(TCO8) In its 2016 annual report to shareholders, Sisters Corporation included the following information on cash flows from operations.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in $ thousands)

2016

2015

Operating activities:

Net income

$10,680

$30,100

Adjustments to reconcile to net cash provided

by operating activities:

Depreciation and amortization

25,734

20,051

Deferred income taxes

5,156

9,885

Equity income

(486)

(864)

Changes in operating assets and liabilities

Receivables

17,888

(33,018)

Inventories

39,331

(10,173)

Accounts payable and accrued expenses

(23,737)

13,515

Prepaids and other-net

(10,913)

5,893

Net Cash Provided by Operating Activities

63,653

35,389

Explain why Sisters Corporation subtracts equity income from its net income in its measurement of cash flows.