

$1.5

million in

2016,

equity distribution in

2015,

and

$0.3

million in

2014,

which was distributed to each member based on its respective ownership percentage. Our investment in TEL, totaling

$18.5

million and

$16.8

million at

December

31,

2016

and

2015,

respectively, is included in other assets in the accompanying consolidated balance sheet. 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 as noted above and the abovementioned deferred gains on sales of equipment to TEL.

See TEL'

s summarized financial information below.

(in thousands)	As of the years ended December 31,
	2016		2015
Current Assets	$	14,320	$	14,275
Non-current Assets		146,081		125,782
Current Liabilities		34,766		29,644
Non-current Liabilities		96,140		84,516
Total Equity	$	29,495	$	25,897

(in thousands)	As of the years ended December 31,
	2016		2015		2014
Revenue	$	94,432	$	104,838	$	90,197
Operating Expenses		83,475		91,644		79,771
Operating Income		10,957		13,194		10,426
Net Income	$	6,598	$	9,061	$	7,564