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Quarterly report [Sections 13 or 15(d)]

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Large accelerated filer x Accelerated filer o
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Page
PART I—FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Statements of Operations—Three Months Ended March 31, 2016 and 2015 3
Statements of Comprehensive Income—Three Months Ended March 31, 2016 and 2015 4
Balance Sheets—March 31, 2016 and December 31, 2015 5
Statements of Cash Flows—Three Months Ended March 31, 2016 and 2015 6
Statements of Changes in Shareholders' Equity—Three Months Ended March 31, 2016 and 2015 7
Notes to Condensed Consolidated Financial Statements 8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 26
Item 3. Quantitative and Qualitative Disclosures About Market Risk 41
Item 4. Controls and Procedures 42
PART II—OTHER INFORMATION
Item 1. Legal Proceedings 42
Item 1A. Risk Factors 43
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 43
Item 3. Defaults Upon Senior Securities 43
Item 4. Mine Safety Disclosures 43
Item 5. Other Information 43
Item 6. Exhibits 43
SIGNATURES 44
Three Months Ended March 31,
2016 2015
(Unaudited)
Revenue $ 2,667,733
$ 3,125,745
Cost of revenue 2,380,128
2,755,574
Gross profit 287,605
370,171
Selling and administrative expense 92,597
109,101
Intangibles amortization 11,277
15,652
Equity earnings (3,990 ) (4,202 )
Other operating (income) expense, net (219 ) 2,822
Income from operations 187,940
246,798
Interest expense (25,898 ) (22,286 )
Interest income 2,489
2,048
Income before taxes 164,531
226,560
Income tax expense (44,569 ) (69,811 )
Net income 119,962
156,749
Less: Net income attributable to noncontrolling interests (13,037 ) (24,521 )
Net income attributable to CB&I $ 106,925
$ 132,228
Net income attributable to CB&I per share:
Basic $ 1.02
$ 1.22
Diluted $ 1.01
$ 1.21
Weighted average shares outstanding:
Basic 104,803
108,197
Diluted 105,785
109,261
Cash dividends on shares:
Amount $ 7,359
$ 7,597
Per share $ 0.07
$ 0.07
Three Months Ended March 31,
2016 2015
(Unaudited)
Net income $ 119,962
$ 156,749
Other comprehensive income (loss), net of tax:
Change in cumulative translation adjustment 22,692
(60,434 )
Change in unrealized fair value of cash flow hedges 1,303
(724 )
Change in unrecognized prior service pension credits/costs 27
(536 )
Change in unrecognized actuarial pension gains/losses (2,153 ) 14,618
Comprehensive income 141,831
109,673
Net income attributable to noncontrolling interests (13,037 ) (24,521 )
Change in cumulative translation adjustment attributable to noncontrolling interests (1,257 ) 1,338
Comprehensive income attributable to CB&I $ 127,537
$ 86,490
March 31,
2016
December 31,
2015
(Unaudited)
Assets
Cash and cash equivalents ($490,374 and $410,989 related to variable interest entities ("VIEs")) $ 641,485
$ 550,221
Accounts receivable, net ($314,349 and $334,232 related to VIEs) 1,388,424
1,331,217
Inventory 262,181
289,658
Costs and estimated earnings in excess of billings ($77,529 and $28,130 related to VIEs) 848,608
688,314
Other current assets ($419,727 and $372,523 related to VIEs) 547,332
507,889
Total current assets 3,688,030
3,367,299
Equity investments 137,895
136,845
Property and equipment, net ($18,550 and $19,040 related to VIEs) 593,064
604,043
Goodwill 3,718,949
3,711,506
Other intangibles, net 400,902
410,949
Deferred income taxes 603,791
633,627
Other non-current assets 338,072
327,791
Total assets $ 9,480,703
$ 9,192,060
Liabilities
Revolving facility and other short-term borrowings $ 570,300
$ 653,000
Current maturities of long-term debt, net 410,371
147,871
Accounts payable ($350,384 and $405,853 related to VIEs) 1,074,324
1,162,077
Billings in excess of costs and estimated earnings ($1,013,196 and $846,180 related to VIEs) 2,152,766
1,934,111
Other current liabilities 1,106,649
959,889
Total current liabilities 5,314,410
4,856,948
Long-term debt, net 1,492,365
1,791,832
Deferred income taxes 14,777
10,239
Other non-current liabilities 373,817
369,451
Total liabilities 7,195,369
7,028,470
Shareholders’ Equity
Common stock, Euro .01 par value; shares authorized: 250,000; shares issued: 108,857 and 108,857; shares outstanding: 105,124 and 104,427 1,288
1,288
Additional paid-in capital 770,856
800,641
Retained earnings 1,812,074
1,712,508
Treasury stock, at cost: 3,733 and 4,430 shares (171,349 ) (206,407 )
Accumulated other comprehensive loss (273,428 ) (294,040 )
Total CB&I shareholders’ equity 2,139,441
2,013,990
Noncontrolling interests 145,893
149,600
Total shareholders’ equity 2,285,334
2,163,590
Total liabilities and shareholders’ equity $ 9,480,703
$ 9,192,060
Three Months Ended March 31,
2016 2015
(Unaudited)
Cash Flows from Operating Activities
Net income $ 119,962
$ 156,749
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization 31,801
44,309
Deferred income taxes 30,457
51,063
Stock-based compensation expense 14,532
31,193
Other operating (income) expense, net (219 ) 2,822
Unrealized loss on foreign currency hedges 1,578
5,103
Excess tax benefits from stock-based compensation (34 ) (202 )
Changes in operating assets and liabilities:
Increase in receivables, net (57,207 ) (41,175 )
Change in contracts in progress, net 58,361
(330,345 )
Decrease in inventory 27,477
2,803
Decrease in accounts payable (87,753 ) (230,152 )
Increase in other current and non-current assets (13,305 ) (4,382 )
Increase (decrease) in other current and non-current liabilities 8,944
(18,090 )
Decrease in equity investments 2,158
12,605
Change in other, net 5,098
27,828
Net cash provided by (used in) operating activities 141,850
(289,871 )
Cash Flows from Investing Activities
Capital expenditures (11,180 ) (8,978 )
Advances with partners of proportionately consolidated ventures, net (25,787 ) (27,800 )
Proceeds from sale of property and equipment 4,331
1,413
Other, net (14,863 ) (21,514 )
Net cash used in investing activities (47,499 ) (56,879 )
Cash Flows from Financing Activities
Revolving facility and other short-term (repayments) borrowings, net (82,700 ) 465,999
Advances with equity method and proportionately consolidated ventures, net 137,219
(9,700 )
Repayments on long-term debt (37,500 ) (26,481 )
Excess tax benefits from stock-based compensation 34
202
Purchase of treasury stock (7,562 ) (13,461 )
Issuance of stock 4,477
5,074
Dividends paid (7,359 ) (7,597 )
Distributions to noncontrolling interests (18,001 ) (10,627 )
Net cash (used in) provided by financing activities (11,392 ) 403,409
Effect of exchange rate changes on cash and cash equivalents 8,305
(60,965 )
Increase (decrease) in cash and cash equivalents 91,264
(4,306 )
Cash and cash equivalents, beginning of the year 550,221
351,323
Cash and cash equivalents, end of the period $ 641,485
$ 347,017
Common Stock Additional Paid-In Capital Retained Earnings Treasury Stock
Accumulated Other Comprehensive (Loss) Income
Non - controlling Interests Total Shareholders’ Equity
Shares Amount Shares Amount
(Unaudited)
Balance at December 31, 2015 104,427
$ 1,288
$ 800,641
$ 1,712,508
4,430
$ (206,407 ) $ (294,040 ) $ 149,600
$ 2,163,590
Net income


