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FORM 10-Q
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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
The Netherlands
|
|
Prinses Beatrixlaan 35
|
|
98-0420223
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(State or other jurisdiction of
|
|
2595 AK The Hague
|
|
(I.R.S. Employer Identification No.)
|
incorporation or organization)
|
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The Netherlands
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|
|
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31 70 373 2010
|
|
|
|
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(Address and telephone number of principal executive offices)
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Page
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|
|
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|
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|
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|
|
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|
|
|
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Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
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2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(Unaudited)
|
||||||||||||||
Revenue
|
$
|
1,283,477
|
|
|
$
|
2,161,164
|
|
|
$
|
3,110,829
|
|
|
$
|
4,295,793
|
|
Cost of revenue
|
1,661,534
|
|
|
1,903,209
|
|
|
3,337,935
|
|
|
3,782,268
|
|
||||
Gross (loss) profit
|
(378,057
|
)
|
|
257,955
|
|
|
(227,106
|
)
|
|
513,525
|
|
||||
Selling and administrative expense
|
67,167
|
|
|
69,195
|
|
|
140,224
|
|
|
150,141
|
|
||||
Intangibles amortization
|
6,377
|
|
|
6,464
|
|
|
12,863
|
|
|
13,541
|
|
||||
Equity earnings
|
(8,655
|
)
|
|
(2,059
|
)
|
|
(16,266
|
)
|
|
(5,664
|
)
|
||||
Other operating expense, net
|
3,637
|
|
|
1,107
|
|
|
3,668
|
|
|
927
|
|
||||
Operating (loss) income from continuing operations
|
(446,583
|
)
|
|
183,248
|
|
|
(367,595
|
)
|
|
354,580
|
|
||||
Interest expense
|
(34,714
|
)
|
|
(20,196
|
)
|
|
(58,815
|
)
|
|
(40,261
|
)
|
||||
Interest income
|
882
|
|
|
2,754
|
|
|
2,110
|
|
|
4,934
|
|
||||
(Loss) income from continuing operations before taxes
|
(480,415
|
)
|
|
165,806
|
|
|
(424,300
|
)
|
|
319,253
|
|
||||
Income tax benefit (expense)
|
178,752
|
|
|
(41,937
|
)
|
|
165,048
|
|
|
(81,461
|
)
|
||||
Net (loss) income from continuing operations
|
(301,663
|
)
|
|
123,869
|
|
|
(259,252
|
)
|
|
237,792
|
|
||||
Net (loss) income from discontinued operations
|
(120,847
|
)
|
|
8,679
|
|
|
(111,353
|
)
|
|
14,718
|
|
||||
Net (loss) income
|
(422,510
|
)
|
|
132,548
|
|
|
(370,605
|
)
|
|
252,510
|
|
||||
Less: Net income attributable to noncontrolling interests ($457, $437, $870 and $885 related to discontinued operations)
|
(2,909
|
)
|
|
(8,709
|
)
|
|
(30,159
|
)
|
|
(21,746
|
)
|
||||
Net (loss) income attributable to CB&I
|
$
|
(425,419
|
)
|
|
$
|
123,839
|
|
|
$
|
(400,764
|
)
|
|
$
|
230,764
|
|
Net (loss) income attributable to CB&I per share (Basic):
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
(3.02
|
)
|
|
$
|
1.10
|
|
|
$
|
(2.87
|
)
|
|
$
|
2.07
|
|
Discontinued operations
|
(1.20
|
)
|
|
0.08
|
|
|
(1.11
|
)
|
|
0.13
|
|
||||
Total
|
$
|
(4.22
|
)
|
|
$
|
1.18
|
|
|
$
|
(3.98
|
)
|
|
$
|
2.20
|
|
Net (loss) income attributable to CB&I per share (Diluted):
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
(3.02
|
)
|
|
$
|
1.09
|
|
|
$
|
(2.87
|
)
|
|
$
|
2.05
|
|
Discontinued operations
|
(1.20
|
)
|
|
0.08
|
|
|
(1.11
|
)
|
|
0.13
|
|
||||
Total
|
$
|
(4.22
|
)
|
|
$
|
1.17
|
|
|
$
|
(3.98
|
)
|
|
$
|
2.18
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
100,866
|
|
|
105,298
|
|
|
100,660
|
|
|
105,051
|
|
||||
Diluted
|
100,866
|
|
|
106,091
|
|
|
100,660
|
|
|
105,925
|
|
||||
Cash dividends on shares:
|
|
|
|
|
|
|
|
||||||||
Amount
|
$
|
7,062
|
|
|
$
|
7,372
|
|
|
$
|
14,109
|
|
|
$
|
14,731
|
|
Per share
|
$
|
0.07
|
|
|
$
|
0.07
|
|
|
$
|
0.14
|
|
|
$
|
0.14
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(Unaudited)
|
||||||||||||||
Net (loss) income
|
$
|
(422,510
|
)
|
|
$
|
132,548
|
|
|
$
|
(370,605
|
)
|
|
$
|
252,510
|
|
Other comprehensive income (loss) from continuing operations, net of tax:
|
|
|
|
|
|
|
|
||||||||
Change in cumulative translation adjustment
|
32,914
|
|
|
(23,691
|
)
|
|
57,324
|
|
|
(1,232
|
)
|
||||
Change in unrealized fair value of cash flow hedges
|
457
|
|
|
(260
|
)
|
|
810
|
|
|
1,043
|
|
||||
Change in unrecognized prior service pension credits/costs
|
56
|
|
|
(183
|
)
|
|
(20
|
)
|
|
(156
|
)
|
||||
Change in unrecognized actuarial pension gains/losses
|
(6,612
|
)
|
|
4,569
|
|
|
(8,045
|
)
|
|
2,416
|
|
||||
Other comprehensive income (loss) from discontinued operations, net of tax:
|
|
|
|
|
|
|
|
||||||||
Change in cumulative translation adjustment
|
(225
|
)
|
|
30
|
|
|
270
|
|
|
263
|
|
||||
Comprehensive (loss) income
|
(395,920
|
)
|
|
113,013
|
|
|
(320,266
|
)
|
|
254,844
|
|
||||
Net income attributable to noncontrolling interests ($457, $437, $870 and $885 related to discontinued operations)
|
(2,909
|
)
|
|
(8,709
|
)
|
|
(30,159
|
)
|
|
(21,746
|
)
|
||||
Change in cumulative translation adjustment attributable to noncontrolling interests
|
(651
|
)
|
|
713
|
|
|
(1,621
|
)
|
|
(544
|
)
|
||||
Comprehensive (loss) income attributable to CB&I
|
$
|
(399,480
|
)
|
|
$
|
105,017
|
|
|
$
|
(352,046
|
)
|
|
$
|
232,554
|
|
|
June 30,
2017 |
|
December 31,
2016 |
||||
|
(Unaudited)
|
|
|
||||
Assets
|
|
|
|
||||
Cash and cash equivalents ($188,408 and $328,387 related to variable interest entities ("VIEs"))
|
$
|
354,920
|
|
|
$
|
490,679
|
|
Accounts receivable, net ($51,900 and $53,159 related to VIEs)
|
663,141
|
|
|
488,513
|
|
||
Inventory
|
158,818
|
|
|
190,102
|
|
||
Costs and estimated earnings in excess of billings ($6,263 and $26,186 related to VIEs)
|
418,038
|
|
|
410,749
|
|
||
Current assets of discontinued operations
|
—
|
|
|
414,732
|
|
||
Other current assets ($357,635 and $426,515 related to VIEs)
|
477,530
|
|
|
546,977
|
|
||
Total current assets
|
2,072,447
|
|
|
2,541,752
|
|
||
Equity investments
|
174,561
|
|
|
165,256
|
|
||
Property and equipment, net
|
502,426
|
|
|
505,944
|
|
||
Goodwill
|
2,829,214
|
|
|
2,813,803
|
|
||
Other intangibles, net
|
208,388
|
|
|
219,409
|
|
||
Deferred income taxes
|
876,969
|
|
|
730,108
|
|
||
Non-current assets of discontinued operations
|
—
|
|
|
462,144
|
|
||
Other non-current assets ($73,865 and $5,484 related to VIEs)
|
482,274
|
|
|
401,004
|
|
||
Total assets
|
$
|
7,146,279
|
|
|
$
|
7,839,420
|
|
Liabilities
|
|
|
|
||||
Revolving facility and other short-term borrowings
|
$
|
374,000
|
|
|
$
|
407,500
|
|
Current maturities of long-term debt, net
|
1,469,320
|
|
|
503,910
|
|
||
Accounts payable ($353,343 and $337,089 related to VIEs)
|
976,929
|
|
|
964,548
|
|
||
Billings in excess of costs and estimated earnings ($441,481 and $407,325 related to VIEs)
|
1,704,464
|
|
|
1,395,349
|
|
||
Current liabilities of discontinued operations
|
—
|
|
|
247,469
|
|
||
Other current liabilities
|
953,567
|
|
|
1,017,473
|
|
||
Total current liabilities
|
5,478,280
|
|
|
4,536,249
|
|
||
Long-term debt, net
|
—
|
|
|
1,287,923
|
|
||
Deferred income taxes
|
8,937
|
|
|
7,307
|
|
||
Non-current liabilities of discontinued operations
|
—
|
|
|
5,388
|
|
||
Other non-current liabilities
|
438,852
|
|
|
441,216
|
|
||
Total liabilities
|
5,926,069
|
|
|
6,278,083
|
|
||
Shareholders’ Equity
|
|
|
|
||||
Common stock, Euro .01 par value; shares authorized: 250,000; shares issued: 108,857 and 108,857; shares outstanding: 101,001 and 100,113
|
1,288
|
|
|
1,288
|
|
||
Additional paid-in capital
|
758,192
|
|
|
782,130
|
|
||
Retained earnings
|
955,733
|
|
|
1,370,606
|
|
||
Treasury stock, at cost: 7,856 and 8,744 shares
|
(296,351
|
)
|
|
(344,870
|
)
|
||
Accumulated other comprehensive loss
|
(346,898
|
)
|
|
(395,616
|
)
|
||
Total CB&I shareholders’ equity
|
1,071,964
|
|
|
1,413,538
|
|
||
Noncontrolling interests ($0 and $6,874 related to discontinued operations)
|
148,246
|
|
|
147,799
|
|
||
Total shareholders’ equity
|
1,220,210
|
|
|
1,561,337
|
|
||
Total liabilities and shareholders’ equity
|
$
|
7,146,279
|
|
|
$
|
7,839,420
|
|
|
Six Months Ended June 30,
|
||||||
|
2017
|
|
2016
|
||||
|
(Unaudited)
|
||||||
Cash Flows from Operating Activities
|
|
|
|
||||
Net (loss) income
|
$
|
(370,605
|
)
|
|
$
|
252,510
|
|
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
48,898
|
|
|
62,853
|
|
||
Loss on net assets sold (net of cash paid for transaction costs of $4,700)
|
60,117
|
|
|
—
|
|
||
Deferred income taxes
|
(141,866
|
)
|
|
68,932
|
|
||
Stock-based compensation expense
|
26,441
|
|
|
21,275
|
|
||
Other operating expense, net
|
1,644
|
|
|
934
|
|
||
Unrealized (gain) loss on foreign currency hedges
|
(3,687
|
)
|
|
2,863
|
|
||
Excess tax benefits from stock-based compensation
|
—
|
|
|
(46
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Increase in receivables, net
|
(164,655
|
)
|
|
(113,662
|
)
|
||
Change in contracts in progress, net
|
298,677
|
|
|
87,405
|
|
||
Decrease in inventory
|
32,988
|
|
|
15,334
|
|
||
