Construction Joint Ventures

We participate in various construction joint ventures, partnerships and a limited liability company of which we are a limited member (“joint ventures”).

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. 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.

At March 31, 2016, there was approximately $5.5 billion of construction revenue to be recognized on unconsolidated and line item construction joint venture contracts of which $1.7 billion represented our share and the remaining $3.8 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 other members and/or other guarantors.

We have determined that certain of these joint ventures are consolidated because they are variable interest entities (“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 three months ended March 31, 2016, we determined no change was required for existing construction joint ventures.

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

The assets and liabilities of each consolidated and unconsolidated construction 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.

Consolidated Construction Joint Ventures (“CCJVs”)

The carrying amounts and classification of assets and liabilities of construction joint ventures that we are required to consolidate are included on the condensed consolidated balance sheets.

At March 31, 2016, we were engaged in five active CCJV projects with total contract values ranging from $3.5 million to $293.4 million. Our share of revenue remaining to be recognized on these CCJVs ranged from $0.1 million to $112.5 million. Our proportionate share of the equity in these joint ventures was between 50.0% and 65.0%. During the three months ended March 31, 2016 and 2015, total revenue from CCJVs was $22.2 million and $15.0 million, respectively. During the three months ended March 31, 2016, CCJVs provided $3.8 million of operating cash flows and during the three months ended March 31, 2015, used $7.9 million.

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, 2016, these unconsolidated joint ventures were engaged in twelve active projects with total contract values ranging from $74.5 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 March 31, 2016, our share of the revenue remaining to be recognized on these unconsolidated joint ventures ranged from $0.3 million to $592.9 million.

The following is summary financial information related to unconsolidated construction joint ventures:



(in thousands)	March 31, 2016		December 31, 2015		March 31, 2015
Assets:
Cash and cash equivalents	$	408,393	$	439,871	$	240,123
Other assets	934,925		859,749		721,618
Less partners’ interest	904,600		881,183		637,512
Granite’s interest	438,718		418,437		324,229
Liabilities:
Accounts payable	225,171		218,790		191,312
Billings in excess of costs and estimated earnings	320,019		341,609		171,187
Other liabilities	113,296		89,901		72,026
Less partners’ interest	455,403		447,926		304,422
Granite’s interest	203,083		202,374		130,103
Equity in construction joint ventures¹	$	235,635	$	216,063	$	194,126

¹As of March 31, 2016, December 31, 2015 and March 31, 2015 this balance included $4.8 million, $8.6 million and $3.4 million, respectively, of deficit in construction joint ventures that is included in accrued expenses and other current liabilities on the condensed consolidated balance sheets.



	Three Months Ended March 31,
(in thousands)	2016		2015
Revenue:
Total	$	288,044	$	443,407
Less partners’ interest and adjustments¹	141,785		308,120
Granite’s interest	146,259		135,287
Cost of revenue:
Total	461,497		410,071
Less partners’ interest and adjustments¹	324,041		286,047
Granite’s interest	137,456		124,024
Granite’s interest in gross profit	$	8,803	$	11,263

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, 2016 and 2015 unconsolidated construction joint venture net income was $33.7 million and $33.4 million, respectively, of which our share was $8.5 million and $11.3 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

We 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. 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 condensed consolidated financial statements. As of March 31, 2016, we had four active line item joint venture construction projects with total contract values ranging from $42.1 million to $87.7 million of which our portion ranged from $28.2 million to $64.9 million. As of March 31, 2016, our share of revenue remaining to be recognized on these line item joint ventures ranged from $0.9 million to $33.8 million.