Investments

The Company is a member of a joint venture, L B Pipe and Coupling Products, LLC (“L B Pipe JV”), in which it maintains a 45% ownership interest. L B Pipe JV manufactures, markets, and sells various machined components and precision coupling products for the energy, water well, and construction markets and is scheduled to terminate on June 30, 2019.

Under applicable guidance for variable interest entities in FASB ASC 810, “Consolidation,” the Company previously determined that L B Pipe JV was a variable interest entity. The Company concluded that it was not the primary beneficiary of the variable interest entity, as the Company did not have a controlling financial interest and did not have the power to direct the activities that most significantly impact the economic performance of L B Pipe JV.

During the year ended December 31, 2017, pursuant to the limited liability company agreement, the Company determined to sell its 45% ownership to the other 45% equity holder and no longer classified the L B Pipe JV as a variable interest entity. The Company concluded that it has met the criteria under applicable guidance for a long-lived asset to be held for sale, and has, accordingly, reclassified L B Pipe JV investment of $3,875 as a current asset held for sale within "Other current assets" on the Consolidated Balance Sheet. During 2017, the asset was remeasured to its fair market value. The difference between the fair market value, $3,875, and the Company's carrying amount, $4,288, resulted in a $413 other-than-temporary impairment for the twelve months ended December 31, 2017. The Company performed recoverability tests over its nonconsolidated equity method investments and concluded that the fair values exceeded the carrying values and no impairment was recorded by the Company during the years ended December 31, 2016 or 2015.

During the years ended December 31, 2017 and 2016, each of the L B Pipe JV members received proportional distributions from L B Pipe JV. During 2016, the Company and the other 45% member each executed a revolving line of credit with L B Pipe JV with an available limit of $1,350. The Company and the other 45% member each loaned $1,235 to L B Pipe JV in an effort to maintain compliance with L B Pipe JV’s debt covenants with an unaffiliated bank. Pursuant to the sale agreement, the Company is to receive its outstanding loan balance, including applicable interest, upon its sale of L B Pipe JV.

The Company recorded equity in the income of L B Pipe JV of approximately $386 and losses of $1,345 and $410 for the years ended December 31, 2017, 2016, and 2015, respectively.

At December 31, 2017 and 2016, the Company had a nonconsolidated equity method investment of $3,875, recorded as an asset held for sale in “Other current assets,” and $3,902, recorded in “Investments,” respectively, in L B Pipe JV and other investments totaling $162 and $129 at December 31, 2017 and 2016, respectively.

The Company is leasing five acres of land and two facilities to L B Pipe JV through June 30, 2019, with a 5.5-year renewal period. The current monthly lease payments, including interest, approximate $17, with a balloon payment of approximately $488, which is required to be paid at the termination of the lease, allocated over the renewal period, or during the initial term of the lease. This lease qualifies as a direct financing lease under the applicable guidance in FASB ASC 840-30, “Leases.”

The following is a schedule of the direct financing minimum lease payments for the years 2017 and thereafter:



	Minimum Lease Payments
2018	$	150
2019	585
	$	735

The Company’s exposure to loss results from its capital contributions, net of the Company’s share of L B Pipe JV’s income or loss, its revolving line of credit, and its net investment in the direct financing lease covering the facility used by L B Pipe JV for its operations. The carrying amounts with the maximum exposure to loss of the Company at December 31, 2017 and 2016, respectively, are as follows:



	2017		2016
LB Pipe JV equity method investment	$	3,875	$	3,902
Revolving line of credit	1,235		1,235
Net investment in direct financing lease	735		871
	$	5,845	$	6,008