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Advances to and Investments in Foreign Joint Venture Operations | 12 Months Ended
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Dec. 31, 2018
Equity Method Investments And Joint Ventures [Abstract] |
Advances to and Investments in Foreign Joint Venture Operations |
(5) | Advances to and Investments in Foreign Joint Venture 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/loss from the foreign joint venture was $0.95 million and $0.43 million for the years ended December 31, 2018 and 2017, respectively. During the years ended December 31, 2018 and 2017, the Company received $1.1 million and $0.78 million, respectively, in dividends from BOMAY. There were no accounts receivable from BOMAY at December 31, 2018 and $0.04 million at December 31, 2017. During 2018 and 2017, the Company also recognized approximately $0.14 million and $0.25 million for each year, respectively, for employee related expenses directly attributable to the foreign joint ventures. Summary financial information of BOMAY in U.S. dollars was as follows at December 31, 2018 and 2017:
|  | BOMAY |  |  | MIEFE |
|  | 2018 |  |  | 2017 |  |  | 2018 |  |  | 2017 |
Assets: |  | (in thousands) |  |  | (in thousands) |
Total current assets |  | $ | 59,124 |  |  | $ | 50,000 |  |  | $ | - |  |  | $ | 121 |
Total non-current assets |  |  | 5,742 |  |  |  | 3,457 |  |  |  | - |  |  |  | 15 |
Total assets |  | $ | 64,866 |  |  | $ | 53,457 |  |  | $ | - |  |  | $ | 136 |
Liabilities and equity: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Total liabilities |  |  | 38,732 |  |  |  | 25,598 |  |  |  | - |  |  |  | 198 |
Total joint ventures’ equity |  |  | 26,134 |  |  |  | 27,859 |  |  |  | - |  |  |  | (62 | )
Total liabilities and equity |  | $ | 64,866 |  |  | $ | 53,457 |  |  | $ | - |  |  | $ | 136 |
|  | BOMAY |  |  | MIEFE |
|  | 2018 |  |  | 2017 |  |  | 2018 |  |  | 2017 |
|  | (in thousands) |  |  | (in thousands) |
Revenue |  | $ | 37,244 |  |  | $ | 26,168 |  |  | $ | - |  |  | $ | 89 |
Gross Profit |  | $ | 7,878 |  |  | $ | 5,654 |  |  | $ | - |  |  | $ | 23 |
Earnings |  | $ | 2,381 |  |  | $ | 1,084 |  |  | $ | - |  |  | $ | 55 |
The Company’s investments in and advances to its foreign joint venture operations were as follows as of December 31, 2018 and 2017:
|  | BOMAY* |  |  | MIEFE |
|  | 2018 |  |  | 2017 |  |  | 2018 |  |  | 2017 |
Investments in foreign joint ventures: |  | (in thousands) |  |  | (in thousands) |
Balance at beginning and end of year |  | $ | 2,033 |  |  | $ | 2,033 |  |  | $ | - |  |  | $ | - |
Undistributed earnings: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at beginning of year |  |  | 7,967 |  |  |  | 8,313 |  |  |  | - |  |  |  | - |
Equity in earnings (loss) |  |  | 953 |  |  |  | 434 |  |  |  | - |  |  |  | - |
Dividend distributions |  |  | (1,127 | ) |  |  | (780 | ) |  |  | - |  |  |  | - |
Balance at end of year |  |  | 7,793 |  |  |  | 7,967 |  |  |  | - |  |  |  | - |
Foreign currency translation: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at beginning of year |  |  | 737 |  |  |  | 104 |  |  |  | 210 |  |  |  | 213 |
Change during the year |  |  | (583 | ) |  |  | 633 |  |  |  | (210 | ) |  |  | (3 | )
Balance at end of year |  |  | 154 |  |  |  | 737 |  |  |  | - |  |  |  | 210 |
Total investments at end of year |  | $ | 9,980 |  |  | $ | 10,737 |  |  | $ | - |  |  | $ | 210 |
*Accumulated statutory reserves in equity method investments of $2.8 million at both December 31, 2018 and 2017, respectively, 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 investment in foreign joint venture operations using the equity method of accounting. Under the equity method, the Company’s share of the joint venture 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 venture 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 at December 31, 2018 or 2017.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -URI http://asc.fasb.org/topic&trid=2196965 + Details
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