Note 9 - Equity Method Investment

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Equity Method Investment [Text Block]

Note 9. Equity Method Investment

We own a minority investment in Transport Enterprise Leasing, LLC ("TEL"). 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. In

May 2016,

the operating agreement with TEL was amended to, among other things, remove the previously agreed to fixed date purchase options. TEL’s majority owners are generally restricted from transferring their interests in TEL, other than to certain permitted transferees, without our consent. We sold

no

tractors or trailers to TEL during the quarter ended

March 31, 2019

, and we sold 

$0.1

million

to TEL during the same 

2018

quarter. We received 

$2.4

million

and

$2.1

million

, respectively, for providing various maintenance services, certain back-office functions, and for miscellaneous equipment. We recognized a net reversal of previously deferred gains totaling

less than

$0.1

million

 and 

$0.2

million

 

For the

three

months ended

 

March 31, 2019

and

2018

, respectively, representing

49%

of the gains on units sold to TEL less any gains previously deferred and recognized when the equipment was subsequently sold to a

third

party.  Deferred gains, totaling 

$0.2

million

at

March 31, 2019

, are being carried as a reduction in our investment in TEL.  At

March 31, 2019

and

December 31, 2018

, we had accounts receivable from TEL of 

$5.6

million

and

$7.2

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

2019

 net income through

March 31, 2019

, or

$3.0

million

. Our investment in TEL, totaling 

$29.1

million

and

$26.1

million

, at

March 31, 2019

and

December 31, 2018

, respectively, is included in other assets in the accompanying condensed consolidated balance sheets.

See TEL's summarized financial information below:

(in thousands)	As of March 31,		As of December 31,
	2019		2018
Current Assets	$	30,635	$	25,877
Non-current Assets		276,925		273,987
Current Liabilities		15,875		78,530
Non-current Liabilities		241,651		176,389
Total Equity	$	50,034	$	44,945

	For the three months ended		For the three months ended
	March 31, 2019		March 31, 2018
Revenue	$	27,483	$	25,141
Operating Expenses		20,000		20,624
Operating Income		7,483		4,517
Net Income	$	5,088	$	3,017