EX-99.2 3 a6630515ex99_2.htm EXHIBIT 99.2

Exhibit 99.2

Indicative Example of Large Change Order on Hypothetical Project in Progress

 

Start of
Quarter
Project
Status

 

Expected
"Backlog Rolloff"
in Qtr. before
Change Order

 

Effects of a
Change Order on
the Project

 

Actual
Wtr. Results
Including
Change Order

 

Variance
Actual
Wtr. v. Initial
Expectation

 

Total Contract

Revenue ("TCV")

$ 900 $ 300 $ 1,200 $ 300

Cost

$ 720 $ 240 $ 960 $ 240

Gross Profit Dollars

$ 180 $ 60 $ 240 $ 60

Gross Profit Percentage

20 % 20 % 20 % 0 %
 
POC Determinants [1]
Direct labor & equipment costs incurred $ 75 $ 150 $ 150 $ -
Direct labor & equipment total cost - est. at completion ("EAC") $ 300 $ 300 $ 240 $ 540 $ 240
Percent Complete ("POC") 25 % 50 % 28 % -22 %
 
Cumulative Recognition
Revenue (POC * TCV) $ 225 $ 450 $ 333 $ (117 )
Gross Profit (POC * GP Dollars) $ 45 $ 90 $ 67 $ (23 )
 
Recognition in Quarter
Revenue $ 225 $ 108 $ (117 )
Gross Profit $ 45 $ 22 $ (23 )
 
 

[1]  Generally includes McDermott's scope work for engineering, construction and installation and generally excludes procurement and sub-contracts.



For a complete discussion on our revenue recognition accounting policy, please see McDermott’s quarterly and annual filings with the Securities and Exchange Commission.