Construction and Line Item Joint Ventures

We participate in various construction joint venture partnerships and a limited liability company of which we are a limited partner or member (“joint ventures”). We also participate in various “line item” joint venture agreements under which each partner is responsible for performing certain discrete items of the total scope of contracted work.

At March 31, 2014, there was approximately $4.2 billion of construction revenue to be recognized on unconsolidated and line item construction joint venture contracts of which $1.2 billion represented our share and the remaining $3.0 billion represented our partners’ share. We are not able to estimate amounts that may be required beyond the remaining cost of the work to be performed. These costs could be offset by billings to the customer or by proceeds from our partners’ corporate and/or other guarantees.

Construction Joint Ventures

Generally, each construction joint venture is formed to complete a specific contract and is jointly controlled by the venture partners. The associated agreements typically provide that our interests in any profits and assets, and our respective share in any losses and liabilities resulting from the performance of the contracts, are limited to our stated percentage interest in the project. We have no significant commitments beyond completion of the contracts. Under our contractual arrangements, we provide capital to these joint ventures in return for an ownership interest. In addition, partners dedicate resources to the ventures necessary to complete the contracts and are reimbursed for their cost. The operational risks of each construction joint venture are passed along to the joint venture partners. As we absorb our share of these risks, our investment in each venture is exposed to potential losses.

We have determined that certain of these joint ventures are consolidated because they are variable interest entities (“VIEs”) and we are the primary beneficiary, or because they are not VIEs and we hold the majority voting interest.

We continually evaluate whether there are changes in the status of the VIEs or changes to the primary beneficiary designation of the VIE. Based on our assessments during the three months ended March 31, 2014, we determined no change was required for existing construction joint ventures.

Consolidated Construction Joint Ventures

The carrying amounts and classification of assets and liabilities of construction joint ventures we are required to consolidate are included in our condensed consolidated balance sheets as follows:



(in thousands)	March 31, 2014		December 31, 2013		March 31, 2013
Cash and cash equivalents¹	$	27,612	$	38,800	$	98,738
Receivables, net	39,014		38,372		47,040
Other current assets	4,624		4,778		3,867
Total current assets	71,250		81,950		149,645
Property and equipment, net	19,801		22,216		39,486
Total assets²	$	91,051	$	104,166	$	189,131

Accounts payable	$	22,136	$	16,937	$	26,354
Billings in excess of costs and estimated earnings¹	43,087		60,185		71,821
Accrued expenses and other current liabilities	7,074		11,299		8,983
Total liabilities²	$	72,297	$	88,421	$	107,158

¹The volume and stage of completion of contracts from our consolidated construction joint ventures may cause fluctuations in cash and cash equivalents as well as billings in excess of costs and estimated earnings between periods.

²The assets and liabilities of each joint venture relate solely to that joint venture. The decision to distribute joint venture cash and cash equivalents and assets must generally be made jointly by all of the partners and, accordingly, these cash and cash equivalents and assets generally are not available for the working capital needs of Granite until distributed.

At March 31, 2014, we were engaged in four active consolidated construction joint venture projects with total contract values ranging from $0.4 million to $337.4 million. Our share of revenue remaining to be recognized on these consolidated joint ventures ranged from $0.1 million to $59.6 million. Our proportionate share of the equity in these joint ventures was between 51.0% and 65.0%. During the three months ended March 31, 2014 and 2013, total revenue from consolidated construction joint ventures was $32.1 million and $18.3 million, respectively. Total cash used in consolidated construction joint venture operations was $22.5 million and $6.6 million during the three months ended March 31, 2014 and 2013, respectively.

Unconsolidated Construction Joint Ventures

We account for our share of construction joint ventures that we are not required to consolidate on a pro rata basis in the condensed consolidated statements of operations and as a single line item on the condensed consolidated balance sheets. As of March 31, 2014, these unconsolidated joint ventures were engaged in eleven active construction projects with total contract values ranging from $40.0 million to $3.1 billion. Our proportionate share of the equity in these unconsolidated joint ventures ranged from 20.0% to 50.0%. As of March 31, 2014, our share of the revenue remaining to be recognized on these unconsolidated joint ventures ranged from $0.3 million to $591.1 million.

As of March 31, 2014, one of our unconsolidated construction joint ventures was located in Canada and, therefore, the associated disclosures throughout this footnote include amounts that were translated from Canadian dollars to U.S. dollars using the spot rate in effect as of the reporting date for balance sheet items, and the average rate in effect during the reporting period for the results of operations. The associated foreign currency translation adjustments did not have a material impact on the condensed consolidated financial statements for any of the dates or periods presented.

Following is summary financial information related to unconsolidated construction joint ventures:



(in thousands)	March 31, 2014		December 31, 2013		March 31, 2013
Assets:
Cash and cash equivalents¹	$	240,486	$	385,094	$	401,746
Other assets	581,842		523,827		333,554
Less partners’ interest	542,114		612,530		466,690
Granite’s interest	280,214		296,391		268,610
Liabilities:
Accounts payable	131,441		155,985		103,050
Billings in excess of costs and estimated earnings¹	189,979		245,341		226,269
Other liabilities	69,745		104,152		6,961
Less partners’ interest	278,996		371,760		238,935
Granite’s interest	112,169		133,718		97,345
Equity in construction joint ventures	$	168,045	$	162,673	$	171,265

¹The volume and stage of completion of contracts from our unconsolidated construction joint ventures may cause fluctuations in cash and cash equivalents as well as billings in excess of costs and estimated earnings between periods. The decision to distribute joint venture cash and cash equivalents and assets must generally be made jointly by all of the partners and, accordingly, these cash and cash equivalents and assets generally are not available for the working capital needs of Granite until distributed.



	Three Months Ended March 31,
(in thousands)	2014		2013
Revenue:
Total	$	349,167	$	225,304
Less partners’ interest¹	259,857		153,704
Granite’s interest	89,310		71,600
Cost of revenue:
Total	297,461		158,695
Less partners’ interest¹	210,906		104,333
Granite’s interest	86,555		54,362
Granite’s interest in gross profit	$	2,755	$	17,238

¹Partners’ interest represents amounts to reconcile total revenue and total cost of revenue as reported by our partners to Granite’s interest adjusted to reflect our accounting policies.

During the three months ended March 31, 2014 and 2013, the net income of unconsolidated construction joint ventures was $51.0 million and $66.0 million, respectively, of which our share was $2.6 million and $17.0 million, respectively.

Line Item Joint Ventures

The revenue for each line item joint venture partner’s discrete items of work is defined in the contract with the project owner and each venture partner bears the profitability risk associated with its own work. There is not a single set of books and records for a line item joint venture. Each partner accounts for its items of work individually as it would for any self-performed contract. We include only our portion of these contracts in our condensed consolidated financial statements. As of March 31, 2014, we had four active line item joint venture construction projects with total contract values ranging from $42.4 million to $74.7 million of which our portion ranged from $23.6 million to $62.1 million. As of March 31, 2014, our share of revenue remaining to be recognized on these line item joint ventures ranged from $0.4 million to $16.5 million.