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Advances to and Investments in Foreign Joint Ventures' Operations | 12 Months Ended
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Dec. 31, 2017
Equity Method Investments And Joint Ventures [Abstract] |
Advances to and Investments in Foreign Joint Ventures' Operations |
(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 $0.43 million and $0.80 million for the years ended December 31, 2017 and 2016, respectively. During the years ended December 31, 2017 and 2016, the Company received $0.78 million and $0.59 million, respectively, in dividends from BOMAY. Sales made to the foreign joint venture were $0.00 million and $0.11 million for the years ended December 31, 2017 and 2016, respectively. Accounts receivable from BOMAY were $0.00 million and $0.04 million at December 31, 2017 and 2016. The Company owns a 41% interest in MIEFE which provides additional sales and technical support in Asia. In November 2017, the Company executed a letter of intent to divest of its ownership interest in MIEFE. As a result, the investment in MIEFE was written down to zero excluding foreign currency translation which will be adjusted upon the completion of the disposal. The Company’s equity income from the foreign joint venture was $0.22 million and ($0.27) million for the years ended December 31, 2017 and 2016, respectively. During 2016, the Company’s share of cumulative losses from MIEFE exceeded the Company’s initial investment balance. The Company applied the losses to the investment balance to the extent of the initial investment amount, with the remaining losses in the amount of $0.05 million accrued for in accounts payable and other liabilities to reflect management’s intention to fund the losses. During the years ended December 31, 2017 and 2016, the Company did not receive dividends from MIEFE. There were no sales made to the foreign joint venture or outstanding accounts receivables for both years ended December 31, 2017 and 2016. The equity income for the Company’s interest in the two joint ventures for 2017 and 2016 was: BOMAY $0.43 million vs. $0.80 million and MIEFE $0.22 million vs. ($0.27) million. During 2016, the Company’s share of cumulative losses from MIEFE exceeded the Company’s initial investment balance. The Company applied the losses to the investment balance to the extent of the initial investment amount, with the remaining losses in the amount of $0.27 million accrued for in accounts payable and other liabilities to reflect management’s intention to fund the losses. In November 2017, the Company executed a letter of intent to divest of its ownership interest in MIEFE. As a result, the Company reversed $0.22 million of the accrued losses. During 2017 and 2016, the Company also recognized approximately $0.25 million for each year, 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 and MIEFE in U.S. dollars was as follows at December 31, 2017 and 2016:
| BOMAY |  |  | MIEFE |
| 2017 |  |  | 2016 |  |  | 2017 |  |  | 2016 |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Total current assets | $ | 50,000 |  |  | $ | 47,700 |  |  | $ | 121 |  |  | $ | 425 |
Total non-current assets |  | 3,457 |  |  |  | 3,589 |  |  |  | 15 |  |  |  | 17 |
Total assets | $ | 53,457 |  |  | $ | 51,289 |  |  | $ | 136 |  |  | $ | 442 |
Liabilities and equity: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Total liabilities | $ | 25,598 |  |  | $ | 24,196 |  |  | $ | 198 |  |  | $ | 551 |
Total joint ventures’ equity |  | 27,859 |  |  |  | 27,093 |  |  |  | (62 | ) |  |  | (109 | )
Total liabilities and equity | $ | 53,457 |  |  | $ | 51,289 |  |  | $ | 136 |  |  | $ | 442 |
| Twelve Months Ended December 31, |
| BOMAY |  |  | MIEFE |
| 2017 |  |  | 2016 |  |  | 2017 |  |  | 2016 |
Revenue | $ | 26,168 |  |  | $ | 33,468 |  |  | $ | 89 |  |  | $ | 1,167 |
Gross Profit | $ | 5,654 |  |  | $ | 6,687 |  |  | $ | 23 |  |  | $ | 481 |
Earnings | $ | 1,084 |  |  | $ | 2,010 |  |  | $ | 55 |  |  | $ | (631 | )
The Company’s investments in and advances to its foreign joint ventures’ operations were as follows as of December 31, 2017 and 2016:
| 2017 |  |  | 2016 |
| BOMAY* |  |  | MIEFE |  |  | TOTAL |  |  | BOMAY* |  |  | MIEFE |  |  | TOTAL |
| (in thousands) |  |  | (in thousands) |
Investments in foreign joint ventures: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance, beginning of year | $ | 2,033 |  |  | $ | 14 |  |  | $ | 2,047 |  |  | $ | 2,033 |  |  | $ | 14 |  |  | $ | 2,047 |
Additional amounts invested and advanced |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Balance, end of year |  | 2,033 |  |  |  | 14 |  |  |  | 2,047 |  |  |  | 2,033 |  |  |  | 14 |  |  |  | 2,047 |
Undistributed earnings: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance, beginning of year |  | 8,313 |  |  |  | (14 | ) |  |  | 8,299 |  |  |  | 8,098 |  |  |  | (11 | ) |  |  | 8,087 |
Equity in earnings (loss) |  | 434 |  |  |  | - |  |  |  | 434 |  |  |  | 804 |  |  |  | (3 | ) |  |  | 801 |
Dividend distributions |  | (780 | ) |  |  | - |  |  |  | (780 | ) |  |  | (589 | ) |  |  | - |  |  |  | (589 | )
Balance, end of year |  | 7,967 |  |  |  | (14 | ) |  |  | 7,953 |  |  |  | 8,313 |  |  |  | (14 | ) |  |  | 8,299 |
Foreign currency translation: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance, beginning of year |  | 104 |  |  |  | 213 |  |  |  | 317 |  |  |  | 765 |  |  |  | 205 |  |  |  | 970 |
Change, during the year |  | 633 |  |  |  | (3 | ) |  |  | 630 |  |  |  | (661 | ) |  |  | 8 |  |  |  | (653 | )
Balance, end of year |  | 737 |  |  |  | 210 |  |  |  | 947 |  |  |  | 104 |  |  |  | 213 |  |  |  | 317 |
Investments, end of year | $ | 10,737 |  |  | $ | 210 |  |  | $ | 10,947 |  |  | $ | 10,450 |  |  | $ | 213 |  |  | $ | 10,663 |
Accumulated statutory reserves in equity method investments of $2.81 million and $2.89 million at December 31, 2017 and 2016, 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 wholly-owned 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-lived asset 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.

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- 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 Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -URI http://asc.fasb.org/topic&trid=2196965 + Details
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