14. 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 HVAC (heating, ventilation and air conditioning). 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 contracting services provided by the Civil segment 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 cost and risk management.

To the extent that a contract is co-managed and co-executed among segments, the Company allocates the share of revenues and costs of the contract to each segment to reflect the shared responsibilities in the management and execution of the project.

The following tables set forth certain reportable segment information relating to the Company’s operations for the years ended December 31, 2018, 2017 and 2016:



	Reportable Segments
					Specialty		Segment					Consolidated
(in thousands)	Civil		Building		Contractors		Total		Corporate			Total
Year ended December 31, 2018
Total revenue	$	1,810,232	$	1,866,902	$	1,006,870	$	4,684,004	$	—		$	4,684,004
Elimination of intersegment revenue		(224,139)		(5,203)		—		(229,342)		—			(229,342)
Revenue from external customers	$	1,586,093	$	1,861,699	$	1,006,870	$	4,454,662	$	—		$	4,454,662
Income (loss) from construction operations(a)	$	168,256	$	43,939	$	43,430	$	255,625	$	(63,749)	(b)	$	191,876
Capital expenditures	$	73,866	$	1,655	$	777	$	76,298	$	771		$	77,069
Depreciation and amortization(c)	$	29,685	$	1,956	$	4,358	$	35,999	$	11,268		$	47,267
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 (loss) from construction operations	$	192,207	$	34,199	$	18,938	$	245,344	$	(65,867)	(b)	$	179,477
Capital expenditures	$	27,694	$	267	$	721	$	28,682	$	1,598		$	30,280
Depreciation and amortization(c)	$	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 (loss) from construction operations(d)	$	172,668	$	51,564	$	37,908	$	262,140	$	(60,220)	(b)	$	201,920
Capital expenditures	$	13,541	$	516	$	1,005	$	15,062	$	681		$	15,743
Depreciation and amortization(c)	$	48,561	$	2,186	$	5,035	$	55,782	$	11,520		$	67,302

_____________________________________________________________________________________________________________

(a)

During the year ended December 31, 2018, the Company recorded a charge of $17.8 million in income from construction operations (an after-tax impact of $12.8 million, or $0.25 per diluted share), which was primarily non-cash, as a result of the unexpected outcome of an arbitration decision related to a subcontract back charge dispute on a Civil segment project in New York that was completed in 2013.

(b)

Consists primarily of corporate general and administrative expenses.

(c)

Depreciation and amortization is included in income from construction operations.

(d)

During the year ended December 31, 2016 the Company recorded net favorable adjustments totaling $3.0 million in income from construction operations (an after-tax impact of $1.8 million, or $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 (an after-tax impact of $8.2 million, or $0.17 per diluted share) and an unfavorable adjustment of $13.8 million for a project that was nearly complete (an after-tax impact of $8.1 million, or $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)	2018		2017
Civil	$	2,574,326	$	2,452,108
Building		913,746		909,207
Specialty Contractors		745,313		767,807
Corporate and other(a)		154,367		135,001
Total assets	$	4,387,752	$	4,264,123

(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)	2018		2017		2016
Revenue:
United States	$	4,180,206	$	4,613,644	$	4,802,393
Foreign and U.S. territories		274,456		143,564		170,683
Total revenue	$	4,454,662	$	4,757,208	$	4,973,076



	As of December 31,
(in thousands)	2018		2017
Assets:
United States	$	4,225,143	$	4,093,673
Foreign and U.S. territories		162,609		170,450
Total assets	$	4,387,752	$	4,264,123

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)	2018		2017		2016
Income from construction operations	$	191,876	$	179,477	$	201,920
Other income, net		4,256		43,882		6,977
Interest expense		(63,519)		(69,384)		(59,782)
Income before income taxes	$	132,613	$	153,975	$	149,115