Decrease in accounts payable
|
(57,913
|
)
|
|
(53,637
|
)
|
||
Increase in other current and non-current assets
|
(42,502
|
)
|
|
(12,764
|
)
|
||
Decrease in other current and non-current liabilities
|
(127,972
|
)
|
|
(22,878
|
)
|
||
(Increase) decrease in equity investments
|
(140
|
)
|
|
445
|
|
||
Change in other, net
|
(25,535
|
)
|
|
9,700
|
|
||
Net cash (used in) provided by operating activities
|
(466,110
|
)
|
|
319,264
|
|
||
Cash Flows from Investing Activities
|
|
|
|
||||
Proceeds from sale of discontinued operation, net of cash sold
|
645,506
|
|
|
—
|
|
||
Capital expenditures
|
(34,300
|
)
|
|
(25,276
|
)
|
||
Advances with partners of proportionately consolidated ventures, net
|
50,384
|
|
|
(39,116
|
)
|
||
Proceeds from sale of property and equipment
|
1,609
|
|
|
4,302
|
|
||
Other, net
|
(9,858
|
)
|
|
(55,578
|
)
|
||
Net cash provided by (used in) investing activities
|
653,341
|
|
|
(115,668
|
)
|
||
Cash Flows from Financing Activities
|
|
|
|
||||
Revolving facility and other short-term repayments, net
|
(33,500
|
)
|
|
(181,000
|
)
|
||
Advances with equity method and proportionately consolidated ventures, net
|
11,817
|
|
|
161,698
|
|
||
Repayments on long-term debt
|
(318,750
|
)
|
|
(75,000
|
)
|
||
Excess tax benefits from stock-based compensation
|
—
|
|
|
46
|
|
||
Purchase of treasury stock
|
(9,080
|
)
|
|
(7,970
|
)
|
||
Issuance of stock
|
7,176
|
|
|
8,864
|
|
||
Dividends paid
|
(14,109
|
)
|
|
(14,731
|
)
|
||
Distributions to noncontrolling interests
|
(24,298
|
)
|
|
(29,643
|
)
|
||
Revolving facility and deferred financing costs
|
(13,763
|
)
|
|
—
|
|
||
Net cash used in financing activities
|
(394,507
|
)
|
|
(137,736
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
57,040
|
|
|
(13,169
|
)
|
||
(Decrease) increase in cash and cash equivalents
|
(150,236
|
)
|
|
52,691
|
|
||
Cash and cash equivalents, beginning of period
|
505,156
|
|
|
550,221
|
|
||
Cash and cash equivalents, end of period
|
354,920
|
|
|
602,912
|
|
||
Cash and cash equivalents, end of period - discontinued operations
|
—
|
|
|
(16,596
|
)
|
||
Cash and cash equivalents, end of period - continuing operations
|
$
|
354,920
|
|
|
$
|
586,316
|
|
|
Six Months Ended June 30, 2017
|
||||||||||||||||||||||||||||||||
|
Common Stock
|
|
Additional
Paid-In Capital
|
|
Retained Earnings
|
|
Treasury Stock
|
|
Accumulated
Other
Comprehensive (Loss) Income
|
|
Non -
controlling Interests
|
|
Total
Shareholders’ Equity
|
||||||||||||||||||||
|
Shares
|
|
Amount
|
|
|
|
Shares
|
|
Amount
|
|
|
|
|||||||||||||||||||||
|
(Unaudited)
|
||||||||||||||||||||||||||||||||
Balance at December 31, 2016
|
100,113
|
|
|
$
|
1,288
|
|
|
$
|
782,130
|
|
|
$
|
1,370,606
|
|
|
8,744
|
|
|
$
|
(344,870
|
)
|
|
$
|
(395,616
|
)
|
|
$
|
147,799
|
|
|
$
|
1,561,337
|
|
Net (loss) income
|
—
|
|
|
—
|
|
|
—
|
|
|
(400,764
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
30,159
|
|
|
(370,605
|
)
|
|||||||
Disposition
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,035
|
)
|
|
(7,035
|
)
|
|||||||
Change in cumulative translation adjustment, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
55,973
|
|
|
1,621
|
|
|
57,594
|
|
|||||||
Change in unrealized fair value of cash flow hedges, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
810
|
|
|
—
|
|
|
810
|
|
|||||||
Change in unrecognized prior service pension credits/costs, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(20
|
)
|
|
—
|
|
|
(20
|
)
|
|||||||
Change in unrecognized actuarial pension gains/losses, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,045
|
)
|
|
—
|
|
|
(8,045
|
)
|
|||||||
Distributions to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(24,298
|
)
|
|
(24,298
|
)
|
|||||||
Dividends paid ($0.14 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(14,109
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14,109
|
)
|
|||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
26,441
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
26,441
|
|
|||||||
Purchase of treasury stock
|
(299
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
299
|
|
|
(9,080
|
)
|
|
—
|
|
|
—
|
|
|
(9,080
|
)
|
|||||||
Issuance of stock
|
1,187
|
|
|
—
|
|
|
(50,379
|
)
|
|
—
|
|
|
(1,187
|
)
|
|
57,599
|
|
|
—
|
|
|
—
|
|
|
7,220
|
|
|||||||
Balance at June 30, 2017
|
101,001
|
|
|
$
|
1,288
|
|
|
$
|
758,192
|
|
|
$
|
955,733
|
|
|
7,856
|
|
|
$
|
(296,351
|
)
|
|
$
|
(346,898
|
)
|
|
$
|
148,246
|
|
|
$
|
1,220,210
|
|
|
Six Months Ended June 30, 2016
|
||||||||||||||||||||||||||||||||
|
Common Stock
|
|
Additional
Paid-In Capital
|
|
Retained Earnings
|
|
Treasury Stock
|
|
Accumulated
Other
Comprehensive (Loss) Income
|
|
Non -
controlling Interests
|
|
Total
Shareholders’ Equity
|
||||||||||||||||||||
|
Shares
|
|
Amount
|
|
|
|
Shares
|
|
Amount
|
|
|
|
|||||||||||||||||||||
|
(Unaudited)
|
||||||||||||||||||||||||||||||||
Balance at December 31, 2015
|
104,427
|
|
|
$
|
1,288
|
|
|
$
|
800,641
|
|
|
$
|
1,712,508
|
|
|
4,430
|
|
|
$
|
(206,407
|
)
|
|
$
|
(294,040
|
)
|
|
$
|
149,600
|
|
|
$
|
2,163,590
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
230,764
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
21,746
|
|
|
252,510
|
|
|||||||
Change in cumulative translation adjustment, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,513
|
)
|
|
544
|
|
|
(969
|
)
|
|||||||
Change in unrealized fair value of cash flow hedges, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,043
|
|
|
—
|
|
|
1,043
|
|
|||||||
Change in unrecognized prior service pension credits/costs, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(156
|
)
|
|
—
|
|
|
(156
|
)
|
|||||||
Change in unrecognized actuarial pension gains/losses, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,416
|
|
|
—
|
|
|
2,416
|
|
|||||||
Distributions to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(29,643
|
)
|
|
(29,643
|
)
|
|||||||
Dividends paid ($0.14 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(14,731
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14,731
|
)
|
|||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
21,275
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
21,275
|
|
|||||||
Purchase of treasury stock
|
(237
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
237
|
|
|
(7,970
|
)
|
|
—
|
|
|
—
|
|
|
(7,970
|
)
|
|||||||
Issuance of stock
|
1,125
|
|
|
—
|
|
|
(49,573
|
)
|
|
—
|
|
|
(1,125
|
)
|
|
52,171
|
|
|
—
|
|
|
—
|
|
|
2,598
|
|
|||||||
Balance at June 30, 2016
|
105,315
|
|
|
$
|
1,288
|
|
|
$
|
772,343
|
|
|
$
|
1,928,541
|
|
|
3,542
|
|
|
$
|
(162,206
|
)
|
|
$
|
(292,250
|
)
|
|
$
|
142,247
|
|
|
$
|
2,389,963
|
|
|
|
June 30, 2017
|
|
December 31, 2016
|
||||||||||||
|
|
Asset
|
|
Liability
|
|
Asset
|
|
Liability
|
||||||||
Costs and estimated earnings on contracts in progress
|
|
$
|
4,334,524
|
|
|
$
|
28,697,752
|
|
|
$
|
8,466,638
|
|
|
$
|
23,408,316
|
|
Billings on contracts in progress
|
|
(3,916,486
|
)
|
|
(30,402,216
|
)
|
|
(8,055,889
|
)
|
|
(24,803,665
|
)
|
||||
Contracts in progress, net
|
|
$
|
418,038
|
|
|
$
|
(1,704,464
|
)
|
|
$
|
410,749
|
|
|
$
|
(1,395,349
|
)
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net (loss) income from continuing operations attributable to CB&I (net of $2,452, $8,272, $29,289 and $20,861 of noncontrolling interests)
|
|
$
|
(304,115
|
)
|
|
$
|
115,597
|
|
|
$
|
(288,541
|
)
|
|
$
|
216,931
|
|
Net (loss) income from discontinued operations attributable to CB&I (net of $457, $437, $870 and $885 of noncontrolling interests)
|
|
(121,304
|
)
|
|
8,242
|
|
|
(112,223
|
)
|
|
13,833
|
|
||||
Net (loss) income attributable to CB&I
|
|
$
|
(425,419
|
)
|
|
$
|
123,839
|
|
|
$
|
(400,764
|
)
|
|
$
|
230,764
|
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average shares outstanding—basic
|
|
100,866
|
|
|
105,298
|
|
|
100,660
|
|
|
105,051
|
|
||||
Effect of restricted shares/performance based shares/stock options
(1)
|
|
—
|
|
|
780
|
|
|
—
|
|
|
861
|
|
||||
Effect of directors’ deferred-fee shares
(1)
|
|
—
|
|
|
13
|
|
|
—
|
|
|
13
|
|
||||
Weighted average shares outstanding—diluted
|
|
100,866
|
|
|
106,091
|
|
|
100,660
|
|
|
105,925
|
|
||||
Net (loss) income attributable to CB&I per share (Basic):
|
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
|
$
|
(3.02
|
)
|
|
$
|
1.10
|
|
|
$
|
(2.87
|
)
|
|
$
|
2.07
|
|
Discontinued operations
|
|
(1.20
|
)
|
|
0.08
|
|
|
(1.11
|
)
|
|
0.13
|
|
||||
Total
|
|
$
|
(4.22
|
)
|
|
$
|
1.18
|
|
|
$
|
(3.98
|
)
|
|
$
|
2.20
|
|
Net (loss) income attributable to CB&I per share (Diluted):
|
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
|
$
|
(3.02
|
)
|
|
$
|
1.09
|
|
|
$
|
(2.87
|
)
|
|
$
|
2.05
|
|
Discontinued operations
|
|
(1.20
|
)
|
|
0.08
|
|
|
(1.11
|
)
|
|
0.13
|
|
||||
Total
|
|
$
|
(4.22
|
)
|
|
$
|
1.17
|
|
|
$
|
(3.98
|
)
|
|
$
|
2.18
|
|
(1)
|
The effect of restricted shares, performance based shares, stock options and directors’ deferred-fee shares were not included in the calculation of diluted EPS for the
three and six months ended June 30, 2017
due to the net loss for the periods. Antidilutive shares excluded from diluted EPS were not material for the
three and six months ended June 30, 2016
.
