Investments In Foreign Joint Ventures

3 Months Ended

Mar. 31, 2012

Investments In Foreign Joint Ventures [Abstract]

5. Investments in Foreign Joint Ventures

We have interests in three joint ventures outside of the United States which are accounted for on the equity method:

•

BOMAY Electric Industries Company, Ltd. ("BOMAY"), in which the Company holds a 40% interest, Baoji Oilfield Machinery Co., Ltd. (a subsidiary of China National Petroleum Corporation) holds a 51% interest, and AA Energies, Inc., holds a 9% interest;

•

M&I Electric Far East, Ltd. ("MIEFE"), in which the Company holds a 41% interest, MIEFE's general manager holds a 8% interest and, Oakwell Engineering, Ltd., of Singapore, holds a 51% interest, and;

•

AETI Alliance Group do Brazil Sistemas E Servicos Em Energia LTDA. ("AAG"), in which the Company holds a 49% interest, and Five Stars De Macae Servicos De Petroleo LTDA., of Brazil, holds a 51% interest.

Sales to joint ventures are made on an arms length basis and intercompany profits, if any, are eliminated in consolidation.

Summary financial information of our foreign joint ventures in U.S. dollars was as follows (in thousands):


	BOMAY				MIEFE				AAG
	2012		2011		2012		2011		2012		2011
Assets:
Total current assets	$	68,309	$	60,817	$	5,994	$	4,459	$	1,692	$	1,604
Total non-current assets		5,135		5,163		104		105		120		49

Total assets	$	73,444	$	65,980	$	6,098	$	4,564	$	1,812	$	1,653

Liabilities and equity:
Total liabilities	$	52,095	$	46,499	$	3,597	$	2,162	$	1,167	$	1,151
Total joint ventures' equity		21,349		19,481		2,501		2,402		645		502

Total liabilities and equity	$	73,444	$	65,980	$	6,098	$	4,564	$	1,812	$	1,653


	Three Months Ended
	March 31,
	BOMAY				MIEFE					AAG
	2012		2011		2012		2011			2012		2011
Revenue	$	23,017	$	17,691	$	2,894	$	613		$	1,514	$	193

Earnings		1,746		725		20		(52	)		129		(56	)

The following is a summary of activity in investment in foreign joint ventures for the three months ended March 31, 2012:


	March 31, 2012
	BOMAY*		MIEFE		AAG			TOTAL
	(in thousands)
Investment in joint ventures:
Balance at December 31, 2011	$	7,912	$	986	$	410		$	9,308
Equity in earnings (loss) in 2012		698		10		63			771
Dividend distributions in 2012		—		—		—			—
Foreign currency translation adjustment		49		39		7			95

Investments, end of period	$	8,659	$	1,035	$	480		$	10,174

Components of investment in joint ventures:
Investment in joint ventures	$	2,033	$	14	$	284		$	2,331
Undistributed earnings		5,537		749		221			6,507
Foreign currency translation		1,089		272		(25	)		1,336

Investments, end of period	$	8,659	$	1,035	$	480		$	10,174

Accumulated statutory reserves in equity method investments of $1.3 million at March 31, 2012 and December 31, 2011 are included in AETI's consolidated retained earnings. In accordance with the People's Republic of China, ("PRC"), regulations on enterprises with foreign operations, an enterprise established in the PRC with foreign operations is required to provide for certain statutory reserves, namely (i) General Reserve Fund, (ii) Enterprise Expansion Fund and (iii) Staff Welfare and Bonus Fund, which are appropriated from net profit as reported in the enterprise's PRC statutory accounts. A non-wholly-owned foreign invested enterprise is permitted to provide for the above allocation at the discretion of its board of directors. The aforementioned reserves can only be used for specific purposes and are not distributable as cash dividends.

Under the equity method, the Company's share of the joint ventures' operations' earnings or loss is recognized in the condensed consolidated statement of operations as equity income (loss) from foreign joint ventures' operations. Joint venture income increases the carrying value of the joint venture investment and joint venture losses, as well as dividends received from the joint ventures, reduce the carrying value of the investment. Each reporting period, the Company evaluates the carrying value of these equity method investments as to whether an impairment adjustment may be necessary. In making this evaluation, a variety of quantitative and qualitative factors are considered including national and local economic, political and market conditions, industry trends and prospects, liquidity and capital resources and other pertinent factors. Based on this evaluation for this reporting period, the Company does not believe an impairment adjustment is necessary.

- Definition

The entire disclosure for equity investment, or group of investments, for which combined disclosure is appropriate, including: (a) the name of each investee and percentage of ownership of common stock, (b) accounting policies for investments in common stock, (c) difference between the amount at which the investment is carried and the amount of underlying equity in net assets and the accounting treatment of the difference, (d) the total fair value of each identified investment for which a market value is available, (e) summarized information as to assets, liabilities, and results of operations of the investees (for investments in unconsolidated subsidiaries, common stock of joint ventures, or other investments using the equity method), and (f) material effects of possible conversions, exercises, or contingent issuances of the investee. Other disclosures include (a) the names of any investee in which the investor owns 20 percent or more of the voting stock and investment is not accounted for using the equity method, and the reasons why not, and (b) the names of any investee in which the investor owns less than 20 percent of the voting stock and the investment is accounted for using the equity method, and the reasons why it is.

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