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Investments in Companies | 6 Months Ended
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Jun. 30, 2015
Investments in Companies [Abstract] |
Investments in Companies | Note 6. Investments in Companies We have made strategic investments in private companies located in China in order to gain access at a competitive cost to raw materials that are critical to our substrate business. These companies form part of our overall supply chain. The investments are summarized below (in thousands):
|  | Investment Balance as of |  |  |  |  |
Company |  | June 30, 2015 |  |  | December 31, 2014 |  | Accounting Method |  | Ownership Percentage |
Beijing JiYa Semiconductor Material Co., Ltd. |  | $ | 3,331 |  |  | $ | 3,331 |  | Consolidated |  |  | 46 | %
Nanjing Jin Mei Gallium Co., Ltd. |  |  | 592 |  |  |  | 592 |  | Consolidated |  |  | 83 | %
Beijing BoYu Semiconductor Vessel Craftwork Technology Co., Ltd. |  |  | 1,346 |  |  |  | 1,346 |  | Consolidated |  |  | 70 | %
|  | $ | 5,269 |  |  | $ | 5,269 |  |  |  |  |  |
Donghai County Dongfang High Purity Electronic Materials Co., Ltd. |  | $ | 1,652 |  |  | $ | 1,723 |  | Equity |  |  | 46 | %
Xilingol Tongli Germanium Co. Ltd. |  |  | 5,556 |  |  |  | 5,351 |  | Equity |  |  | 25 | %
Emeishan Jia Mei High Purity Metals Co., Ltd. |  |  | 1,043 |  |  |  | 1,021 |  | Equity |  |  | 25 | %
|  | $ | 8,251 |  |  | $ | 8,095 |  |  |  |  |  |
Our ownership of Beijing JiYa Semiconductor Material Co., Ltd. (“JiYa”) is 46%. We continue to consolidate JiYa as we have significant influence in management and have majority control of the board. Our Chief Executive Officer is chairman of the JiYa board and we have appointed one other representative to serve on the board. Our ownership of Nanjing Jin Mei Gallium Co., Ltd. (“Jin Mei”) is 83%. We continue to consolidate Jin Mei as we have significant influence in management and have majority control of the board. Our Chief Executive Officer is chairman of the Jin Mei board and we have appointed two other representatives to serve on the board. Our ownership of Beijing BoYu Semiconductor Vessel Craftwork Technology Co., Ltd (“BoYu”) is 70%. We continue to consolidate BoYu as we have a significant influence in management and have majority control of the board. Our Chief Executive Officer is chairman of the BoYu board and we have appointed two other representatives to serve on the board. Although we have representation on the boards of directors of each of these companies, the daily operations of each of these companies are managed by local management and not by us. Decisions concerning their respective short-term strategy and operations, any capacity expansion and annual capital expenditures, and decisions concerning sales of finished product, are made by local management with some inputs from us. During the three months ended June 30, 2015 and 2014, the three consolidated joint ventures generated $0.6 million and $1.1 million of income, respectively, of which $127,000 and $242,000, respectively, were allocated to minority interests, resulting in $520,000 and $847,000 of income, respectively, to our net income (loss). During the six months ended June 30, 2015 and 2014, the three consolidated joint ventures generated $1.2 million and $1.8 million of income, respectively, of which $252,000 and $447,000, respectively, were allocated to minority interests, resulting in $947,000 and $1.4 million of income, respectively, to our net income (loss). For the three minority investment entities that are not consolidated, the investment balances are included in “other assets” in our condensed consolidated balance sheets and totaled $8.3 million and $8.1 million as of June 30, 2015 and December 31, 2014. We own 46% of the ownership interests in one of these companies and 25% in each of the other two companies. These three companies are not considered variable interest entities because:
| · | all three companies have sustainable businesses of their own;
| · | our voting power is proportionate to our ownership interests;
| · | we only recognize our respective share of the losses and/or residual returns generated by the companies if they occur; and
| · | we do not have controlling financial interest in, do not maintain operational or management control of, do not control the board of directors of, and are not required to provide additional investment or financial support to any of these companies.
We also maintain minority investments indirectly in privately-held companies through our consolidated joint ventures. These minority investments are accounted for under the equity method in the books of our consolidated joint ventures. As of June 30, 2015 and December 31, 2014, our consolidated joint ventures included these minority investments in “other assets” in the consolidated balance sheets with a carrying value of $4.4 million and $4.0 million, respectively. The minority investment entities that are not consolidated are accounted for under the equity method and had the following summarized income information (in thousands) for the three and six months ended June 30, 2015 and 2014.
|  | Three Months Ended June 30, |  |  | Six Months Ended June 30, |
|  | 2015 |  |  | 2014 |  |  | 2015 |  |  | 2014 |
Net revenue |  | $ | 11,004 |  |  | $ | 13,466 |  |  | $ | 20,329 |  |  | $ | 26,946 |
Gross profit |  |  | 3,625 |  |  |  | 8,124 |  |  |  | 5,920 |  |  |  | 12,087 |
Operating income |  |  | 2,292 |  |  |  | 3,424 |  |  |  | 3,343 |  |  |  | 6,088 |
Net income |  |  | 1,784 |  |  |  | 2,607 |  |  |  | 2,741 |  |  |  | 4,726 |
Our portion of the entity earnings from the minority investment entities that are not consolidated and are accounted for under the equity method were $410,000 and $625,000 for the three months ended June 30, 2015 and 2014, respectively, and $610,000 and $1.1 million for the six months ended June 30, 2015 and 2014, respectively. During the three months ended June 30, 2015, we re-classified our minority investments under the cost method as an available-for- sale security when we deemed that there was sufficient trading volume in the exchange for the stock to be deemed readily marketable. As of June 30, 2015, we no longer maintain any investments under the cost method. As of December 31, 2014, our investments in this unconsolidated company had a carrying value of $200,000 and were included in “other assets” in the condensed consolidated balance sheets.

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- Definition The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6382943&loc=d3e33918-111571 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 35 -Paragraph 35 -URI http://asc.fasb.org/extlink&oid=49116238&loc=d3e32847-111569 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.12) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 35 -Paragraph 32 -URI http://asc.fasb.org/extlink&oid=49116238&loc=d3e32787-111569 + Details
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