106,925



13,037
119,962
Change in cumulative translation adjustment, net





21,435
1,257
22,692
Change in unrealized fair value of cash flow hedges, net





1,303

1,303
Change in unrecognized prior service pension credits/costs, net





27

27
Change in unrecognized actuarial pension gains/losses, net





(2,153 )
(2,153 )
Distributions to noncontrolling interests






(18,001 ) (18,001 )
Dividends paid ($0.07 per share)


(7,359 )



(7,359 )
Stock-based compensation expense

14,532





14,532
Purchase of treasury stock (226 )


226
(7,562 )

(7,562 )
Issuance of stock 923

(44,317 )
(923 ) 42,620


(1,697 )
Balance at March 31, 2016 105,124
$ 1,288
$ 770,856
$ 1,812,074
3,733
$ (171,349 ) $ (273,428 ) $ 145,893
$ 2,285,334
Common Stock Additional Paid-In Capital Retained Earnings Treasury Stock
Accumulated Other Comprehensive (Loss) Income
Non - controlling Interests Total Shareholders’ Equity
Shares Amount Shares Amount
(Unaudited)
Balance at December 31, 2014 107,806
$ 1,283
$ 776,864
$ 2,246,770
601
$ (24,428 ) $ (262,397 ) $ 138,211
$ 2,876,303
Net income


132,228



24,521
156,749
Change in cumulative translation adjustment, net





(59,096 ) (1,338 ) (60,434 )
Change in unrealized fair value of cash flow hedges, net





(724 )
(724 )
Change in unrecognized prior service pension credits/costs, net





(536 )
(536 )
Change in unrecognized actuarial pension gains/losses, net





14,618

14,618
Distributions to noncontrolling interests






(10,627 ) (10,627 )
Dividends paid ($0.07 per share)


(7,597 )



(7,597 )
Stock-based compensation expense

31,193





31,193
Issuance to treasury stock
2
8,164

200
(8,166 )


Purchase of treasury stock (330 )


330
(13,461 )