|
|
|
December 31,
2016 |
||
Assets
|
|
|
||
Cash
|
|
$
|
14,477
|
|
Accounts receivable, net
|
|
239,146
|
|
|
Costs and estimated earnings in excess of billings
|
|
153,275
|
|
|
Other assets
|
|
7,834
|
|
|
Current assets of discontinued operations
|
|
414,732
|
|
|
|
|
|
||
Property and equipment, net
|
|
59,746
|
|
|
Goodwill
(1)
|
|
229,607
|
|
|
Other intangibles, net
|
|
148,440
|
|
|
Other assets
|
|
24,351
|
|
|
Non-current assets of discontinued operations
|
|
462,144
|
|
|
|
|
|
||
Total assets of discontinued operations
|
|
$
|
876,876
|
|
|
|
|
||
Liabilities
|
|
|
||
Accounts payable
|
|
$
|
141,028
|
|
Billings in excess of costs and estimated earnings
|
|
53,986
|
|
|
Other liabilities
|
|
52,455
|
|
|
Current liabilities of discontinued operations
|
|
247,469
|
|
|
|
|
|
||
Other liabilities
|
|
5,388
|
|
|
Non-current liabilities of discontinued operations
|
|
5,388
|
|
|
|
|
|
||
Total liabilities of discontinued operations
|
|
$
|
252,857
|
|
|
|
|
||
Noncontrolling interests of discontinued operations
|
|
$
|
6,874
|
|
(1)
|
The carrying value of goodwill for the Capital Services Operations includes the impact of a
$655,000
impairment charge recorded in the fourth quarter 2016 in connection with our annual impairment assessment.
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Revenue
|
|
$
|
561,708
|
|
|
$
|
559,690
|
|
|
$
|
1,114,655
|
|
|
$
|
1,124,671
|
|
Cost of revenue
|
|
528,927
|
|
|
523,119
|
|
|
1,047,614
|
|
|
1,056,065
|
|
||||
Gross profit
|
|
32,781
|
|
|
36,571
|
|
|
67,041
|
|
|
68,606
|
|
||||
Selling and administrative expense
|
|
16,503
|
|
|
13,536
|
|
|
29,541
|
|
|
25,187
|
|
||||
Intangibles amortization
|
|
—
|
|
|
4,030
|
|
|
2,550
|
|
|
8,230
|
|
||||
Loss on net assets sold
|
|
64,817
|
|
|
—
|
|
|
64,817
|
|
|
—
|
|
||||
Other operating expense (income)
|
|
876
|
|
|
120
|
|
|
504
|
|
|
(304
|
)
|
||||
Operating (loss) income from discontinued operations
|
|
(49,415
|
)
|
|
18,885
|
|
|
(30,371
|
)
|
|
35,493
|
|
||||
Interest expense
(1)
|
|
(6,577
|
)
|
|
(5,877
|
)
|
|
(13,440
|
)
|
|
(11,710
|
)
|
||||
Interest income
|
|
7
|
|
|
305
|
|
|
16
|
|
|
614
|
|
||||
(Loss) income from discontinued operations before taxes
|
|
(55,985
|
)
|
|
13,313
|
|
|
(43,795
|
)
|
|
24,397
|
|
||||
Income tax expense
(2)
|
|
(64,862
|
)
|
|
(4,634
|
)
|
|
(67,558
|
)
|
|
(9,679
|
)
|
||||
Net (loss) income from discontinued operations
|
|
(120,847
|
)
|
|
8,679
|
|
|
(111,353
|
)
|
|
14,718
|
|
||||
Net income from discontinued operations attributable to noncontrolling interests
|
|
(457
|
)
|
|
(437
|
)
|
|
(870
|
)
|
|
(885
|
)
|
||||
Net (loss) income from discontinued operations attributable to CB&I
|
|
$
|
(121,304
|
)
|
|
$
|
8,242
|
|
|
$
|
(112,223
|
)
|
|
$
|
13,833
|
|
|
|
Six Months Ended June 30,
|
||||||
|
|
2017
|
|
2016
|
||||
Operating cash flows
|
|
$
|
(36,469
|
)
|
|
$
|
28,470
|
|
Investing cash flows
|
|
$
|
(1,459
|
)
|
|
$
|
(2,495
|
)
|
|
|
June 30,
2017 |
|
December 31,
2016 |
||||
Raw materials
|
|
$
|
97,231
|
|
|
$
|
65,969
|
|
Work in process
|
|
28,717
|
|
|
51,625
|
|
||
Finished goods
|
|
32,870
|
|
|
72,508
|
|
||
Total
|
|
$
|
158,818
|
|
|
$
|
190,102
|
|
|
|
Total
|
||
Balance at December 31, 2016
|
|
$
|
2,813,803
|
|
Foreign currency translation and other
|
|
16,596
|
|
|
Amortization of tax goodwill in excess of book goodwill
|
|
(1,185
|
)
|
|
Balance at June 30, 2017
(1)
|
|
$
|
2,829,214
|
|
(1)
|
At
June 30, 2017
, we had approximately
$453,100
of cumulative impairment losses which were recorded in our Engineering & Construction operating group during 2015 related to the sale of our nuclear power construction business (our “Nuclear Operations”) on December 31, 2015.
|
•
|
Engineering & Construction
—Our Engineering & Construction operating group represented a reporting unit.
|
•
|
Fabrication Services
—Our Fabrication Services operating group represented a reporting unit.
|
•
|
Technology
—Our Technology operating group represented a reporting unit.
|
|
|
|
|
June 30, 2017
|
|
December 31, 2016
|
||||||||||||
|
|
Weighted Average Life
|
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
||||||||
Backlog and customer relationships
|
|
18 Years
|
|
$
|
99,086
|
|
|
$
|
(24,143
|
)
|
|
$
|
99,086
|
|
|
$
|
(21,374
|
)
|
Process technologies
|
|
15 Years
|
|
263,043
|
|
|
(140,717
|
)
|
|
258,516
|
|
|
(129,261
|
)
|
||||
Tradenames
|
|
12 Years
|
|
27,327
|
|
|
(16,208
|
)
|
|
27,090
|
|
|
(14,648
|
)
|
||||
Total
(1)
|
|
16 Years
|
|
$
|
389,456
|
|
|
$
|
(181,068
|
)
|
|
$
|
384,692
|
|
|
$
|
(165,283
|
)
|
(1)
|
The decrease in other intangibles, net during the
six months ended June 30, 2017
primarily related to amortization expense of approximately
$12,900
.
|
•
|
CB&I/Zachry—
We have a venture with Zachry (CB&I—
50%
/ Zachry—
50%
) to perform EPC work for
two
liquefied natural gas (“LNG”) liquefaction trains in Freeport, Texas. Our proportionate share of the venture project value is approximately
$2,700,000
. In addition, we have subcontract and risk sharing arrangements with Chiyoda to support our responsibilities to the venture. The costs of these arrangements are recorded in cost of revenue.
|
•
|
CB&I/Zachry/Chiyoda—
We have a venture with Zachry and Chiyoda (CB&I—
33.3%
/ Zachry—
33.3%
/ Chiyoda—
33.3%
) to perform EPC work for an additional LNG liquefaction train at the aforementioned project site in Freeport, Texas. Our proportionate share of the venture project value is approximately
$675,000
.
|
•
|
CB&I/Chiyoda—
We have a venture with Chiyoda (CB&I—
50%
/ Chiyoda—
50%
) to perform EPC work for
three
LNG liquefaction trains in Hackberry, Louisiana. Our proportionate share of the venture project value is approximately
$3,200,000
.
