Note 9 - Equity Method Investment

3 Months Ended

Mar. 31, 2018

Note

Equity Method Investment

We own a minority investment in Transport Enterprise Leasing, LLC ("TEL"). TEL is a tractor and trailer equipment leasing company and used equipment reseller. We have

not

guaranteed any of TEL's debt and have

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. TEL’s majority owners are generally restricted from transferring their interests in TEL, other than to certain permitted transferees, without our consent. We sold less than

$0.1

million of tractors or trailers to TEL during the quarter ended

March 31, 2018,

and we sold

none

to TEL during the same

2017

quarter. We received

$2.1

million and

$0.1

million, respectively, for providing various maintenance services, certain back-office functions, and for miscellaneous equipment. We recognized a net reversal of previously deferred gains totaling

$0.2

million and less than

$0.1

million for the

three

months ended

March 31, 2018

and

2017,

respectively, 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. Deferred gains, totaling

$0.2

million at

March 31, 2018,

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

March 31, 2018

and

December 31, 2017,

we had accounts receivable from TEL of

$5.3

million and

$8.6

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

2018

net income through

March 31, 2018,

$1.5

million. Our investment in TEL, totaling

$21.8

million and

$20.1

million, at

March 31, 2018

and

December 31, 2017,

respectively, is included in other assets in the accompanying condensed consolidated balance sheets.

See TEL's summarized financial information below:

(in thousands)	As of March 31, 2018		As of December 31, 2017
Current Assets	$	20,284	$	19,660
Non-current Assets		204,043		183,905
Current Liabilities		12,991		53,981
Non-current Liabilities		175,870		117,135
Total Equity	$	35,466	$	32,449

	For the three months ended March 31, 2018		For the three months ended March 31, 2017
Revenue	$	25,141	$	22,533
Operating Expenses		20,624		19,827
Operating Income		4,517		2,706
Net Income	$	3,017	$	1,637