Construction Joint Ventures

We participate in various construction joint ventures. 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, 2017, we determined no change to the primary beneficiary was required for existing construction joint ventures.

At March 31, 2017, there was approximately $4.6 billion of construction revenue to be recognized on unconsolidated and line item construction joint venture contracts of which $1.4 billion represented our share and the remaining $3.2 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’ and/or other guarantees.

Consolidated Construction Joint Ventures (“CCJVs”)

At March 31, 2017, we were engaged in five active CCJV projects with total contract values ranging from $48.2 million to $292.4 million. Our share of revenue remaining to be recognized on these CCJVs ranged from $3.2 million to $157.8 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, 2017 and 2016, total revenue from CCJVs was $35.5 million and $22.2 million, respectively. During the three months ended March 31, 2017 and 2016, CCJVs used $6.5 million and provided $3.8 million of operating cash flows, respectively.

Unconsolidated Construction Joint Ventures

As of March 31, 2017, we were engaged in ten active unconsolidated joint venture projects with total contract values ranging from $78.8 million to $3.6 billion. Our proportionate share of the equity in these unconsolidated construction joint ventures ranged from 20.0% to 50.0%. As of March 31, 2017, our share of the revenue remaining to be recognized on these unconsolidated construction joint ventures ranged from $0.7 million to $475.7 million.

As of March 31, 2017, December 31, 2016 and March 31, 2016, 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 following is summary financial information related to unconsolidated construction joint ventures:



(in thousands)	March 31, 2017		December 31, 2016		March 31, 2016
Assets:
Cash, cash equivalents and marketable securities	$	399,445	$	537,991	$	408,393
Other current assets¹	703,498		644,809		710,747
Noncurrent assets	205,517		207,240		224,178
Less partners’ interest	876,118		935,615		904,600
Granite’s interest^1,2	432,342		454,425		438,718
Liabilities:
Current liabilities	660,537		696,215		658,486
Less partners’ interest and adjustments³	447,502		472,324		455,403
Granite’s interest	213,035		223,891		203,083
Equity in construction joint ventures⁴	$	219,307	$	230,534	$	235,635

¹Included in this balance and in accrued and other current liabilities on our condensed consolidated balance sheets as of March 31, 2017, December 31, 2016 and March 31, 2016 was $83.1 million, $83.1 million and $77.4 million, respectively, related to performance guarantees.

²Included in this balance as of March 31, 2017, December 31, 2016 and March 31, 2016 was $69.7 million, $65.4 million and $43.7 million, respectively, related to Granite’s share of estimated cost recovery of customer affirmative claims. In addition, this balance included $7.9 million and $5.6 million related to Granite’s share of estimated recovery of back charge claims as of March 31, 2017 and December 31, 2016, respectively. There was no estimated recovery of back charge claims as of March 31, 2016.

³Partners’ interest and adjustments includes amounts to reconcile total liabilities as reported by our partners to Granite’s interest adjusted to reflect our accounting policies.

⁴As of March 31, 2017, December 31, 2016 and March 31, 2016 this balance included $16.4 million, $16.6 million and $4.8 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)	2017		2016
Revenue:
Total¹	$	451,321	$	494,167
Less partners’ interest and adjustments^1,2	323,830		347,908
Granite’s interest	127,491		146,259
Cost of revenue:
Total	442,990		461,497
Less partners’ interest and adjustments¹	316,995		324,041
Granite’s interest	125,995		137,456
Granite’s interest in gross profit	$	1,496	$	8,803

¹While Granite’s interest in revenue, cost of revenue and gross profit were correctly stated, Total revenue and revenue for partners’ interest and adjustments for the three months ended March 31, 2016 were misstated in our Quarterly Report for the quarter ended March 31, 2016. Total revenue and revenue for partner’s interest and adjustments as reported was (in thousands): $288,044 and $141,785, respectively, for the three months ended March 31, 2016. Total revenue and revenue for partner’s interest and adjustments should have been (in thousands): $494,167 and $347,908, respectively, for the three months ended March 31, 2016 and are reflected in the table. The misstatements did not have any impact on the consolidated financial statements in any period. We assessed the materiality of the errors in accordance with the SEC’s Staff Accounting Bulletin 99 and concluded that the errors were not material to either of these previously issued financial statements. Accordingly, we will revise our previously issued financial statements prospectively to correct these errors.

²Partners’ interest and adjustments 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 and estimates.

During the three months ended March 31, 2017 and 2016, unconsolidated construction joint venture net income was $8.6 million and $33.7 million, respectively, of which our share was $1.5 million and $8.5 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

As of March 31, 2017, we had two active line item joint venture construction projects with total contract values of $66.2 million and $75.8 million of which our portion was $44.7 million and $28.7 million, respectively. As of March 31, 2017, our share of revenue remaining to be recognized on these line item joint ventures was $10.6 million and $1.1 million, respectively. During the three months ended March 31, 2017 and 2016, our portion of revenue from line item joint ventures was $8.0 million and $4.4 million, respectively.