|
|
|
June 30,
2017 |
|
December 31,
2016 |
||||
CB&I/Zachry
|
|
|
|
|
||||
Current assets
(1)
|
|
$
|
251,237
|
|
|
$
|
260,934
|
|
Non-current assets
|
|
2,678
|
|
|
3,204
|
|
||
Total assets
|
|
$
|
253,915
|
|
|
$
|
264,138
|
|
Current liabilities
(1)
|
|
$
|
387,466
|
|
|
$
|
379,339
|
|
CB&I/Zachry/Chiyoda
|
|
|
|
|
||||
Current assets
(1)
|
|
$
|
88,593
|
|
|
$
|
84,279
|
|
Non-current assets
|
|
1,539
|
|
|
1,969
|
|
||
Total assets
|
|
$
|
90,132
|
|
|
$
|
86,248
|
|
Current liabilities
(1)
|
|
$
|
68,305
|
|
|
$
|
73,138
|
|
CB&I/Chiyoda
|
|
|
|
|
||||
Current assets
(1)
|
|
$
|
186,278
|
|
|
$
|
337,479
|
|
Current liabilities
(1)
|
|
$
|
258,367
|
|
|
$
|
150,179
|
|
(1)
|
Our venture arrangements allow for excess working capital of the ventures to be advanced to the venture partners. Such advances are returned to the ventures for working capital needs as necessary. Accordingly, at a reporting period end a venture may have advances to its partners which are reflected as an advance receivable within current assets of the venture. At
June 30, 2017
and
December 31, 2016
, other current assets on the Balance Sheet included approximately
$324,400
and
$374,800
, respectively, related to our proportionate share of advances from the ventures to our venture partners, and other current liabilities included approximately
$347,300
and
$394,400
, respectively, related to advances to CB&I from the ventures.
|
•
|
Chevron-Lummus Global (“CLG”)—
We have a venture with Chevron (CB&I—
50%
/ Chevron—
50%
) which provides proprietary process technology licenses and associated engineering services and catalyst, primarily for the refining industry. As sufficient capital investments in CLG have been made by the venture partners, it does not qualify as a VIE.
|
•
|
NET Power—
We have a venture with Exelon and 8 Rivers Capital (CB&I—
33.3%
/ Exelon—
33.3%
/ 8 Rivers Capital—
33.3%
) to commercialize a new natural gas power generation system that recovers the carbon dioxide produced during combustion. NET Power is building a first-of-its-kind demonstration plant which is being funded by contributions and services from the venture partners and other parties. We have determined the venture to be a VIE; however, we do not effectively control NET Power and therefore do not consolidate it. Our cash commitment for NET Power totals
$47,300
and at
June 30, 2017
, we had made cumulative investments totaling approximately
$44,900
.
|
•
|
CB&I/CTCI—
We have a venture with CTCI (CB&I—
50%
/ CTCI—
50%
) to perform EPC work for a liquids ethylene cracker and associated units in Sohar, Oman. We have determined the venture to be a VIE; however, we do not effectively control the venture and therefore do not consolidate it. Our proportionate share of the venture project value is approximately
$1,400,000
. Our venture arrangement allows for excess working capital of the venture to be advanced to the venture partners. Such advances are returned to the venture for working capital needs as necessary. At
June 30, 2017
and
December 31, 2016
, other current liabilities included approximately
$205,900
and
$147,000
, respectively, related to advances to CB&I from the venture.
|
•
|
CB&I/Kentz—
We have a venture with Kentz (CB&I—
65%
/ Kentz—
35%
) to perform the structural, mechanical, piping, electrical and instrumentation work on, and to provide commissioning support for,
three
LNG trains, including associated utilities and a gas processing and compression plant, for the Gorgon LNG project, located on Barrow Island, Australia. Our venture project value is approximately
$5,900,000
and the project was substantially complete at June 30, 2017.
|
•
|
CB&I/AREVA—
We have a venture with AREVA (CB&I
—
52%
/ AREVA—
48%
) to design, license and construct a mixed oxide fuel fabrication facility in Aiken, South Carolina. Our venture project value is approximately
$5,800,000
.
|
|
|
June 30,
2017 |
|
December 31,
2016 |
||||
CB&I/Kentz
|
|
|
|
|
||||
Current assets
|
|
$
|
26,486
|
|
|
$
|
68,867
|
|
Non-current assets
|
|
69,404
|
|
|
—
|
|
||
Total assets
|
|
$
|
95,890
|
|
|
$
|
68,867
|
|
Current liabilities
|
|
$
|
27,581
|
|
|
$
|
87,822
|
|
CB&I/AREVA
|
|
|
|
|
||||
Current assets
|
|
$
|
24,416
|
|
|
$
|
16,313
|
|
Current liabilities
|
|
$
|
50,086
|
|
|
$
|
47,652
|
|
All Other
(1)
|
|
|
|
|
||||
Current assets
|
|
$
|
33,099
|
|
|
$
|
69,785
|
|
Non-current assets
|
|
16,003
|
|
|
16,382
|
|
||
Total assets
|
|
$
|
49,102
|
|
|
$
|
86,167
|
|
Current liabilities
|
|
$
|
8,514
|
|
|
$
|
7,748
|
|
(1)
|
Other ventures that we consolidate are not individually material to our financial results and are therefore aggregated as “All Other”.
|
|
|
June 30,
2017 |
|
December 31,
2016 |
||||
Current
|
|
|
|
|
||||
Revolving facility and other short-term borrowings
|
|
$
|
374,000
|
|
|
$
|
407,500
|
|
|
|
|
|
|
||||
Current maturities of long-term debt
|
|
1,481,250
|
|
|
506,250
|
|
||
Less: unamortized debt issuance costs
|
|
(11,930
|
)
|
|
(2,340
|
)
|
||
Current maturities of long-term debt, net of unamortized debt issuance costs
|
|
1,469,320
|
|
|
503,910
|
|
||
Current debt, net of unamortized debt issuance costs
|
|
$
|
1,843,320
|
|
|
$
|
911,410
|
|
Long-Term
|
|
|
|
|
||||
Term Loan: $1,000,000 term loan (interest at LIBOR plus a floating margin)
|
|
$
|
—
|
|
|
$
|
300,000
|
|
Second Term Loan: $500,000 term loan (interest at LIBOR plus a floating margin)
|
|
481,250
|
|
|
500,000
|
|
||
Senior Notes: $800,000 senior notes, series A-D (fixed interest ranging from 4.65% to 5.80%)
|
|
800,000
|
|
|
800,000
|
|
||
Second Senior Notes: $200,000 senior notes (fixed interest of 5.03%)
|
|
200,000
|
|
|
200,000
|
|
||
Less: unamortized debt issuance costs
|
|
—
|
|
|
(5,827
|
)
|
||
Less: current maturities of long-term debt
|
|
(1,481,250
|
)
|
|
(506,250
|
)
|
||
Long-term debt, net of unamortized debt issuance costs
|
|
$
|
—
|
|
|
$
|
1,287,923
|
|
•
|
Series A—Interest due semi-annually at a fixed rate of
4.65%
, with principal of
$150,000
due in December 2017
|
•
|
Series B—Interest due semi-annually at a fixed rate of
5.07%
, with principal of
$225,000
due in December 2019
|
•
|
Series C—Interest due semi-annually at a fixed rate of
5.65%
, with principal of
$275,000
due in December 2022
|
•
|
Series D—Interest due semi-annually at a fixed rate of
5.80%
, with principal of
$150,000
due in December 2024
|
•
|
Established a new maximum leverage ratio of
3.50
at December 31, 2016, decreasing to
3.00
at December 31, 2017, or 45 days subsequent to the closing of the sale of our Capital Services Operations (the “Closing Date”), if earlier.
|
•
|
Established a new minimum net worth of
$1,201,507
, maintained our required fixed charge coverage ratio at
1.75
, and reduced our Revolving Facility from
$1,350,000
to
$1,150,000
at the Closing Date.
|
•
|
Included other financial and restrictive covenants, including restrictions regarding subsidiary indebtedness, sales of assets, liens, investments, type of business conducted, and mergers and acquisitions, and restrictions on dividend payments and share repurchases, among other restrictions.
|
•
|
Required us to secure the Senior Facilities through the pledge of cash, accounts receivable, inventory, fixed assets, and stock of subsidiaries, which was in the process of being completed as of June 30, 2017.
|
•
|
Required us to repay portions of the Senior Facilities with all of the net proceeds from the sale of our Capital Services Operations, the issuance of any unsecured debt that is subordinate (“Subordinated Debt”) to the Senior Facilities, the issuance of any equity securities, or the sale of any assets.
|
•
|
Established new maximum leverage ratios for borrowings under the Senior Facilities as follows:
4.00
at March 31, 2017;
4.50
at June 30, 2017 and September 30, 2017;
3.00
at December 31, 2017 and March 31, 2018; and
2.50
at June 30, 2018.
|
•
|
Established total maximum leverage ratios (in addition to those established for the Senior Facilities) for all borrowings among the Senior Facilities and any Subordinated Debt as follows:
5.25
at June 30, 2017;
6.00
at September 30, 2017;
4.00
at December 31, 2017 and March 31, 2018;
3.25
at June 30, 2018; and
3.00
at September 30, 2018.
|
•
|
Prohibited mergers and acquisitions, open-market share repurchases, and increases to dividends until our leverage ratio is below
3.00
for two consecutive quarters.
|
•
|
Eliminate our Minimum Net Worth covenant required by our previous amendments.
|
•
|
Require minimum levels of trailing 12-month earnings before interest, taxes, depreciation and amortization (“EBITDA”), as defined by the amendments, as follows:
$500,000
at September 30, 2017;
$550,000
at December 31, 2017;
$500,000
at March 31, 2018;
$450,000
at June 30, 2018 and September 30, 2018; and
$425,000
at December 31, 2018 and thereafter (“Minimum EBITDA”). Trailing 12-month EBITDA for purposes of determining compliance with the Minimum EBITDA covenant will be adjusted to exclude: an agreed amount attributable to any restructuring or integration charges during the third and fourth quarters of 2017; an agreed amount attributable to previous charges on certain projects which occurred during the first and second quarters of 2017; and an agreed amount for potential future charges for the same projects if they were to be incurred during the third and fourth quarters of 2017 (collectively, the “EBITDA Addbacks”).