(13,461 )
Issuance of stock 1,075

(43,064 )
(1,075 ) 43,586


522
Balance at March 31, 2015 108,551
$ 1,285
$ 773,157
$ 2,371,401
56
$ (2,469 ) $ (308,135 ) $ 150,767
$ 2,986,006
March 31, 2016 December 31, 2015
Asset Liability Asset Liability
Costs and estimated earnings on contracts in progress $ 20,986,898
$ 16,042,759
$ 14,853,683
$ 21,942,765
Billings on contracts in progress (20,138,290 ) (18,195,525 ) (14,165,369 ) (23,876,876 )
Contracts in Progress, net $ 848,608
$ (2,152,766 ) $ 688,314
$ (1,934,111 )
Foreign Currency Exchange Rate Derivatives —We do not engage in currency speculation; however, we utilize foreign currency exchange rate derivatives on an ongoing basis to hedge against certain foreign currency-related operating exposures. We generally seek hedge accounting treatment for contracts used to hedge operating exposures and designate them as cash flow hedges. Therefore, gains and losses, exclusive of credit risk and forward points (which represent the time-value component of the fair value of our derivative positions), are included in AOCI until the associated underlying operating exposure impacts our earnings. Changes in the fair value of (1) credit risk and forward points, (2) instruments deemed ineffective during the period, and (3) instruments that we do not designate as cash flow hedges are recognized within cost of revenue.
Interest Rate Derivatives —At March 31, 2016 , we continued to utilize a swap arrangement to hedge against interest rate variability associated with $347,188 of our outstanding $412,500 unsecured term loan (the “Term Loan”). The swap arrangement has been designated as a cash flow hedge as its critical terms matched those of the Term Loan at inception and through March 31, 2016 . Accordingly, changes in the fair value of the swap arrangement are included in AOCI until the associated underlying exposure impacts our earnings.
Three Months Ended March 31,
2016 2015
Net income attributable to CB&I $ 106,925
$ 132,228
Weighted average shares outstanding—basic 104,803
108,197
Effect of restricted shares/performance based shares/stock options (1) 969
1,054
Effect of directors’ deferred-fee shares 13
10
Weighted average shares outstanding—diluted 105,785
109,261
Net income attributable to CB&I per share:
Basic $ 1.02
$ 1.22
Diluted $ 1.01
$ 1.21
Three Months Ended March 31, 2015
Revenue $ 488,259
Pre-tax income $ 45,600
March 31,
2016
December 31,
2015
Raw materials $ 116,723
$ 142,170
Work in process 57,446
58,884
Finished goods 88,012
88,604
Total $ 262,181
$ 289,658
Total (1)
Balance at December 31, 2015 $ 3,711,506
Foreign currency translation and other 8,284
Amortization of tax goodwill in excess of book goodwill (841 )
Balance at March 31, 2016 $ 3,718,949
March 31, 2016 December 31, 2015
Weighted Average Life Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization
Backlog and customer relationships (1) 18 Years $ 261,586
$ (52,173 ) $ 281,072
$ (66,666 )
Process technologies 15 Years 273,610
(121,483 ) 271,028
(115,608 )
Tradenames 10 Years 64,925
(25,563 ) 64,790
(23,667 )
Total (2) 16 Years $ 600,121
$ (199,219 ) $ 616,890
$ (205,941 )
(1) Backlog and customer relationships intangibles totaling approximately $19,500 became fully amortized during the three months ended March 31, 2016 and were therefore removed from the March 31, 2016 gross carrying and accumulated amortization balances above.
CB&I/Zachry— We have a venture with Zachry (CB&I— 50% / Zachry— 50% ) to perform EPC work for two liquefied natural gas (“LNG”) liquefaction trains in Freeport, Texas. Our proportionate share of the venture project value is approximately $2,700,000 . In addition, we have subcontract and risk sharing arrangements with Chiyoda to support our responsibilities to the venture. The costs of these arrangements are recorded in cost of revenue.
CB&I/Zachry/Chiyoda— We have a venture with Zachry and Chiyoda (CB&I— 33.3% / Zachry— 33.3% / Chiyoda— 33.3% ) to perform EPC work for an additional LNG liquefaction train at the aforementioned project site in Freeport, Texas. Our proportionate share of the venture project value is approximately $675,000 .
CB&I/Chiyoda— We have a venture with Chiyoda (CB&I— 50% / Chiyoda— 50% ) to perform EPC work for three LNG liquefaction trains in Hackberry, Louisiana. Our proportionate share of the venture project value is approximately $3,100,000 .
March 31, 2016 December 31, 2015
CB&I/Zachry
Current assets (1) $ 346,935
$ 298,916
Non-current assets 5,103
6,689
Total assets $ 352,038
$ 305,605
Current liabilities (1) $ 497,460
$ 454,943
CB&I/Zachry/Chiyoda
Current assets (1) $ 97,265
$ 84,696
Current liabilities (1) $ 95,579
$ 86,124
CB&I/Chiyoda
Current assets (1) $ 471,602
$ 424,781
Current liabilities (1) $ 433,029
$ 433,526
