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 an 8% interest and Sonepar Asia Pacific Limited, holds a 51% interest.

•

AETI Alliance Group do Brazil Sistemas E Servicos Em Energia LTDA. (“AAG”), in which the Company holds a 49% interest and Beppe Hans Eddy Askerbo, of Brazil, holds a 51% interest.

Sales to joint ventures are made on an arms-length basis.

Summary unaudited financial information of our foreign joint ventures (100%) in U.S. dollars was as follows at September 30, 2013 and December 31, 2012 and for the three and nine months ended September 30, 2013 and 2012:


	BOMAY				MIEFE					AAG
	2013		2012		2013			2012		2013			2012
Assets:
Total current assets	$	100,829	$	87,127	$	4,200		$	3,726	$	3,109		$	1,983
Total non-current assets		5,122		5,025		135			120		1,595			347

Total assets	$	105,951	$	92,152	$	4,335		$	3,846	$	4,704		$	2,330

Liabilities and equity:
Total liabilities	$	79,312	$	69,154	$	1,460		$	1,257	$	1,728		$	1,474
Total equity		26,639		22,998		2,875			2,589		2,976			856

Total liabilities and equity	$	105,951	$	95,152	$	4,335		$	3,846	$	4,704		$	2,330


	Three Months Ended, September 30, 2013 and 2012
	BOMAY				MIEFE					AAG
	2013		2012		2013			2012		2013			2012
Revenue	$	17,995	$	20,069	$	1,530		$	743	$	1,434		$	2,275
Gross profit	$	2,853	$	3,452	$	372		$	441	$	259		$	842
Earnings	$	1,187	$	1,561	$	(29	)	$	—	$	(59	)	$	329

	Nine Months Ended September 30, 2013 and 2012
	BOMAY				MIEFE					AAG
	2013		2012		2013			2012		2013			2012
Revenue	$	82,986	$	77,078	$	7,021		$	5,823	$	9,433		$	4,940
Gross profit	$	10,451	$	11,948	$	1,659		$	1,185	$	3,691		$	1,715
Earnings	$	5,308	$	5,962	$	356		$	46	$	1,777		$	419

The following is a summary of activity in AETI’s investment in foreign joint ventures for the nine months ended September 30, 2013:


	BOMAY**			MIEFE			AAG			TOTAL
	(in thousands)
Investments in foreign joint ventures:
Balance at December 31, 2012	$	9,531		$	1,063		$	814		$	11,408
Equity in earnings (loss) in 2013		2,123			146			871			3,140
Repayment of advances		—			—			(179	)		(179	)
Dividend distributions in 2013		(1,320	)		—			(23	)		(1,343	)
Foreign currency translation adjustment		212			(29	)		(121	)		62

Investments, end of period	$	10,546		$	1,180		$	1,362		$	13,088

Components of investments in foreign joint ventures:
Investment in foreign joint ventures	$	2,033		$	15		$	53		$	2,101
Undistributed earnings		7,203			901			1,509			9,613
Foreign currency translation		1,310			264			(200	)		1,374

Investments, end of period	$	10,546		$	1,180		$	1,362		$	13,088

Accumulated statutory reserves in equity method investments of $1,857 at September 30, 2013 and $1,620 at December 31, 2012 are included in AETI’s consolidated retained earnings. In accordance with the People’s Republic of China’s (“PRC”), regulations on enterprises with foreign ownership an enterprise established in the PRC with foreign ownership 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 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.