|
•
|
Provide for the replacement of our previous maximum leverage ratio and minimum fixed charge ratio with a new maximum leverage ratio of
1.75
(“Maximum Leverage Ratio”) and new minimum fixed charge coverage ratio of
2.25
(“Minimum Fixed Charge Coverage Ratio”), which are temporarily suspended and will resume as of March 31, 2018. Trailing 12-month EBITDA for purposes of determining compliance with the Maximum Leverage Ratio and consolidated net income for purposes of determining compliance with the Minimum Fixed Charge Coverage Ratio will be adjusted for the EBITDA Addbacks.
|
•
|
Require us to execute on our plan to market and sell our Technology Operations by December 27, 2017 (the “Technology Sale”), with an extension of up to 60 days at the discretion of the holders of a majority of the outstanding Notes and at the discretion of the administrative agents of the Bank Facilities.
|
•
|
Require us to maintain a minimum aggregate availability under our Revolving Facility and Second Revolving Facility, including borrowings and letters of credit, of
$150,000
at all times from the Effective Date through the date of the Technology Sale, and
$250,000
thereafter (“Minimum Availability”). Our amendments require the net cash proceeds from the Technology Sale be used to repay our Senior Facilities (“Mandatory Repayment Amount”). Further, our aggregate capacity under the Revolving Facility and Second Revolving Facility will be reduced by seventy percent (
70%
) of the portion of the Mandatory Repayment Amount allocable to the Revolving Facility and Second Revolving Facility, upon closing the Technology Sale and certain other mandatory prepayment events.
|
•
|
Limit the amount of certain of our funded indebtedness to
$3,000,000
prior to the Technology Sale and
$2,900,000
thereafter, in each case, subject to reduction pursuant to scheduled repayments and mandatory prepayments thereof (but, with respect to the Revolving Facility and Second Revolving Facility, only to the extent the commitments have been reduced by such prepayments) made by us after the Effective Date.
|
•
|
Prohibit mergers and acquisitions, open-market share repurchases and dividend payments and certain inter-company transactions.
|
•
|
Replace the previous financial letter of credit sublimits for our Revolving Facility and Second Revolving Facility with a
$100,000
letter of credit sublimit for each, as described further above.
|
•
|
Adjust the interest rates on our Senior Facilities, as described further above.
|
•
|
Level 1
—Fair value is based upon quoted prices in active markets.
|
•
|
Level 2
—Fair value is based upon internally-developed models that use, as their basis, readily observable market parameters. Our derivative positions are classified within level 2 of the valuation hierarchy as they are valued using quoted market prices for similar assets and liabilities in active markets. These level 2 derivatives are valued utilizing an income approach, which discounts future cash flow based upon current market expectations and adjusts for credit risk.
|
•
|
Level 3
—Fair value is based upon internally-developed models that use, as their basis, significant unobservable market parameters. We did not have any level 3 classifications at
June 30, 2017
or
December 31, 2016
.
|
|
|
June 30, 2017
|
|
December 31, 2016
|
||||||||||||||||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||||||||
Derivative Assets
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Other current assets
|
|
$
|
—
|
|
|
$
|
4,766
|
|
|
$
|
—
|
|
|
$
|
4,766
|
|
|
$
|
—
|
|
|
$
|
1,146
|
|
|
$
|
—
|
|
|
$
|
1,146
|
|
Other non-current assets
|
|
—
|
|
|
561
|
|
|
—
|
|
|
561
|
|
|
—
|
|
|
82
|
|
|
—
|
|
|
82
|
|
||||||||
Total assets at fair value
|
|
$
|
—
|
|
|
$
|
5,327
|
|
|
$
|
—
|
|
|
$
|
5,327
|
|
|
$
|
—
|
|
|
$
|
1,228
|
|
|
$
|
—
|
|
|
$
|
1,228
|
|
Derivative Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Other current liabilities
|
|
$
|
—
|
|
|
$
|
(551
|
)
|
|
$
|
—
|
|
|
$
|
(551
|
)
|
|
$
|
—
|
|
|
$
|
(3,509
|
)
|
|
$
|
—
|
|
|
$
|
(3,509
|
)
|
Other non-current liabilities
|
|
—
|
|
|
(908
|
)
|
|
—
|
|
|
(908
|
)
|
|
—
|
|
|
(725
|
)
|
|
—
|
|
|
(725
|
)
|
||||||||
Total liabilities at fair value
|
|
$
|
—
|
|
|
$
|
(1,459
|
)
|
|
$
|
—
|
|
|
$
|
(1,459
|
)
|
|
$
|
—
|
|
|
$
|
(4,234
|
)
|
|
$
|
—
|
|
|
$
|
(4,234
|
)
|
(1)
|
We are exposed to credit risk on our hedging instruments associated with potential counterparty non-performance, and the fair value of our derivatives reflects this credit risk. The total level 2 assets at fair value above represent the maximum loss that we would incur on our outstanding hedges if the applicable counterparties failed to perform according to the hedge contracts. To help mitigate counterparty credit risk, we transact only with counterparties that are rated as investment grade or higher and monitor all counterparties on a continuous basis.
|
|
|
Other Current and
Non-Current Assets
|
|
Other Current and
Non-Current Liabilities
|
||||||||||||
|
|
June 30,
2017 |
|
December 31,
2016 |
|
June 30,
2017 |
|
December 31,
2016 |
||||||||
Derivatives designated as cash flow hedges
|
|
|
|
|
|
|
|
|
||||||||
Interest rate
|
|
$
|
—
|
|
|
$
|
49
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Foreign currency
|
|
545
|
|
|
109
|
|
|
—
|
|
|
(536
|
)
|
||||
Fair value
|
|
$
|
545
|
|
|
$
|
158
|
|
|
$
|
—
|
|
|
$
|
(536
|
)
|
Derivatives not designated as cash flow hedges
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency
|
|
$
|
4,782
|
|
|
$
|
1,070
|
|
|
$
|
(1,459
|
)
|
|
$
|
(3,698
|
)
|
Fair value
|
|
$
|
4,782
|
|
|
$
|
1,070
|
|
|
$
|
(1,459
|
)
|
|
$
|
(3,698
|
)
|
Total fair value
|
|
$
|
5,327
|
|
|
$
|
1,228
|
|
|
$
|
(1,459
|
)
|
|
$
|
(4,234
|
)
|
|
|
Gross
Amounts Recognized (i) |
|
Gross Amounts
Offset on the Balance Sheet (ii) |
|
Net Amounts
Presented on the Balance Sheet (iii) = (i) - (ii) |
|
Gross Amounts Not Offset on
the Balance Sheet (iv) |
|
Net Amount
(v) = (iii) - (iv) |
||||||||||||||
|
|
Financial
Instruments |
|
Cash Collateral Received
|
|
|||||||||||||||||||
Derivative Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign currency
|
|
5,327
|
|
|
—
|
|
|
5,327
|
|
|
(179
|
)
|
|
—
|
|
|
5,148
|
|
||||||
Total assets
|
|
$
|
5,327
|
|
|
$
|
—
|
|
|
$
|
5,327
|
|
|
$
|
(179
|
)
|
|
$
|
—
|
|
|
$
|
5,148
|
|
Derivative Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign currency
|
|
(1,459
|
)
|
|
—
|
|
|
(1,459
|
)
|
|
179
|
|
|
—
|
|
|
(1,280
|
)
|
||||||
Total liabilities
|
|
$
|
(1,459
|
)
|
|
$
|
—
|
|
|
$
|
(1,459
|
)
|
|
$
|
179
|
|
|
$
|
—
|
|
|
$
|
(1,280
|
)
|
|
|
Amount of Gain (Loss) on Effective Derivative Portion
|
||||||||||||||||||||||||||||||
|
|
Recognized in OCI
|
|
Reclassified from AOCI into Earnings
(1)
|
||||||||||||||||||||||||||||
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||||||||||
Derivatives designated as cash flow hedges
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Interest rate
|
|
$
|
—
|
|
|
$
|
(248
|
)
|
|
$
|
—
|
|
|
$
|
(961
|
)
|
|
$
|
—
|
|
|
$
|
(163
|
)
|
|
$
|
49
|
|
|
$
|
(344
|
)
|
Foreign currency
|
|
497
|
|
|
(655
|
)
|
|
1,179
|
|
|
821
|
|
|
84
|
|
|
148
|
|
|
208
|
|
|
(914
|
)
|
||||||||
Total
|
|
$
|
497
|
|
|
$
|
(903
|
)
|
|
$
|
1,179
|
|
|
$
|
(140
|
)
|
|
$
|
84
|
|
|
$
|
(15
|
)
|
|
$
|
257
|
|
|
$
|
(1,258
|
)
|
(1)
|
Net unrealized gains totaling approximately
$600
are anticipated to be reclassified from AOCI into earnings during the next
12 months
due to settlement of the associated underlying obligations.
|
|
|
Amount of Gain (Loss) Recognized in Earnings
|
||||||||||||||
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Derivatives not designated as cash flow hedges
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency
|
|
$
|
5,774
|
|
|
$
|
(4,930
|
)
|
|
$
|
(396
|
)
|
|
$
|
(9,159
|
)
|
Total
|
|
$
|
5,774
|
|
|
$
|
(4,930
|
)
|
|
$
|
(396
|
)
|
|
$
|
(9,159
|
)
|
|
|
Pension Plans
|
|
Other Postretirement Plans
|
||||
Contributions made through June 30, 2017
|
|
$
|
9,720
|
|
|
$
|
1,040
|
|
Contributions expected for the remainder of 2017
|
|
8,183
|
|
|
1,238
|
|
||
Total contributions expected for 2017
|
|
$
|
17,903
|
|
|
$
|
2,278
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Pension Plans
|
|
|
|
|
|
|
|
|
||||||||
Service cost
|
|
$
|
2,871
|
|
|
$
|
2,384
|
|
|
$
|
5,653
|
|
|
$
|
4,711
|
|
Interest cost
|
|
4,737
|
|
|
5,975
|
|
|
9,328
|
|
|
11,893
|
|
||||
Expected return on plan assets
|
|
(5,968
|
)
|
|
(6,821
|
)
|
|
(11,754
|
)
|
|
(13,617
|
)
|
||||
Amortization of prior service credits
|
|
(156
|
)
|
|
(158
|
)
|
|
(306
|
)
|
|
(312
|
)
|
||||
Recognized net actuarial losses
|
|
1,529
|
|
|
1,475
|
|
|
3,027
|
|
|
2,936
|
|
||||
Settlement expense
(1)
|
|
2,426
|
|
|
—
|
|
|
2,426
|
|
|
—
|
|
||||
Net periodic benefit cost
|
|
$
|
5,439
|
|
|
$
|
2,855
|
|
|
$
|
8,374
|
|
|
$
|
5,611
|
|
Other Postretirement Plans
|
|
|
|
|
|
|
|
|
||||||||
Service cost
|
|
$
|
171
|
|
|
$
|
176
|
|
|
$
|
342
|
|
|
$
|
352
|
|
Interest cost
|
|
342
|
|
|
341
|
|
|
684
|
|
|
681
|
|
||||
Recognized net actuarial gains
|
|
(685
|
)
|
|
(841
|
)
|
|
(1,370
|
)
|
|
(1,681
|
)
|
||||
Net periodic benefit income
|
|
$
|
(172
|
)
|
|
$
|
(324
|
)
|
|
$
|
(344
|
)
|
|
$
|
(648
|
)
|
(1)
|
Net periodic benefit cost in 2017 was impacted by the settlement of our qualified Canadian pension plan in the second quarter 2017. The settlement resulted in the immediate recognition of previously unrecognized actuarial gains related to the plan that were previously included in AOCI.