(1) Our venture arrangements allow for excess working capital of the ventures to be advanced to the venture partners. Such advances are returned to the venture for working capital needs as necessary. Accordingly, at a reporting period end a venture may have advances to its partners which are reflected as an advance receivable within current assets of the venture. At March 31, 2016 and December 31, 2015 , other current assets on the Balance Sheet included approximately $350,800 and $325,000 , respectively, related to our proportionate share of advances from the ventures to our venture partners, and other current liabilities included approximately $356,800 and $334,900 , respectively, related to advances to CB&I from the ventures.
Chevron-Lummus Global (“CLG”)— We have a venture with Chevron (CB&I— 50% / Chevron— 50% ), which provides licenses, engineering services and catalyst, primarily for the refining industry. As sufficient capital investments in CLG have been made by the venture partners, it does not qualify as a VIE.
NetPower LLC (“NetPower”)— We have a venture with Exelon and 8 Rivers Capital (CB&I— 33.3% / Exelon— 33.3% / 8 Rivers Capital— 33.3% ), which was formed for the purpose of developing, commercializing and monetizing a new natural gas power generation system that recovers essentially all the carbon dioxide produced during combustion. NetPower is building a first-of-its-kind demonstration plant which is being funded by contributions and services from the venture partners and other parties. We have determined the venture to be a VIE; however, we do not
CB&I/CTCI— We have a venture with CTCI Corporation (“CTCI”) (CB&I— 50% / CTIC— 50% ) to perform EPC work for a liquids ethylene cracker and associated units in Sohar, Oman. We have determined the venture to be a VIE; however, we do not effectively control CB&I/CTCI and therefore do not consolidate it. Our proportionate share of the venture project value is approximately $1,400,000 . Our venture arrangement allows for excess working capital of the venture to be advanced to the venture partners. Such advances are returned to the venture for working capital needs as necessary. At March 31, 2016 , other current liabilities included approximately $115,300 related to advances to CB&I from the venture.
CB&I/Kentz— We have a venture with Kentz (CB&I— 65% / Kentz— 35% ) to perform the structural, mechanical, piping, electrical and instrumentation work on, and to provide commissioning support for, three LNG trains, including associated utilities and a gas processing and compression plant, for the Gorgon LNG project, located on Barrow Island, Australia. Our venture project value is approximately $5,000,000 .
March 31,
2016
December 31,
2015
CB&I/Kentz
Current assets $ 218,156
$ 214,291
Current liabilities $ 267,654
$ 191,471
CB&I/AREVA
Current assets $ 64,068
$ 24,269
Current liabilities $ 59,217
$ 65,674
All Other (1)
Current assets $ 111,409
$ 112,532
Non-current assets 18,724
19,253
Total assets $ 130,133
$ 131,785
Current liabilities $ 23,264
$ 32,001
March 31,
2016
December 31,
2015
Current
Revolving facility and other short-term borrowings $ 570,300
$ 653,000
Current maturities of long-term debt 412,500
150,000
Less: unamortized debt issuance costs (2,129 ) (2,129 )
Current maturities of long-term debt, net of unamortized debt issuance costs 410,371
147,871
Current debt, net of unamortized debt issuance costs $ 980,671
$ 800,871
Long-Term
Term Loan: $1,000,000 term loan (interest at LIBOR plus an applicable floating margin) $ 412,500
$ 450,000
Second Term Loan: $500,000 term loan (interest at LIBOR plus an applicable floating margin) 500,000
500,000
Senior Notes: $800,000 senior notes, series A-D (fixed interest ranging from 4.15% to 5.30%) 800,000
800,000
Second Senior Notes: $200,000 senior notes (fixed interest of 4.53%) 200,000
200,000
Less: unamortized debt issuance costs (7,635 ) (8,168 )
Less: current maturities of long-term debt (412,500 ) (150,000 )
Long-term debt, net of unamortized debt issuance costs $ 1,492,365
$ 1,791,832
Level 2 —Fair value is based upon internally-developed models that use, as their basis, readily observable market parameters. Our derivative positions are classified within level 2 of the valuation hierarchy as they are valued using quoted market prices for similar assets and liabilities in active markets. These level 2 derivatives are valued utilizing an income approach, which discounts future cash flow based upon current market expectations and adjusts for credit risk.
Level 3 —Fair value is based upon internally-developed models that use, as their basis, significant unobservable market parameters. We did not have any level 3 classifications at March 31, 2016 or December 31, 2015 .
March 31, 2016 December 31, 2015
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Derivative Assets (1)
Other current assets $
$ 2,125
$
$ 2,125
$
$ 3,344
$
$ 3,344
Other non-current assets
259

