XML 28 R11.htm IDEA: XBRL DOCUMENT v3.19.1
REVENUE RECOGNITION
3 Months Ended
Mar. 31, 2019
Revenue Recognition [Abstract]  
REVENUE RECOGNITION

NOTE 4—REVENUE RECOGNITION

RPOs

Our RPOs by segment were as follows:

 

 

March 31, 2019

 

 

December 31, 2018

 

 

(Dollars in millions)

 

NCSA

$

8,581

 

 

 

56

%

 

$

5,649

 

 

 

52

%

EARC

 

1,914

 

 

 

12

%

 

 

1,378

 

 

 

12

%

MENA

 

2,879

 

 

 

19

%

 

 

1,834

 

 

 

17

%

APAC

 

1,401

 

 

 

9

%

 

 

1,420

 

 

 

13

%

Technology

 

601

 

 

 

4

%

 

 

632

 

 

 

6

%

Total

$

15,376

 

 

 

100

%

 

$

10,913

 

 

 

100

%

 

Of the March 31, 2019 RPOs, we expect to recognize revenues as follows:

 

 

2019

 

 

2020

 

 

Thereafter

 

 

(In millions)

 

Total RPOs

$

6,189

 

 

$

5,119

 

 

$

4,068

 

 

Revenue Disaggregation

Our revenue by product offering, contract types and revenue recognition methodology was as follows:

 

 

 

Three Months Ended March 31,

 

 

 

2019 (2)

 

 

2018 (2)

 

 

 

(In millions)

 

Revenue by product offering:

 

 

 

 

 

 

 

 

Offshore and subsea

 

$

605

 

 

$

608

 

LNG

 

 

421

 

 

 

-

 

Downstream (1)

 

 

862

 

 

 

-

 

Power

 

 

323

 

 

 

-

 

 

 

$

2,211

 

 

$

608

 

 

 

 

 

 

 

 

 

 

Revenue by contract type:

 

 

 

 

 

 

 

 

Fixed price

 

$

1,726

 

 

$

583

 

Reimbursable

 

 

303

 

 

 

-

 

Hybrid

 

 

110

 

 

 

-

 

Unit-basis and other

 

 

72

 

 

 

25

 

 

 

$

2,211

 

 

$

608

 

 

 

 

 

 

 

 

 

 

Revenue by recognition methodology:

 

 

 

 

 

 

 

 

Over time

 

$

2,160

 

 

$

608

 

At a point in time

 

 

51

 

 

 

-

 

 

 

$

2,211

 

 

$

608

 

 

(1)

Includes the results of our Technology operating group.

(2)

Intercompany amounts have been eliminated in consolidation.

Other

For the three months ended March 31, 2019, we recognized approximately $22 million of revenues resulting from changes in transaction prices associated with performance obligations satisfied in prior periods, primarily in our NCSA segment. For the three months ended March 31, 2018, we recognized approximately $66 million of revenues due to changes in transaction price associated with performance obligations satisfied in prior periods, primarily in our APAC segment. The changes in transaction prices primarily related to reimbursement of costs incurred in prior periods.

Revenues recognized during the three months ended March 31, 2019, with respect to amounts included in our Advance billings on contracts balance as of December 31, 2018, were approximately $768 million.

Unapproved Change Orders, Claims and Incentives

Unapproved Change Orders and Claims—As of March 31, 2019, we had unapproved change orders and claims included in transaction prices for our projects aggregating to approximately $297 million, of which approximately $93 million was included in our RPO balance. As of December 31, 2018, we had unapproved change orders and claims included in transaction prices for our projects aggregating to approximately $428 million, of which approximately $130 million was included in our RPO balance.

Incentives—As of March 31, 2019, we had incentives included in transaction prices for our projects aggregating to approximately $16 million, of which approximately $1 million was included in our RPO balance. As of December 31, 2018, we did not have any material incentives included in transaction prices for our projects.

The amounts recorded in contract prices and recognized as revenues reflect our best estimates of recovery; however, the ultimate resolution and amounts received could differ from these estimates and could have a material adverse effect on our results of operations, financial position and cash flow.

Loss Projects

Our accrual of provisions for estimated losses on active uncompleted contracts as of March 31, 2019 was $190 million and primarily related to the Cameron LNG project and the Freeport LNG Trains 1 & 2 projects. Our accrual of provisions for estimated losses on active uncompleted contracts as of December 31, 2018 was $266 million and primarily related to the Cameron LNG, Freeport LNG Trains 1 & 2, Calpine and Abkatun-A2 projects. Our Freeport LNG Train 3 project is not anticipated to be in a loss position.

Summary information for our significant ongoing loss projects as of March 31, 2019 is as follows:

Cameron LNG―At March 31, 2019, our U.S. LNG export facility project in Hackberry, Louisiana for Cameron LNG (within our NCSA operating group) was approximately 65% complete on a post-Combination basis (approximately 90% on a pre-Combination basis) and had an accrued provision for estimated losses of approximately $128 million. For these purposes (and for purposes of the discussion below), when we refer to a percentage of completion on a pre-Combination basis, we are referring to the cumulative percentage of completion, which includes progress made prior to the Combination Date. In accordance with U.S. GAAP, as of the Combination Date, we reset the progress to completion for all of CB&I’s projects then in progress to 0% for accounting purposes based on the remaining costs to be incurred as of that date.

Freeport LNG―At March 31, 2019, Trains 1 & 2 of our U.S. LNG export facility project in Freeport, Texas for Freeport LNG (within our NCSA operating group) were approximately 80% complete on a post-Combination basis (approximately 95% on a pre-Combination basis) and had an accrued provision for estimated losses of approximately $19 million. During the three months ended March 31, 2019, the project was negatively impacted by $27 million due to changes in cost estimates resulting from increases in construction and subcontractor costs. These cost estimate increases were partially offset by the recording of approximately $11 million of incentive revenues. Additionally, Freeport LNG Train 3 was positively impacted by $16 million of changes in cost estimates at completion due to increased productivity and savings in indirect costs, resulting in an overall net immaterial impact on operating margin at completion for the Freeport LNG project taken as a whole.

Summary information for our significant loss projects previously reported in the 2018 Form 10-K that are substantially complete as of March 31, 2019 is as follows:

Calpine Power Project―At March 31, 2019, our U.S. gas turbine power project for Calpine (within our NCSA operating group) was approximately 95% complete on a post-Combination basis (approximately 99% on a pre-Combination basis), and the remaining accrued provision for estimated losses was not significant.

Abkatun-A2 Project―At March 31, 2019, our Abkatun-A2 platform project in Mexico for Pemex (within our NCSA operating group) was approximately 95% complete, and the remaining accrued provision for estimated losses was not significant.