|
|
|
Currency
Translation Adjustment (1) |
|
Unrealized
Fair Value Of Cash Flow Hedges |
|
Defined Benefit
Pension and Other Postretirement Plans |
|
Total
|
||||||||
Balance at December 31, 2016
|
|
$
|
(264,562
|
)
|
|
$
|
(213
|
)
|
|
$
|
(130,841
|
)
|
|
$
|
(395,616
|
)
|
OCI before reclassifications
|
|
55,973
|
|
|
942
|
|
|
(10,924
|
)
|
|
45,991
|
|
||||
Amounts reclassified from AOCI
|
|
—
|
|
|
(132
|
)
|
|
2,859
|
|
|
2,727
|
|
||||
Net OCI
|
|
55,973
|
|
|
810
|
|
|
(8,065
|
)
|
|
48,718
|
|
||||
Balance at June 30, 2017
|
|
$
|
(208,589
|
)
|
|
$
|
597
|
|
|
$
|
(138,906
|
)
|
|
$
|
(346,898
|
)
|
(1)
|
During the
six months ended June 30, 2017
, the currency translation adjustment component of AOCI was
favorably
impacted by net movements in the
Australian Dollar
,
British Pound
, and
Euro
exchange rates against the U.S. Dollar.
|
|
|
Amount Reclassified From AOCI
|
||
Unrealized Fair Value Of Cash Flow Hedges
(1)
|
|
|
||
Interest rate derivatives (interest expense)
|
|
$
|
(49
|
)
|
Foreign currency derivatives (cost of revenue)
|
|
(208
|
)
|
|
Total before tax
|
|
$
|
(257
|
)
|
Tax
|
|
125
|
|
|
Total net of tax
|
|
$
|
(132
|
)
|
Defined Benefit Pension and Other Postretirement Plans
(2)
|
|
|
||
Amortization of prior service credits
|
|
$
|
(306
|
)
|
Recognized net actuarial losses
|
|
4,155
|
|
|
Total before tax
|
|
$
|
3,849
|
|
Tax
|
|
(990
|
)
|
|
Total net of tax
|
|
$
|
2,859
|
|
(1)
|
See
Note 9
for further discussion of our cash flow hedges, including the total value reclassified from AOCI to earnings.
|
(2)
|
See
Note 10
for further discussion of our defined benefit and other postretirement plans, including the components of net periodic benefit cost.
|
|
|
Shares
(1)
|
|
Weighted Average
Grant-Date Fair
Value per Share
|
|||
RSUs
|
|
1,155
|
|
|
$
|
32.13
|
|
Financial performance based shares
|
|
597
|
|
|
$
|
36.00
|
|
Stock performance based shares
|
|
149
|
|
|
$
|
44.21
|
|
Total shares granted
|
|
1,901
|
|
|
|
(1)
|
No
stock options were granted during the
six months ended June 30, 2017
.
|
|
|
Shares
|
|
Financial performance based shares (issued upon vesting)
|
|
49
|
|
RSUs (issued upon vesting)
|
|
867
|
|
Stock options (issued upon exercise)
|
|
32
|
|
ESPP shares (issued upon sale)
|
|
239
|
|
Total shares issued
|
|
1,187
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Revenue
|
|
|
|
|
|
|
|
|
||||||||
Engineering & Construction
|
|
$
|
702,150
|
|
|
$
|
1,548,994
|
|
|
$
|
1,982,903
|
|
|
$
|
3,085,355
|
|
Fabrication Services
|
|
508,518
|
|
|
547,658
|
|
|
987,090
|
|
|
1,081,364
|
|
||||
Technology
|
|
72,809
|
|
|
64,512
|
|
|
140,836
|
|
|
129,074
|
|
||||
Total revenue
|
|
$
|
1,283,477
|
|
|
$
|
2,161,164
|
|
|
$
|
3,110,829
|
|
|
$
|
4,295,793
|
|
|
|
|
|
|
|
|
|
|
||||||||
Operating (Loss) Income From Continuing Operations
|
|
|
|
|
|
|
|
|
||||||||
Engineering & Construction
|
|
$
|
(525,682
|
)
|
|
$
|
92,809
|
|
|
$
|
(520,268
|
)
|
|
$
|
200,882
|
|
Fabrication Services
|
|
57,639
|
|
|
67,385
|
|
|
109,698
|
|
|
104,495
|
|
||||
Technology
|
|
21,460
|
|
|
23,054
|
|
|
42,975
|
|
|
49,203
|
|
||||
Total operating (loss) income from continuing operations
|
|
$
|
(446,583
|
)
|
|
$
|
183,248
|
|
|
$
|
(367,595
|
)
|
|
$
|
354,580
|
|
|
|
June 30, 2017
|
|
December 31, 2016
|
||||
Assets
|
|
|
|
|
||||
Engineering & Construction
|
|
$
|
3,694,396
|
|
|
$
|
3,572,399
|
|
Fabrication Services
|
|
2,465,398
|
|
|
2,394,041
|
|
||
Technology
|
|
986,485
|
|
|
996,104
|
|
||
Total assets of continuing operations
|
|
7,146,279
|
|
|
6,962,544
|
|
||
Assets of discontinued operations (Note 4)
|
|
—
|
|
|
876,876
|
|
||
Total assets
|
|
$
|
7,146,279
|
|
|
$
|
7,839,420
|
|
|
|
June 30, 2017
|
|
% of Total
|
|
December 31, 2016
|
|
% of Total
|
||||||||||||||||||
Backlog
|
|
(In thousands)
|
||||||||||||||||||||||||
Engineering & Construction
|
|
$
|
10,445,699
|
|
|
77%
|
|
$
|
9,871,208
|
|
|
76%
|
||||||||||||||
Fabrication Services
|
|
2,001,355
|
|
|
15%
|
|
2,117,567
|
|
|
16%
|
||||||||||||||||
Technology
|
|
1,160,453
|
|
|
8%
|
|
1,025,723
|
|
|
8%
|
||||||||||||||||
Total backlog
|
|
$
|
13,607,507
|
|
|
|
|
|
|
$
|
13,014,498
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||||||
|
|
(In thousands)
|
||||||||||||||||||||||||
|
|
2017
|
|
% of
Total |
|
2016
|
|
% of
Total |
|
2017
|
|
% of
Total |
|
2016
|
|
% of
Total |
||||||||||
New Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Engineering & Construction
|
|
$
|
398,421
|
|
|
37%
|
|
$
|
977,911
|
|
|
73%
|
|
$
|
2,634,594
|
|
|
67%
|
|
$
|
1,319,576
|
|
|
62%
|
||
Fabrication Services
|
|
521,447
|
|
|
49%
|
|
253,633
|
|
|
19%
|
|
967,707
|
|
|
25%
|
|
627,772
|
|
|
29%
|
||||||
Technology
|
|
148,507
|
|
|
14%
|
|
107,769
|
|
|
8%
|
|
308,861
|
|
|
8%
|
|
191,389
|
|
|
9%
|
||||||
Total new awards
|
|
$
|
1,068,375
|
|
|
|
|
$
|
1,339,313
|
|
|
|
|
$
|
3,911,162
|
|
|
|
|
$
|
2,138,737
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
2017
|
|
% of
Total |
|
2016
|
|
% of
Total |
|
2017
|
|
% of
Total |
|
2016
|
|
% of
Total |
||||||||||
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Engineering & Construction
|
|
$
|
702,150
|
|
|
55%
|
|
$
|
1,548,994
|
|
|
72%
|
|
$
|
1,982,903
|
|
|
64%
|
|
$
|
3,085,355
|
|
|
72%
|
||
Fabrication Services
|
|
508,518
|
|
|
39%
|
|
547,658
|
|
|
25%
|
|
987,090
|
|
|
32%
|
|
1,081,364
|
|
|
25%
|
||||||
Technology
|
|
72,809
|
|
|
6%
|
|
64,512
|
|
|
3%
|
|
140,836
|
|
|
4%
|
|
129,074
|
|
|
3%
|
||||||
Total revenue
|
|
$
|
1,283,477
|
|
|
|
|
$
|
2,161,164
|
|
|
|
|
$
|
3,110,829
|
|
|
|
|
$
|
4,295,793
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
2017
|
|
% of
Revenue |
|
2016
|
|
% of
Revenue |
|
2017
|
|
% of
Revenue |
|
2016
|
|
% of
Revenue |
||||||||||
Operating (Loss) Income From Continuing Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Engineering & Construction
|
|
$
|
(525,682
|
)
|
|
(74.9)%
|
|
$
|
92,809
|
|
|
6.0%
|
|
$
|
(520,268
|
)
|
|
(26.2)%
|
|
$
|
200,882
|
|
|
6.5%
|
||
Fabrication Services
|
|
57,639
|
|
|
11.3%
|
|
67,385
|
|
|
12.3%
|
|
109,698
|
|
|
11.1%
|
|
104,495
|
|
|
9.7%
|
||||||
Technology
|
|
21,460
|
|
|
29.5%
|
|
23,054
|
|
|
35.7%
|
|
42,975
|
|
|
30.5%
|
|
49,203
|
|
|
38.1%
|
||||||
Total operating (loss) income from continuing operations
|
|
$
|
(446,583
|
)
|
|
(34.8)%
|
|
$
|
183,248
|
|
|
8.5%
|
|
$
|
(367,595
|
)
|
|
(11.8)%
|
|
$
|
354,580
|
|
|
8.3%
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
|
(In thousands)
|
||||||||||||||
New Awards
|
|
$
|
308,425
|
|
|
$
|
439,808
|
|
|
$
|
780,783
|
|
|
$
|
855,298
|
|
Revenue
|
|
$
|
561,708
|
|
|
$
|
559,690
|
|
|
$
|
1,114,655
|
|
|
$
|
1,124,671
|
|
(Loss) Income From Operations
|
|
$
|
(49,415
|
)
|
|
$
|
18,885
|
|
|
$
|
(30,371
|
)
|
|
$
|
35,493
|
|
% of Revenue
|
|
(8.8
|
)%
|
|
3.4
|
%
|
|
(2.7
|
)%
|
|
3.2
|
%
|
|
June 30, 2017
(2)
|
|
December 31, 2016
(2)
|
|
Change
|
||||||
|
(In thousands)
|
||||||||||
Total billings in excess of costs and estimated earnings
(1)
|
$
|
(1,751,968
|
)
|
|
$
|
(1,449,335
|
)
|
|
$
|
(302,633
|
)
|
Total costs and estimated earnings in excess of billings
(1)
|
567,980
|
|
|
564,024
|
|
|
3,956
|
|
|||
Contracts in Progress, net
|
(1,183,988
|
)
|
|
(885,311
|
)
|
|
(298,677
|
)
|
|||
Accounts receivable, net
|
892,314
|
|
|
727,659
|
|
|
164,655
|
|
|||
Inventory
|
161,142
|
|
|
194,130
|
|
|
(32,988
|
)
|
|||
Accounts payable
|
(1,047,663
|
)
|
|
(1,105,576
|
)
|
|
57,913
|
|
|||
Contract Capital, net
|
$
|
(1,178,195
|
)
|
|
$
|
(1,069,098
|
)
|
|
$
|
(109,097
|
)
|
(1)
|
Represents our cash position relative to revenue recognized on projects, with (i) billings in excess of costs and estimated earnings representing a liability reflective of future cash expenditures and non-cash earnings and (ii) costs and estimated earnings in excess of billings representing an asset reflective of future cash receipts.
