EQUITY METHOD INVESTMENT

In May 2011, we acquired a 49.0% interest in TEL for $1.5 million in cash. Additionally, TEL'

s majority owners were eligible to receive an earn-out of up to $4.5 million for TEL'

s results through December 31, 2012, of which $1.0 million was earned based on TEL'

s 2011 results and $2.4 million was earned based on TEL'

s 2012 results. The earn-out payments increased our investment balance and there are no additional earn-outs payable for future results.

TEL is a tractor and trailer equipment leasing company and used equipment reseller. We have not guaranteed any of TEL'

s debt and have no obligation to provide funding, services, or assets. Under the agreement, we have an option to acquire 100% of TEL until May 31, 2016, by purchasing the majority owners'

interest based on a multiple of TEL'

s average earnings before interest and taxes, adjusted for certain items including cash and debt balances as of the acquisition date. Subsequent to May 31, 2016, TEL'

s majority owners have the option to acquire our interest based on the same terms detailed above. For the years ended December 31, 2015 and 2014, we sold tractors and trailers to TEL for $6.2 million and $14.0 million, respectively, and received $1.3 million and $1.5 million, respectively, for providing various maintenance services, certain back-office functions, and for miscellaneous equipment. We reversed previously deferred gains totaling less than $0.1 million for the years ending December 31, 2015 and 2014, respectively, representing 49% of the gains on units sold to TEL less any gains previously deferred and recognized when the equipment was sold to a third party. Deferred gains totaling $0.8 million at December 31, 2015 and December 31, 2014, respectively, are being carried as a reduction in our investment in TEL. At December 31, 2015 and 2014, we had accounts receivable from TEL of $5.3 million and $2.2 million, respectively, related to cash disbursements made pursuant to our performance of certain back-office and maintenance functions on TEL's behalf.

We have accounted for our investment in TEL using the equity method of accounting and thus our financial results include our proportionate share of TEL'

s net income, which amounted to $4.6 million in 2015, $3.7 million in 2014, and $2.8 million in 2013. We received no equity distribution from TEL in 2015, $0.3 million in 2014, and less than $0.1 million in 2013, which was distributed to each member based on its respective ownership percentage in order to satisfy estimated tax payments resulting from TEL'

s earnings. The distribution is the result of TEL being a limited liability company and thus its earnings are attributed to its members for tax purposes and are taxed for federal and certain state income on the members'

respective tax returns. Our investment in TEL, totaling $16.8 million and $12.2 million at December 31, 2015 and 2014, respectively, is included in other assets in the accompanying consolidated balance sheet. Our investment in TEL is comprised of the $4.9 million cash investment noted above and our equity in TEL'

s earnings since our investment, partially offset by dividends received since our investment for minimum tax withholdings as noted above and the abovementioned deferred gains on sales of equipment to TEL.

See TEL'

s summarized financial information below.

(in thousands)	As of the years ended December 31,
	2015		2014
Current Assets	$	14,275	$	14,525
Non-current Assets		125,782		64,731
Current Liabilities		29,644		16,733
Non-current Liabilities		84,516		45,687
Total Equity	$	25,897	$	16,836

(in thousands)	As of the years ended December 31,
	2015		2014		2013
Revenue	$	104,838	$	90,197	$	58,484
Operating Expenses		91,644		79,771		50,878
Operating Income		13,194		10,426		7,606
Net Income	$	9,061	$	7,564	$	5,643