259

180

180
Total assets at fair value $
$ 2,384
$
$ 2,384
$
$ 3,524
$
$ 3,524
Derivative Liabilities
Other current liabilities $
$ (9,142 ) $
$ (9,142 ) $
$ (7,568 ) $
$ (7,568 )
Other non-current liabilities
(318 )
(318 )
(607 )
(607 )
Total liabilities at fair value $
$ (9,460 ) $
$ (9,460 ) $
$ (8,175 ) $
$ (8,175 )
(1) We are exposed to credit risk on our hedging instruments associated with potential counterparty non-performance, and the fair value of our derivatives reflects this credit risk. The total level 2 assets at fair value above represent the maximum loss that we would incur on our outstanding hedges if the applicable counterparties failed to perform according to the hedge contracts. To help mitigate counterparty credit risk, we transact only with counterparties that are rated as investment grade or higher and monitor all counterparties on a continuous basis.
Other Current and Non- Current Assets Other Current and Non- Current Liabilities
March 31,
2016
December 31,
2015
March 31,
2016
December 31,
2015
Derivatives designated as cash flow hedges
Interest rate $ 17
$ 471
$ (271 ) $ (192 )
Foreign currency 486
944
(1,735 ) (1,858 )
Fair value $ 503
$ 1,415
$ (2,006 ) $ (2,050 )
Derivatives not designated as cash flow hedges
Foreign currency $ 1,881
$ 2,109
$ (7,454 ) $ (6,125 )
Fair value $ 1,881
$ 2,109
$ (7,454 ) $ (6,125 )
Total fair value $ 2,384
$ 3,524
$ (9,460 ) $ (8,175 )
Gross
Amounts
Recognized
(i)
Gross Amounts
Offset on the
Balance Sheet
(ii)
Net Amounts
Presented on the
Balance Sheet
(iii) = (i) - (ii)
Gross Amounts Not Offset on
the Balance Sheet (iv)
Net Amount
(v) = (iii) - (iv)
Financial
Instruments
Cash Collateral Received
Derivative Assets
Interest rate $ 17
$
$ 17
$
$
$ 17
Foreign currency 2,367