|
(2)
|
Although our Capital Services Operations were sold on June 30, 2017 and reported as a discontinued operation in our December 31, 2016 Balance Sheet, our Statement of Cash Flows reflects the changes in Contract Capital balances (and all balance sheet components) during the first six months of 2017 prior to the sale and on a non-discontinued operations basis at December 31, 2016. Accordingly, the components of our net Contract Capital balances prior to their removal on June 30, 2017, and on a non-discontinued operations basis at December 31, 2016, have been reflected in the table above.
|
•
|
Series A—Interest due semi-annually at a fixed rate of
4.65%
, with principal of
$150.0 million
due in December 2017
|
•
|
Series B—Interest due semi-annually at a fixed rate of
5.07%
, with principal of
$225.0 million
due in December 2019
|
•
|
Series C—Interest due semi-annually at a fixed rate of
5.65%
, with principal of
$275.0 million
due in December 2022
|
•
|
Series D—Interest due semi-annually at a fixed rate of
5.80%
, with principal of
$150.0 million
due in December 2024
|
•
|
Established a new maximum leverage ratio of
3.50
at December 31, 2016, decreasing to
3.00
at December 31, 2017, or 45 days subsequent to the closing of the sale of our Capital Services Operations (the “Closing Date”), if earlier.
|
•
|
Established a new minimum net worth of $1.2 billion, maintained our required fixed charge coverage ratio at
1.75
, and reduced our Revolving Facility from
$1.35 billion
to
$1.15 billion
at the Closing Date.
|
•
|
Included other financial and restrictive covenants, including restrictions regarding subsidiary indebtedness, sales of assets, liens, investments, type of business conducted, and mergers and acquisitions, and restrictions on dividend payments and share repurchases, among other restrictions.
|
•
|
Required us to secure the Senior Facilities through the pledge of cash, accounts receivable, inventory, fixed assets, and stock of subsidiaries, which was in the process of being completed as of June 30, 2017.
|
•
|
Required us to repay portions of the Senior Facilities with all of the net proceeds from the sale of our Capital Services Operations, the issuance of any unsecured debt that is subordinate (“Subordinated Debt”) to the Senior Facilities, the issuance of any equity securities, or the sale of any assets.
|
•
|
Established new maximum leverage ratios for borrowings under the Senior Facilities as follows:
4.00
at March 31, 2017;
4.50
at June 30, 2017 and September 30, 2017;
3.00
at December 31, 2017 and March 31, 2018; and
2.50
at June 30, 2018.
|
•
|
Established total maximum leverage ratios (in addition to those established for the Senior Facilities) for all borrowings among the Senior Facilities and any Subordinated Debt as follows:
5.25
at June 30, 2017;
6.00
at September 30, 2017;
4.00
at December 31, 2017 and March 31, 2018;
3.25
at June 30, 2018; and
3.00
at September 30, 2018.
|
•
|
Prohibited mergers and acquisitions, open-market share repurchases, and increases to dividends until our leverage ratio is below
3.00
for two consecutive quarters.
|
•
|
Eliminate our Minimum Net Worth covenant required by our previous amendments.
|
•
|
Require minimum levels of trailing 12-month earnings before interest, taxes, depreciation and amortization (“EBITDA”), as defined by the amendments, as follows:
$500.0 million
at September 30, 2017;
$550.0 million
at December 31, 2017;
$500.0 million
at March 31, 2018;
$450.0 million
at June 30, 2018 and September 30, 2018; and
$425.0 million
at December 31, 2018 and thereafter (“Minimum EBITDA”). Trailing 12-month EBITDA for purposes of determining compliance with the Minimum EBITDA covenant will be adjusted to exclude: an agreed amount attributable to any restructuring or integration charges during the third and fourth quarters of 2017; an agreed amount
|
•
|
Provide for the replacement of our previous maximum leverage ratio and minimum fixed charge ratio with a new maximum leverage ratio of
1.75
(“Maximum Leverage Ratio”) and new minimum fixed charge coverage ratio of
2.25
(“Minimum Fixed Charge Coverage Ratio), which are temporarily suspended and will resume as of March 31, 2018. Trailing 12-month EBITDA for purposes of determining compliance with the Maximum Leverage Ratio and consolidated net income for purposes of determining compliance with the Minimum Fixed Charge Coverage Ratio will be adjusted for the EBITDA Addbacks.
|
•
|
Require us to execute on our plan to market and sell our Technology Operations by December 27, 2017 (the “Technology Sale”), with an extension of up to 60 days at the discretion of the holders of a majority of the outstanding Notes and at the discretion of the administrative agents of the Bank Facilities.
|
•
|
Require us to maintain a minimum aggregate availability under our Revolving Facility and Second Revolving Facility, including borrowings and letters of credit, of
$150.0 million
at all times from the Effective Date through the date of the Technology Sale, and
$250.0 million
thereafter (“Minimum Availability”). Our amendments require the net cash proceeds from the Technology Sale be used to repay our Senior Facilities (“Mandatory Repayment Amount”). Further, our aggregate capacity under the Revolving Facility and Second Revolving Facility will be reduced by seventy percent (
70%
) of the portion of the Mandatory Repayment Amount allocable to the Revolving Facility and Second Revolving Facility, upon closing the Technology Sale and certain other mandatory prepayment events.
|
•
|
Limit the amount of certain of our funded indebtedness to
$3.0 billion
prior to the Technology Sale and
$2.9 billion
thereafter, in each case, subject to reduction pursuant to scheduled repayments and mandatory prepayments thereof (but, with respect to the Revolving Facility and Second Revolving Facility, only to the extent the commitments have been reduced by such prepayments) made by us after the Effective Date.
|
•
|
Prohibit mergers and acquisitions, open-market share repurchases and dividend payments and certain inter-company transactions.
|
•
|
Replace the previous financial letter of credit sublimits for our Revolving Facility and Second Revolving Facility with a
$100.0 million
letter of credit sublimit for each, as described further above.
|
•
|
Adjust the interest rates on our Senior Facilities, as described further above.
|
•
|
Engineering & Construction
—Our Engineering & Construction operating group represented a reporting unit.
|
•
|
Fabrication Services
—Our Fabrication Services operating group represented a reporting unit.
|
•
|
Technology
—Our Technology operating group represented a reporting unit.
|
•
|
new awards and backlog and future business opportunities;
|
•
|
future levels of demand, including expectations regarding: planned investments across the natural gas value chain, including LNG and petrochemicals; continued investments in projects based on U.S. shale gas; global investments in power and petrochemical facilities are expected to continue; and investments in various types of facilities that require storage structures and pre-fabricated pipe;
|
•
|
the execution of activities on and completion of specific projects, including timing to complete, future productivity and cost to complete;
|
•
|
estimates of percentage of completion and contract profits or losses;
|
•
|
estimates regarding liquidated damages;
|
•
|
expectations regarding the sale of our Technology operating group;
|
•
|
expectations regarding the future compliance with our financial and other covenants in the agreements governing our primary financing arrangements;
|
•
|
expectations regarding access to sources of liquidity and capital resources, including access to bonding facilities;
|
•
|
future levels of capital expenditures;
|
•
|
anticipated tax rates;
|
•
|
expectations regarding exchange gains and losses;
|
•
|
expectations regarding defined benefit pension and other postretirement plan contributions and investment performance;
|
•
|
the potential effects of judicial or other proceedings on our business, financial condition, results of operations and cash flows; and
|
•
|
the anticipated effects of actions of third parties such as competitors, or regulatory authorities, or plaintiffs in litigation.
