REVENUE RECOGNITION |
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Revenue Recognition [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REVENUE RECOGNITION |
NOTE 5—REVENUE RECOGNITION RPOs Our RPOs by segment were as follows:
Of the June 30, 2019 RPOs, we expect to recognize revenues as follows:
Revenue Disaggregation Our revenue by product offering, contract types and revenue recognition methodology was as follows:
Other For the three and six months ended June 30, 2019, we recognized approximately $74 million and $96 million of revenues resulting from changes in transaction prices associated with performance obligations satisfied in prior periods, primarily in our NCSA segment. Revenues reported for the 2019 periods include $72 million settlement of claims on a substantially complete project. For the three and six months ended June 30, 2018, we recognized approximately $13 million and $79 million of revenues due to changes in transaction price associated with performance obligations satisfied in prior periods, primarily in our APAC and MENA segments. The changes in transaction prices primarily related to reimbursement of costs incurred in prior periods. Revenues recognized during the three and six months ended June 30, 2019, with respect to amounts included in our Advance billings on contracts balance as of December 31, 2018, were approximately $579 million and $1.3 billion. Unapproved Change Orders, Claims and Incentives Unapproved Change Orders and Claims—As of June 30, 2019, we had unapproved change orders and claims included in transaction prices for our projects aggregating to approximately $388 million, of which approximately $101 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 June 30, 2019, we had incentives included in transaction prices for our projects aggregating to approximately $126 million, primarily associated with our Cameron LNG project discussed below, of which approximately $25 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 June 30, 2019 was $132 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. Our subsea pipeline flowline installation project in support of the Ayatsil field offshore Mexico for Pemex (“Line 1 and Line 10”) was also determined to be in substantial loss position as of June 30, 2019, as discussed further below. For purposes of the discussion below, when we refer to a percentage of completion on a cumulative 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. Summary information for our significant ongoing loss projects as of June 30, 2019 is as follows: Cameron LNG―At June 30, 2019, our U.S. LNG export facility project in Hackberry, Louisiana for Cameron LNG (being performed by our NCSA operating group) was approximately 78% complete on a post-Combination basis (approximately 93% on a cumulative basis) and had an accrued provision for estimated losses of approximately $58 million. In the second quarter of 2019, NCSA project operating margin was positively impacted by recognition of approximately $110 million of incentives related to the projected achievement of progress milestones. Freeport LNG―At June 30, 2019, Trains 1 & 2 of our U.S. LNG export facility project in Freeport, Texas for Freeport LNG (being performed by our NCSA operating group) were approximately 87% complete on a post-Combination basis (approximately 96% on a cumulative basis) and had an accrued provision for estimated losses of approximately $19 million. During the three and six months ended June 30, 2019, the project was negatively impacted by $27 million and $54 million, respectively, 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 in the first quarter of 2019. During the three months ended June 30, 2019, Freeport LNG Train 3 was negatively impacted by $11 million of changes in cost estimates at completion. During the six months ended June 30, 2019, Freeport LNG Train 3 was positively impacted by $5 million of changes in estimates, primarily due to increased productivity and savings in indirect costs in the first quarter. During the six months ended June 30, 2019, the Freeport LNG project taken as a whole had an overall negative $38 million impact on operating margin at completion. Line 1 and Line 10― As of June 30, 2019, our subsea pipeline flowline installation project in support of the Ayatsil field offshore Mexico (being performed by our NCSA operating group) was approximately 85% complete and had an accrued provision for estimated losses of approximately $6 million. During the three and six months ended June 30, 2019, the project was negatively impacted by $10 million and $28 million, respectively, of changes in cost estimates associated with unexpected schedule extensions, resulting in additional vessel and labor costs. The project is expected to be completed in the third quarter of 2019. Summary information for our significant loss projects previously reported in the 2018 Form 10-K that are substantially complete as of June 30, 2019 is as follows: Calpine Power Project―At June 30, 2019, our U.S. gas turbine power project for Calpine (being performed by our NCSA operating group) was approximately 99% complete on a post-Combination basis (approximately 99.7% on a pre-Combination basis), and the remaining accrued provision for estimated losses was not significant. Abkatun-A2 Project―At June 30, 2019, our Abkatun-A2 platform project in Mexico for Pemex (being performed by our NCSA operating group) was approximately 99% complete, and the remaining accrued provision for estimated losses was not significant. |