(6)	Advances to and Investments in Foreign Joint Ventures’ Operations

The Company has a foreign joint venture agreement and holds a 40% interest in a Chinese company, BOMAY, which builds electrical systems for sale in China. The majority partner in this foreign joint venture is a subsidiary of a major Chinese oil company. M&I made an initial investment of $1.0 million in 2006 and made an additional $1.0 million investment in 2007. The Company’s equity in the income of the foreign joint venture was $2.1 million and $2.1 million for the years ended December 31, 2014 and 2013, respectively. Sales made to the foreign joint venture were $130,000 and $325,000 for the years ended December 31, 2014 and 2013, respectively. Accounts receivable from BOMAY were $82,000 and $119,000 at December 31, 2014 and 2013.

The Company owns a 41% interest in MIEFE which provides additional sales and technical support in Asia. The Company’s equity in the income of the foreign joint venture was $138,000 and $115,000 for the years ended December 31, 2014 and 2013, respectively. Sales made to the foreign joint venture were $14,000 and $225,000 for the years ended December 31, 2014 and 2013, respectively. Accounts receivable from MIEFE was $2,000 and $0 at December 31, 2014 and 2013, respectively.

In April 2014 the Company withdrew from the AAG joint venture. The Company received a note from the joint venture
payable over 12 months. At December the outstanding note was valued at $201,000 and does not bear interest.

The Company’s equity in income of the foreign joint ventures before our foreign operations expenses, totaled $2.2 million and $3.0 million for the years ended December 31, 2014 and 2013, respectively.

During 2014 and 2013, the Company also recognized approximately $522,000 and $267,000, respectively, for employee related expenses directly attributable to the foreign joint ventures.

Sales to foreign joint ventures’ operations are made on an arm’s length basis and intercompany profits, if any, are eliminated in consolidation.

Summary financial information of BOMAY, MIEFE and AAG in U.S. dollars was as follows at December 31, 2014 and 2013:

	BOMAY				MIEFE				AAG
	2014		2013		2014		2013		2014		2013
	(in thousands)
Assets:
Total current assets	$	77,812	$	94,220	$	3,488	$	3,855	$	—	$	2,572
Total non-current assets		4,710		5,122		108		114		—		1,550
Total assets	$	82,522	$	99,342	$	3,596	$	3,969	$	—	$	4,122
Liabilities and equity:
Total liabilities	$	53,277	$	72,644	$	2,128	$	1,197	$	—	$	1,291
Total joint ventures equity		29,245		26,698		1,468		2,772				2,831
Total liabilities and equity	$	82,522	$	99,342	$	3,596	$	3,969	$	—	$	4,122
Gross sales	$	73,148	$	86,332	$	5,161	$	7,997	$	1,078	$	10,658
Gross profit		12,469		12,130		2,091		2,066		154		4,282
Net income		5,136		5,165		336		279		4		1,721

The Company’s investments in and advances to its foreign joint ventures’ operations were as follows as of December 31, 2014 and 2013:

	2014												2013
	BOMAY*			MEIFE			AAG			TOTAL			BOMAY*			MIEFE			AAG			TOTAL
	(in thousands)												(in thousands)
Investment in joint ventures:
Balance, beginning of year	$	2,033		$	14		$	54		$	2,101		$	2,033		$	14		$	234		$	2,281
Additional amounts invested and advanced		—			—			—			—			—			—			(180	)		(180	)
Withdrawal from joint venture		—			—			(54	)		(54	)		—			—			—			—
Balance, end of year		2,033			14			—			2,047			2,033			14			54			2,101
Undistributed earnings:
Balance, beginning of year	$	7,145		$	870		$	1,481		$	9,496		$	6,400		$	755		$	661		$	7,816
Equity in earnings (loss)		2,054			138			2			2,194			2,066			115			843			3,024
Dividend distributions		(1,042	)		(650	)		(830	)		(2,522	)		(1,321	)		—			(23	)		(1,344	)
Withdrawal from joint venture		—			—			(653	)		(653	)		—			—			—			—
Balance, end of year		8,157			358			—			8,515			7,145			870			1,481			9,496
Foreign currency translation:
Balance, beginning of year	$	1,431		$	254		$	(249	)	$	1,436		$	1,098		$	294		$	(81	)	$	1,311
Change during the year		(73	)		(120	)		178			(15	)		333			(40	)		(168	)		125
Withdrawal from joint venture		—			—			71			71			—			—			—			—
Balance, end of year		1,358			134			—			1,492			1,431			254			(249	)		1,436
Investments, end of year	$	11,548		$	506		$	—		$	12,054		$	10,609		$	1,138		$	1,286		$	13,033

Accumulated statutory reserves in equity method investments of $2,100,000 and $1,857,000 at December 31, 2014 and 2013, are included in AETI’s consolidated retained earnings. In accordance with the People’s Republic of China, (“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.

The Company accounts for its investments in foreign joint ventures’ operations using the equity method of accounting. Under the equity method, the Company’s share of the joint ventures’ operations’ earnings or loss is recognized in the consolidated statements of operations as equity income (loss) from foreign joint ventures’ operations. Joint venture income increases the carrying value of the joint ventures and joint venture losses reduce the carrying value. Dividends received from the joint ventures reduce the carrying value. 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.