|
•
|
our ability to realize cost savings from our expected performance of contracts, whether as a result of improper estimates, performance, or otherwise;
|
•
|
uncertain timing and funding of new contract awards, as well as project cancellations;
|
•
|
our ability to fully realize the revenue value reported in our backlog;
|
•
|
cost overruns on fixed price or similar contracts or failure to receive timely or proper payments on cost reimbursable contracts, whether as a result of improper estimates, performance, disputes or otherwise;
|
•
|
risks associated with labor productivity;
|
•
|
risks associated with government contracts that may be subject to modification or termination;
|
•
|
risks associated with percentage-of-completion accounting; our ability to settle or negotiate unapproved change orders and claims;
|
•
|
changes in the costs or availability of, or delivery schedule for, equipment, components, materials, labor or subcontractors;
|
•
|
adverse impacts from weather affecting our performance and timeliness of completion, which could lead to increased costs and affect the quality, costs or availability of, or delivery schedule for, equipment, components, materials, labor or subcontractors;
|
•
|
operating risks, which could lead to increased costs and affect the quality, costs or availability of, or delivery schedule for, equipment, components, materials, labor or subcontractors;
|
•
|
increased competition;
|
•
|
fluctuating revenue resulting from a number of factors, including a decline in energy prices and the cyclical nature of the individual markets in which our customers operate;
|
•
|
delayed or lower than expected activity in the energy and natural resources industries, demand from which is the largest component of our revenue;
|
•
|
lower than expected growth in our primary end markets, including but not limited to LNG and energy processes;
|
•
|
risks associated with non-compliance with covenants in our financing arrangements;
|
•
|
risks inherent in acquisitions and our ability to complete or obtain financing for acquisitions;
|
•
|
our ability to integrate and successfully operate and manage acquired businesses and the risks associated with those businesses;
|
•
|
the non-competitiveness or unavailability of, or lack of demand or loss of legal protection for, our intellectual property assets or rights;
|
•
|
failure to keep pace with technological changes or innovation;
|
•
|
failure of our patents or licensed technologies to perform as expected or to remain competitive, current, in demand, profitable or enforceable;
|
•
|
adverse outcomes of pending claims or litigation or the possibility of new claims or litigation, and the potential effect of such claims or litigation on our business, financial position, results of operations and cash flow;
|
•
|
lack of necessary liquidity to provide bid, performance, advance payment and retention bonds, guarantees, or letters of credit securing our obligations under our bids and contracts or to finance expenditures prior to the receipt of payment for the performance of contracts;
|
•
|
proposed and actual revisions to U.S. and non-U.S. tax laws, and interpretation of said laws, Dutch tax treaties with foreign countries and U.S. tax treaties with non-U.S. countries (including, but not limited to, The Netherlands), which would seek to increase income taxes payable;
|
•
|
political and economic conditions including, but not limited to, war, conflict or civil or economic unrest in countries in which we operate;
|
•
|
compliance with applicable laws and regulations in any one or more of the countries in which we operate including, but not limited to, the U.S. Foreign Corrupt Practices Act and those concerning the environment, export controls, anti-money laundering and trade sanction programs;
|
•
|
foreign currency risk and our inability to properly manage or hedge currency or similar risks; and
|
•
|
a downturn, disruption, or stagnation in the economy in general.
|
2.1
(1)
|
|
Amendment Agreement, dated as of June 18, 2017, to the Purchase Agreement dated as of February 27, 2017 (incorporated by reference to Exhibit 10.1 to CB&I’s Current Report on Form 8-K filed with the SEC on July 7, 2017 (File No. 1-12815))
|
|
|
|
2.2
(1)
|
|
Letter Amendment, dated as of June 30, 2017, to the Purchase Agreement dated as of February 27, 2017 (incorporated by reference to Exhibit 10.2 to CB&I’s Current Report on Form 8-K filed with the SEC on July 7, 2017 (File No. 1-12815), which filing omitted the schedules to the Letter Amendment pursuant to Item 601 (b) of Regulation S-K and noted that a copy of the omitted schedules will be furnished to the SEC supplementally upon request)
|
|
|
|
3
(1)
|
|
Amended Articles of Association of the Company (English translation) (incorporated by reference to Exhibit 3 to CB&I’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2005, filed with the SEC on August 8, 2005 (File No. 1-12815))
|
|
|
|
10.1
(2),(3)
|
|
Form of Restricted Stock Unit Award Letter pursuant to CB&I’s 2008 Long-Term Incentive Plan, as amended
|
|
|
|
10.2
(2),(3)
|
|
Form of Performance Share Award Letter pursuant to CB&I’s 2008 Long-Term Incentive Plan, as amended
|
|
|
|
10.3
(2),(3)
|
|
Amendment No. 2, dated as of June 22, 2017, to the Chicago Bridge & Iron Savings Plan
|
|
|
|
10.4
(2),(3)
|
|
Amendment No. 3, dated as of June 30, 2017, to the Chicago Bridge & Iron Savings Plan
|
|
|
|
10.5
(1)
|
|
Sixth Amendment and Waiver, dated as of May 8, 2017, to the Note Purchase and Guarantee Agreement dated as of December 27, 2012 (incorporated by reference to Exhibit 10.7 to CB&I’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, filed with the SEC on May 10, 2017 (File No. 1-12815))
|
|
|
|
10.6
(1)
|
|
Amendment No. 6 and Waiver, dated as of May 8, 2017, to the Credit Agreement, dated as of October 28, 2013 (incorporated by reference to Exhibit 10.8 to CB&I’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, filed with the SEC on May 10, 2017 (File No. 1-12815))
|
|
|
|
10.7
(1)
|
|
Amendment No. 3 and Waiver, dated as of May 8, 2017, to the Amended and Restated Revolving Credit Agreement, dated as of July 8, 2015 (incorporated by reference to Exhibit 10.9 to CB&I’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, filed with the SEC on May 10, 2017 (File No. 1-12815))
|
|
|
|
10.8
(1)
|
|
Amendment No. 3 and Waiver, dated as of May 8, 2017, to the Term Loan Agreement, dated as of July 8, 2015 (incorporated by reference to Exhibit 10.10 to CB&I’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, filed with the SEC on May 10, 2017 (File No. 1-12815))
|
|
|
|
10.9
(1)
|
|
Fourth Amendment and Waiver, dated as of May 8, 2017, to the Note Purchase and Guarantee Agreement dated as of July 22, 2015 (incorporated by reference to Exhibit 10.11 to CB&I’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, filed with the SEC on May 10, 2017 (File No. 1-12815))
|
|
|
|
10.10
(1)
|
|
Amendment No. 7, dated as of May 29, 2017, to the Credit Agreement, dated as of October 28, 2013 (incorporated by reference to Exhibit 10.1 to CB&I’s Current Report on Form 8-K filed with the SEC on June 2, 2017 (File No. 1-12815))
|
|
|
|
10.11
(1)
|
|
Amendment No. 4, dated as of May 29, 2017, to the Amended and Restated Revolving Credit Agreement, dated as of July 8, 2015 (incorporated by reference to Exhibit 10.2 to CB&I’s Current Report on Form 8-K filed with the SEC on June 2, 2017 (File No. 1-12815))
|
|
|
|
10.12
(1)
|
|
Amendment No. 4, dated as of May 29, 2017, to the Term Loan Agreement, dated as of July 8, 2015 (incorporated by reference to Exhibit 10.3 to CB&I’s Current Report on Form 8-K filed with the SEC on June 2, 2017 (File No. 1-12815))
|
|
|
|
10.13
(1)
|
|
Separation and Release Agreement dated as of June 27, 2017 between Chicago Bridge & Iron Company (Delaware) and Philip K. Asherman (incorporated by reference to Exhibit 10.1 to CB&I’s Current Report on Form 8-K filed with the SEC on July 3, 2017 (File No. 1-12815))
|
|
|
|
31.1
(3)
|
|
Certification of the Company’s Chief Executive Officer pursuant to Rule 13A-14 of the Securities Exchange Act of 1934 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
31.2
(3)
|
|
Certification of the Company’s Chief Financial Officer pursuant to Rule 13A-14 of the Securities Exchange Act of 1934 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
32.1
(3)
|
|
Certification of the Company’s Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
32.2
(3)
|
|
Certification of the Company’s Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
101.INS
(3),(4)
|
|
XBRL Instance Document
|
|
|
|
101.SCH
(3),(4)
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
101.CAL
(3),(4)
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
101.DEF
(3),(4)
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
101.LAB
(3),(4)
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
101.PRE
(3),(4)
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
(1)
|
Incorporated by reference to the filing indicated
|
(2)
|
Management compensatory plan or arrangement
|
(3)
|
Filed herewith
|
(4)
|
Attached as Exhibit 101 to this report are the following documents formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Statements of Operations for the
three and six months ended June 30, 2017
and
2016
, (ii) the Condensed Consolidated Statements of Comprehensive Income for the
three and six months ended June 30, 2017
and
2016
, (iii) the Condensed Consolidated Balance Sheets at
June 30, 2017
and
December 31, 2016
, (iv) the Condensed Consolidated Statements of Cash Flows for the
six months ended June 30, 2017
and
2016
, (v) the Condensed Consolidated Statements of Changes in Shareholders’ Equity for the
six months ended June 30, 2017
and
2016
, and (vi) the Notes to Financial Statements.
|
|
|
|
Chicago Bridge & Iron Company N.V.
|
|
|
|
|
By:
|
Chicago Bridge & Iron Company B.V.
|
|
|
|
Its:
|
Managing Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Michael S. Taff
|
|
|
|
|
Michael S. Taff
|
|
|
|
|
Managing Director
|
|
|
|
|
(Principal Financial Officer and Duly Authorized Officer)
|
Level
|
RTSR Performance Level
|
Payout Percentage
|
Maximum
|
120% of Index Return or more
|
200% of Target Level
|
Target
|
100% of Index Return
|
100% of Target Level
|
Threshold
|
80% of Index Return
|
50% of Target Level
|
Below Threshold
|
<80% of Index Return
|
0%
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Chicago Bridge & Iron Company N.V.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected or is reasonably likely to materially affect the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Patrick K. Mullen
|
Patrick K. Mullen
|
Principal Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Chicago Bridge & Iron Company N.V.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected or is reasonably likely to materially affect the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Michael S. Taff
|
Michael S. Taff
|
Principal Financial Officer
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Patrick K. Mullen
|
Patrick K. Mullen
|
Principal Executive Officer
|
Date: August 9, 2017
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Michael S. Taff
|
Michael S. Taff
|
Principal Financial Officer
|
Date: August 9, 2017
|