Construction and Line Item Joint Ventures

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

Due to the joint and several nature of the performance obligations under the related owner contracts, if any of the members fail to perform, we and the other members would be responsible for performance of the outstanding work. At December 31, 2015, there was approximately $5.1 billion of construction revenue to be recognized on unconsolidated and line item construction joint venture contracts of which $1.6 billion represented our share and the remaining $3.5 billion represented the other members’ 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 the other members and/or other guarantors. See Note 10 for disclosure of the amounts recorded on the consolidated balance sheets and Note 1 for additional discussion.

Construction Joint Ventures

Generally, each construction joint venture is formed to complete a specific contract and is jointly controlled by the venture members. 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 venture. Under our contractual arrangements, we provide capital to these joint ventures in return for an ownership interest. In addition, members 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 members. As we absorb our share of these risks, our investment in each venture is exposed to potential gains and losses.

We have determined that certain of these joint ventures are consolidated because they are VIEs and we are the primary beneficiary.

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 years ended December 31, 2015, 2014 and 2013, 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 on the consolidated balance sheets as follows (in thousands):



December 31,	2015		2014
Cash and cash equivalents¹	$	46,210	$	61,276
Receivables, net	45,734		36,781
Other current assets	4,863		1,746
Total current assets	96,807		99,803
Property and equipment, net	5,378		11,969
Total assets²	$	102,185	$	111,772

Accounts payable	$	11,909	$	18,009
Billings in excess of costs and estimated earnings¹	15,768		32,830
Accrued expenses and other current liabilities	1,171		2,714
Total liabilities²	$	28,848	$	53,553

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 and costs in excess of billings and estimated earnings between periods.

²The assets and liabilities of each consolidated 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 a majority of the members and, accordingly, these cash and cash equivalents and assets generally are not available for the working capital needs of Granite until distributed.

At December 31, 2015, we were engaged in five active consolidated construction joint venture projects with total contract values ranging from $1.5 million to $293.8 million. Our share of revenue remaining to be recognized on these consolidated joint ventures ranged from $0.1 million to $117.2 million. Our proportionate share of the equity in these joint ventures was between 50.0% and 65.0%. During the years ended December 31, 2015, 2014 and 2013, total revenue from consolidated construction joint ventures was $54.4 million, $155.1 million and $170.0 million, respectively. During the year ended December 31, 2015, consolidated construction joint ventures used $16.4 million of operating cash flows, and during the years ended December 31, 2014 and 2013 operating cash flows provided by such ventures were $22.5 million and $10.9 million, 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 consolidated statements of operations and as a single line item on the consolidated balance sheets. As of December 31, 2015, these unconsolidated joint ventures were engaged in eleven active projects with total contract values ranging from $73.7 million to $3.5 billion. Our proportionate share of the equity in these unconsolidated joint ventures ranged from 20.0% to 50.0%. As of December 31, 2015, our share of the revenue remaining to be recognized on these unconsolidated joint ventures ranged from $1.0 million to $614.0 million.

As of December 31, 2015, 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 consolidated financial statements for any of the dates or periods presented.

The following is summary financial information related to unconsolidated construction joint ventures (in thousands):



December 31,	2015		2014
Assets:
Cash and cash equivalents¹	$	439,871	$	264,263
Other assets	859,749		573,898
Less partners’ interest	881,183		546,907
Granite’s interest	418,437		291,254
Liabilities:
Accounts payable	218,790		146,198
Billings in excess of costs and estimated earnings¹	341,609		156,604
Other liabilities	89,901		55,289
Less partners’ interest	447,926		251,412
Granite’s interest	202,374		106,679
Equity in construction joint ventures²	$	216,063	$	184,575

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 and costs in excess of billings 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.

²As of December 31, 2015, this balance included $8.6 million of deficit in construction joint ventures that is included in accrued expenses and other current liabilities on the consolidated balance sheets.



Years Ended December 31,	2015		2014		2013
Revenue:
Total	$	1,924,544	$	1,501,894	$	1,391,190
Less partners’ interest and adjustments¹	1,341,334		1,048,514		982,734
Granite’s interest	583,210		453,380		408,456
Cost of revenue:
Total	1,819,257		1,386,577		1,107,533
Less partners’ interest and adjustments¹	1,279,954		984,062		772,670
Granite’s interest	539,303		402,515		334,863
Granite’s interest in gross profit	$	43,907	$	50,865	$	73,593

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 years ended December 31, 2015, 2014 and 2013, unconsolidated construction joint venture net income was $105.6 million, $116.8 million and $283.2 million, respectively, of which our share was $43.4 million, $49.2 million and $72.8 million, respectively. These joint venture net income amounts exclude our corporate overhead required to manage the joint ventures and include taxes only to the extent the applicable states have joint venture level taxes.

Line Item Joint Ventures

The revenue for each line item joint venture member’s discrete items of work is defined in the contract with the project owner and each venture member 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 member 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 consolidated financial statements. As of December 31, 2015, we had four active line item joint venture construction projects with total contract values ranging from $42.5 million to $87.3 million of which our portion ranged from $28.6 million to $64.8 million. As of December 31, 2015, our share of revenue remaining to be recognized on these line item joint ventures ranged from $1.3 million to $37.6 million.