12. Business Segments

The Company offers general contracting, pre-construction planning and comprehensive project management services, including planning and scheduling of manpower, equipment, materials and subcontractors required for the timely completion of a project in accordance with the terms and specifications contained in a construction contract. The Company also offers self-performed construction services: site work; concrete forming and placement; steel erection; electrical; mechanical; plumbing; and heating, ventilation and air conditioning (HVAC). As described below, the Company’s business is conducted through three segments: Civil, Building and Specialty Contractors. These segments are determined based on how the Company’s Chairman and Chief Executive Officer (chief operating decision maker) aggregates business units when evaluating performance and allocating resources.

The Civil segment specializes in public works construction and the replacement and reconstruction of infrastructure. The civil contracting services include construction and rehabilitation of highways, bridges, tunnels, mass-transit systems, and water management and wastewater treatment facilities.

The Building segment has significant experience providing services for private and public works customers in a number of specialized building markets, including: high-rise residential, hospitality and gaming, transportation, health care, commercial and government offices, sports and entertainment, education, correctional facilities, biotech, pharmaceutical, industrial and high-tech.

The Specialty Contractors segment specializes in electrical, mechanical, plumbing, HVAC, fire protection systems and pneumatically placed concrete for a full range of Civil and Building construction projects in the industrial, commercial, hospitality and gaming, and mass-transit end markets. This segment provides the Company with unique strengths and capabilities that allow the Company to position itself as a full-service contractor with greater control over scheduled work, project delivery and risk management.

The following tables set forth certain reportable segment information relating to the Company’s operations for the years ended December 31, 2017, 2016 and 2015:



	Reportable Segments
					Specialty		Segment					Consolidated
(in thousands)	Civil		Building		Contractors		Total		Corporate			Total
Year ended December 31, 2017
Total revenue	$	1,856,164	$	1,982,857	$	1,213,708	$	5,052,729	$	—		$	5,052,729
Elimination of intersegment revenue		(253,989)		(41,532)		—		(295,521)		—			(295,521)
Revenue from external customers	$	1,602,175	$	1,941,325	$	1,213,708	$	4,757,208	$	—		$	4,757,208
Income from construction operations	$	192,207	$	34,199	$	18,938	$	245,344	$	(65,867)	(a)	$	179,477
Capital expenditures	$	27,694	$	267	$	721	$	28,682	$	1,598		$	30,280
Depreciation and amortization(b)	$	33,767	$	2,021	$	4,699	$	40,487	$	11,443		$	51,930
Year ended December 31, 2016
Total revenue	$	1,830,857	$	2,146,747	$	1,234,272	$	5,211,876	$	—		$	5,211,876
Elimination of intersegment revenue		(161,894)		(76,906)		—		(238,800)		—			(238,800)
Revenue from external customers	$	1,668,963	$	2,069,841	$	1,234,272	$	4,973,076	$	—		$	4,973,076
Income from construction operations	$	172,668	$	51,564	$	37,908	$	262,140	$	(60,220)	(a)	$	201,920
Capital expenditures	$	13,541	$	516	$	1,005	$	15,062	$	681		$	15,743
Depreciation and amortization(b)	$	48,561	$	2,186	$	5,035	$	55,782	$	11,520		$	67,302
Year ended December 31, 2015
Total revenue	$	2,005,193	$	1,900,492	$	1,228,030	$	5,133,715	$	—		$	5,133,715
Elimination of intersegment revenue		(115,286)		(97,957)		—		(213,243)		—			(213,243)
Revenue from external customers	$	1,889,907	$	1,802,535	$	1,228,030	$	4,920,472	$	—		$	4,920,472
Income from construction operations	$	145,213	$	(1,240)	$	15,682	$	159,655	$	(54,242)	(a)	$	105,413
Capital expenditures	$	8,383	$	2,877	$	1,193	$	12,453	$	23,459		$	35,912
Depreciation and amortization(b)	$	22,601	$	2,728	$	5,507	$	30,836	$	10,798		$	41,634

(a)

Consists primarily of corporate general and administrative expenses.

(b)

Depreciation and amortization is included in income from construction operations.

During the year ended December 31, 2016 the Company recorded net favorable adjustments totaling $3.0 million in income from construction operations ($0.04 per diluted share) for various Five Star Electric projects in New York in the Specialty Contractors segment. The net impact included material adjustments related to two electrical subcontract projects: a favorable adjustment of $14.0 million for a completed project ($0.17 per diluted share) and an unfavorable adjustment of $13.8 million for a project that was nearly complete ($0.16 per diluted share).

During the year ended December 31, 2015, the Company recorded unfavorable adjustments in the Specialty Contractors segment totaling $45.6 million in income from construction operations ($0.53 per diluted share) related to various Five Star Electric projects in New York, none of which were individually material. Most of these projects are complete or nearing completion. In addition, there were unfavorable adjustments to the estimated cost to complete a Building segment project, which has been completed and resulted in a decrease of $24.3 million in income from construction operations ($0.28 per diluted share). Furthermore, the Company recorded an unfavorable adjustment totaling $23.9 million ($0.28 per diluted share) in the Civil segment for an adverse legal decision related to a long-standing litigation matter, for which the Company assumed liability as part of an acquisition in 2011. Finally, the Company recorded favorable adjustments for a Civil segment runway reconstruction project, which resulted in an increase of $13.7 million in income from construction operations ($0.16 per diluted share).

The above were the only changes in estimates considered material to the Company’s results of operations during the periods presented herein.

Total assets by segment are as follows:



	As of December 31,
(in thousands)	2017		2016
Civil	$	2,452,108	$	2,152,123
Building		909,207		917,317
Specialty Contractors		767,807		813,851
Corporate and other(a)		135,001		155,329
Total assets	$	4,264,123	$	4,038,620

(a) Consists principally of cash, equipment, tax-related assets and insurance-related assets, offset by the elimination of assets related to intersegment revenue.

Geographic Information

Information concerning principal geographic areas is as follows:



	Year Ended December 31,
(in thousands)	2017		2016		2015
Revenue:
United States	$	4,613,644	$	4,802,393	$	4,694,165
Foreign and U.S. territories		143,564		170,683		226,307
Total revenue	$	4,757,208	$	4,973,076	$	4,920,472



	As of December 31,
(in thousands)	2017		2016
Assets:
United States	$	4,093,673	$	3,911,865
Foreign and U.S. territories		170,450		126,755
Total assets	$	4,264,123	$	4,038,620

Reconciliation of Segment Information to Consolidated Amounts

A reconciliation of segment results to the consolidated income before income taxes is as follows:



	Year Ended December 31,
(in thousands)	2017		2016		2015
Income from construction operations	$	179,477	$	201,920	$	105,413
Other income, net		43,882		6,977		13,569
Interest expense		(69,384)		(59,782)		(45,143)
Income before income taxes	$	153,975	$	149,115	$	73,839