XML 45 R10.htm IDEA: XBRL DOCUMENT

Investments in Foreign Joint Ventures

9 Months Ended

Sep. 30, 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. (known as BOMCO, 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 at September 30, 2012 (unaudited) and December 31, 2011 (in thousands):


	BOMAY				MIEFE				AAG
	2012		2011		2012		2011		2012		2011
Assets:
Total current assets	$	87,127	$	60,817	$	3,726	$	4,459	$	1,983	$	1,604
Total non-current assets		5,025		5,163		120		105		347		49

Total assets	$	92,152	$	65,980	$	3,846	$	4,564	$	2,330	$	1,653

Liabilities and equity:
Total liabilities	$	69,154	$	46,499	$	1,257	$	2,162	$	1,474	$	1,151
Total joint ventures’ equity		22,998		19,481		2,589		2,402		856		502

Total liabilities and equity	$	95,152	$	65,980	$	3,846	$	4,564	$	2,330	$	1,653

The following table summarizes revenues and earnings reported by our foreign joint ventures for the three and nine months ended September 30, 2012 and 2011 (unaudited):


	Three Months Ended September 30, (in thousands)
	BOMAY				MIEFE					AAG
	2012		2011		2012		2011			2012		2011
Revenue	$	20,069	$	19,681	$	743	$	1,189		$	2,275	$	1,531
Earnings	$	1,561	$	1,665	$	0	$	134		$	329	$	274

	Nine Months Ended September 30, (in thousands)
	BOMAY				MIEFE					AAG
	2012		2011		2012		2011			2012		2011
Revenue	$	77,078	$	45,624	$	5,823	$	2,421		$	4,940	$	2,181
Earnings	$	5,962	$	3,359	$	46	$	(147	)	$	419	$	189

The following is a summary of activity in investment in foreign joint ventures for the nine months ended September 30, 2012:


	BOMAY*			MIEFE		AAG			TOTAL
	(in thousands)
Investment in joint ventures:
Balance at December 31, 2011	$	7,913		$	986	$	409		$	9,308
Equity in earnings (loss) in 2012		2,385			19		167			2,571
Dividend distributions in 2012		(1,008	)		—		—			(1,008	)
Foreign currency translation adjustment		124			118		(54	)		188

Investment, end of period	$	9,414		$	1,123	$	522		$	11,059

Components of investment in joint ventures:
Investment in joint ventures:	$	2,033		$	15	$	283		$	2,331
Undistributed earnings		6,216			758		325			7,299
Foreign currency translation		1,165			350		(86	)		1,429

Investments, end of period	$	9,414		$	1,123	$	522		$	11,059

*

Accumulated statutory reserves in equity method investments of $1.6 million at September 30, 2012 and $1.3 million at 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 owners, an enterprise established in the PRC with foreign owners 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 foreign joint ventures’ operations’ earnings or loss is recognized in the condensed consolidated statements 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 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+ Details