2,367
(132 )
2,235
Total assets $ 2,384
$
$ 2,384
$ (132 ) $
$ 2,252
Derivative Liabilities
Interest rate $ (271 ) $
$ (271 ) $
$
$ (271 )
Foreign currency (9,189 )
(9,189 ) 132

(9,057 )
Total liabilities $ (9,460 ) $
$ (9,460 ) $ 132
$
$ (9,328 )
Amount of Gain (Loss) on Effective Derivative Portion
Recognized in OCI Reclassified from AOCI into Earnings (1)
Three Months Ended March 31,
2016 2015 2016 2015
Designated as cash flow hedges
Interest rate $ (713 ) $ (1,708 ) $ (181 ) $ (474 )
Foreign currency 1,476
(2,455 ) (1,062 ) (1,137 )
Total $ 763
$ (4,163 ) $ (1,243 ) $ (1,611 )
Amount of Gain (Loss) Recognized in Earnings
Three Months Ended March 31,
2016 2015
Derivatives not designated as cash flow hedges
Foreign currency $ (4,229 ) $ (6,532 )
Total $ (4,229 ) $ (6,532 )
Pension Plans Other Postretirement Plans
Contributions made through March 31, 2016 $ 7,548
$ 514
Contributions expected for the remainder of 2016 9,645
1,824
Total contributions expected for 2016 $ 17,193
$ 2,338
Three Months Ended March 31,
2016 2015
Pension Plans
Service cost $ 2,327
$ 2,712
Interest cost 5,918
5,858
Expected return on plan assets (6,796 ) (7,137 )
Amortization of prior service credits (154 ) (158 )
Recognized net actuarial losses 1,461
1,934
Net periodic benefit cost $ 2,756
$ 3,209
Other Postretirement Plans
Service cost $ 176
$ 295
Interest cost 340
529
Recognized net actuarial gains (840 ) (150 )
Net periodic benefit (income) cost $ (324 ) $ 674
Currency
Translation
Adjustment (1)
Unrealized
Fair Value Of
Cash Flow Hedges
Defined Benefit
Pension and Other
Postretirement Plans
Total
Balance at December 31, 2015 $ (209,281 ) $ (967 ) $ (83,792 ) $ (294,040 )
OCI before reclassifications 21,435
449
(2,622 ) 19,262
Amounts reclassified from AOCI
854
496
1,350
Net OCI 21,435
1,303
(2,126 ) 20,612
Balance at March 31, 2016 $ (187,846 ) $ 336
$ (85,918 ) $ (273,428 )
AOCI Components Amount Reclassified From AOCI
Unrealized Fair Value Of Cash Flow Hedges (1)
Interest rate derivatives (interest expense) $ 181
Foreign currency derivatives (cost of revenue) 1,062
Total before tax $ 1,243
Tax (389 )
Total net of tax $ 854
Defined Benefit Pension and Other Postretirement Plans (2)
Amortization of prior service credits $ (154 )
Recognized net actuarial losses 621
Total before tax $ 467
Tax 29
Total net of tax $ 496
Shares (1) Weighted Average Grant-Date Fair Value per Share
RSUs 940
$ 33.56
Financial performance based shares 665
$ 33.56
Stock performance based shares 166
$ 37.41
Total 1,771
Shares
Financial performance based shares (issued upon vesting) 370
RSUs (issued upon vesting) 414
Stock options (issued upon exercise) 30
ESPP shares (issued upon sale) 109
Total shares issued 923
Three Months Ended March 31,
2016 2015
Revenue
Engineering & Construction $ 1,516,328
$ 1,818,586
Fabrication Services 517,576
637,809
Technology 64,562
99,361
Capital Services 569,267
569,989
Total revenue $ 2,667,733
$ 3,125,745
Income From Operations
Engineering & Construction $ 111,920
$ 136,418
Fabrication Services 38,249
52,399
Technology 26,281
48,024
Capital Services 11,490
9,957
Total income from operations $ 187,940
$ 246,798
March 31, 2016 % of
Total
December 31, 2015 % of
Total
Backlog (In thousands)
Engineering & Construction $ 11,750,069
55% $ 12,892,804
57%
Fabrication Services 2,999,868
14% 3,107,500
14%
Technology 963,352
5% 963,058
4%
Capital Services 5,449,770
26% 5,680,577
25%
Total backlog $ 21,163,059
$ 22,643,939

