Note 9 - Equity Method Investment

3 Months Ended

Mar. 31, 2020

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

tractors or trailers to TEL during the

three

-months ended

March 31, 2020

and

2019

, and we received

$2.3

million

and

$2.4

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

for the

three

-months ended

March 31, 2020

and

2019

, 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

March 31, 2020

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

March 31, 2020

and

December 31, 2019

, we had accounts receivable from TEL of

$1.4

million

and

$1.3

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

2020

net loss through

March 31, 2020

, or

$0.7

million

. We received

equity distribution from TEL during the

three

-months ended

March 31, 2020

and

2019

. Our investment in TEL, totaling

$31.2

million

and

$31.9

million

, at

March 31, 2020

and

December 31, 2019

, 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,		As of December 31,
	2020		2019
Total Assets	$	360,538	$	374,591
Total Liabilities		306,132		318,743
Total Equity	$	54,406	$	55,848

	Three Months Ended
	March 31,
	2020			2019
Revenue	$	25,221		$	27,525
Cost of Sales		4,769			7,516
Operating Expenses		18,875			12,526
Operating Income		1,577			7,483
Net Income	$	(1,442	)	$	5,088