Note 9 - Equity Method Investment

6 Months Ended

Jun. 30, 2019

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

and

$0.1

million tractors or trailers to TEL during the

six

-months ended

June 30, 2019

and

2018,

respectively, and we received

$4.6

million and

$3.9

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 less than

$0.1

million and

$0.2

million for the

six

-months ended

June 30, 2019

and

2018,

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

June 30, 2019,

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

June 30, 2019

and

December 31, 2018,

we had accounts receivable from TEL of

$5.6

million and

$5.1

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

2019

net income through

June 30, 2019,

$5.4

million. Our investment in TEL, totaling

$31.5

million and

$26.1

million, at

June 30, 2019

and

December 31, 2018,

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

See TEL's summarized financial information below:

(in thousands)	As of June 30,		As of December 31,
	2019		2018
Current Assets	$	26,400	$	25,877
Non-current Assets		320,129		273,987
Current Liabilities		15,802		78,530
Non-current Liabilities		275,901		176,389
Total Equity	$	54,826	$	44,945

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Revenue	$	24,505	$	23,574	$	51,988	$	48,715
Operating Expenses		17,052		18,374		37,052		38,999
Operating Income		7,453		5,200		14,936		9,716
Net Income	$	4,792	$	3,464	$	9,881	$	6,482