(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 $1.00 million in 2006 and made an additional $1.00 million investment in 2007. The Company’s equity income from the foreign joint venture was $0.97 million and $2.05 million for the years ended December 31, 2015 and 2014, respectively. During the years ended December 31, 2015 and 2014, the Company received $1.03 million and $1.04 million, respectively, in dividends from BOMAY. Sales made to the foreign joint venture were $0.19 million and $0.13 million for the years ended December 31, 2015 and 2014, respectively. Accounts receivable from BOMAY were $0.00 million and $0.03 million at December 31, 2015 and 2014.

The Company owns a 41% interest in MIEFE which provides additional sales and technical support in Asia. The Company’s equity income from the foreign joint venture was $(0.23) million and $0.14 million for the years ended December 31, 2015 and 2014, respectively. During the years ended December 31, 2015 and 2014, the Company received $0.14 million and $0.65 million, respectively, in dividends from MIEFE. Sales made to the foreign joint venture were $0.05 million and $0.01 million for the years ended December 31, 2015 and 2014, respectively. Accounts receivable from MIEFE was $0.05 million and $0.00 million at December 31, 2015 and 2014, respectively.

In April 2014 the Company withdrew from a joint venture previously established in Brazil, AAG. In connection with the Company’s withdrawal from the joint venture, the Company received a note payable equal to the book value of the joint venture at the date of withdrawal. The note is payable over 12 months and bears no interest. At December 31, 2015 and 2014, the outstanding balance on the note was valued at 0.87 million and $2.61 million, respectively. We have determined that collection of the remaining balance of the note is uncertain and, therefore, have fully reserved the remaining balance of the note.

The Company’s equity income from the foreign joint ventures, before foreign operations expenses, totaled $0.74 million and $2.19 million for the years ended December 31, 2015 and 2014, respectively.

During 2015 and 2014, the Company also recognized approximately $0.39 million and $0.52 million, 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, 2015 and 2014:

	BOMAY				MIEFE					AAG*
	2015		2014		2015			2014		2015		2014
Assets:
Total current assets	$	68,151	$	77,812	$	2,365		$	3,488	$	-	$	-
Total non-current assets		4,131		4,710		70			108		-		-
Total assets	$	72,282	$	82,522	$	2,435		$	3,596	$	-	$	-
Liabilities and equity:
Total liabilities	$	44,415	$	53,277	$	1,930		$	2,128	$	-	$	-
Total joint ventures’ equity		27,867		29,245		505			1,468		-		-
Total liabilities and equity	$	72,282	$	82,522	$	2,435		$	3,596	$	-	$	-


	Twelve Months Ended December 31,
	BOMAY				MIEFE					AAG*
	2015		2014		2015			2014		2015		2014

Revenue	$	47,347	$	73,148	$	5,741		$	5,161	$	-	$	1,078
Gross Profit	$	8,353	$	12,469	$	1,112		$	2,091	$	-	$	154
Earnings	$	2,433	$	5,136	$	(567	)	$	336	$	-	$	4

The Company’s investments in and advances to its foreign joint ventures’ operations were as follows as of December 31, 2015 and 2014:

	2015											2014
	BOMAY*			MIEFE			AAG		TOTAL			BOMAY*			MIEFE			AAG			TOTAL
	(in thousands)											(in thousands)
Investments in foreign joint ventures:
Balance, beginning of year	$	2,033		$	14		$	-	$	2,047		$	2,033		$	14		$	54		$	2,101
Additional amounts invested and advanced		-			-			-		-			-			-			-			-
Withdrawal from joint venture		-			-			-		-			-			-			(54	)		(54	)
Balance, end of year		2,033			14			-		2,047			2,033			14			-			2,047
Undistributed earnings:
Balance, beginning of year		8,157			358			-		8,515			7,145			870			1,481			9,496
Equity in earnings (loss)		973			(232	)		-		741			2,054			138			2			2,194
Dividend distributions		(1,032	)		(137	)		-		(1,169	)		(1,042	)		(650	)		(830	)		(2,522	)
Withdrawal from joint venture		-			-			-		-			-			-			(653	)		(653	)
Balance, end of year		8,098			(11	)		-		8,087			8,157			358			-			8,515
Foreign currency translation:
Balance, beginning of year		1,358			134			-		1,492			1,431			254			(249	)		1,436
Change, during the year		(593	)		71			-		(522	)		(73	)		(120	)		178			(15	)
Withdrawal from joint venture		-			-			-		-			-			-			71			71
Balance, end of year		765			205			-		970			1,358			134			-			1,492
Investments, end of year	$	10,896		$	208		$	-	$	11,104		$	11,548		$	506		$	-		$	12,054

Accumulated statutory reserves in equity method investments of $2.72 million and $2.10 million at December 31, 2015 and 2014, 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 losses 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. In accordance with our long live policy, when events or circumstances indicate the carrying amount of an asset may not be recoverable, management tests long-lived assets for impairment. If the estimated future cash flows are projected to be less than the carrying amount, an impairment write-down (representing the carrying amount of the long-lived asset which exceeds the present value of estimated expected future cash flows) would be recorded as a period expense. 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.