Three Months Ended March 31,
(In thousands)
2016 % of
Total
2015 % of
Total
New Awards
Engineering & Construction $ 323,418
27% $ 1,209,407
40%
Fabrication Services 373,689
31% 927,374
31%
Technology 83,620
7% 77,022
2%
Capital Services 416,672
35% 817,380
27%
Total new awards $ 1,197,399
$ 3,031,183

2016 % of
Total
2015 % of
Total
Revenue
Engineering & Construction $ 1,516,328
57% $ 1,818,586
58%
Fabrication Services 517,576
19% 637,809
21%
Technology 64,562
3% 99,361
3%
Capital Services 569,267
21% 569,989
18%
Total revenue $ 2,667,733
$ 3,125,745

2016 % of
Revenue
2015 % of
Revenue
Income From Operations
Engineering & Construction $ 111,920
7.4% $ 136,418
7.5%
Fabrication Services 38,249
7.4% 52,399
8.2%
Technology 26,281
40.7% 48,024
48.3%
Capital Services 11,490
2.0% 9,957
1.7%
Total income from operations $ 187,940
7.0% $ 246,798
7.9%
Three Months Ended March 31,
(In thousands)
2016 % of
Total
2015 % of
Total
Excluding Nuclear Operations $ 2,667,733
100% $ 2,637,486
84%
Nuclear Operations
—% 488,259
16%
Total revenue $ 2,667,733
$ 3,125,745
Three Months Ended March 31,
(In thousands)
2016 % of
Revenue
2015 % of
Revenue
Excluding Nuclear Operations $ 287,605
10.8% $ 318,771
12.1%
Nuclear Operations
—% 51,400
10.5%
Total gross profit $ 287,605
10.8% $ 370,171
11.8%
Three Months Ended March 31,
(In thousands)
2016 % of
Revenue
2015 % of
Revenue
Excluding Nuclear Operations $ 187,940
7.0% $ 201,198
7.6%
Nuclear Operations
—% 45,600
9.3%
Total income from operations $ 187,940
7.0% $ 246,798
7.9%
Three Months Ended March 31,
(In thousands)
2016 % of
Total
2015 % of
Total
Excluding Nuclear Operations $ 1,516,328
100% $ 1,330,327
73%
Nuclear Operations
—% 488,259
27%
Total revenue $ 1,516,328
$ 1,818,586
Three Months Ended March 31,
(In thousands)
2016 % of
Revenue
2015 % of
Revenue
Excluding Nuclear Operations $ 111,920
7.4% $ 90,818
6.8%
Nuclear Operations
—% 45,600
9.3%
Total income from operations $ 111,920
7.4% $ 136,418
7.5%
March 31,
2016
December 31,
2015
Change
(In thousands)
Total billings in excess of costs and estimated earnings (1) $ (2,152,766 ) $ (1,934,111 ) $ (218,655 )
Total costs and estimated earnings in excess of billings (1) 848,608
688,314
160,294
Contracts in Progress, net (1,304,158 )
(1,245,797 )
(58,361 )
Accounts receivable, net 1,388,424
1,331,217
57,207
Inventory 262,181
289,658
(27,477 )
Accounts payable (1,074,324 ) (1,162,077 ) 87,753
Contract Capital, net $ (727,877 )
$ (786,999 )
$ 59,122
Fabrication & Manufacturing —Goodwill associated with the Fabrication & Manufacturing reporting unit was approximately $497.0 million at October 1, 2015, and the fair value of the reporting unit exceeded its net book value by approximately 13%. Key assumptions used in deriving the reporting unit’s fair value included a discount rate of 10%; an earnings before interest, taxes, depreciation and amortization (“EBITDA”) compound annual growth rate (“CAGR”) of approximately 13% from 2016 through 2022; and a terminal growth rate of 2.5%.
Federal Services —Goodwill associated with the Federal Services reporting unit was approximately $190.0 million at October 1, 2015, and the fair value of the reporting unit exceeded its net book value by approximately 12%. Key assumptions used in deriving the reporting unit’s fair value included a discount rate of 11.5%; an EBITDA CAGR of approximately 12% from 2016 through 2022; and a terminal growth rate of 2.5%.
Facilities & Plant Services —Goodwill associated with the Facilities & Plant Services reporting unit was approximately $695.0 million at October 1, 2015, and the fair value of the reporting unit exceeded its net book value by approximately 10%. Key assumptions used in deriving the reporting unit’s fair value included a discount rate of 10%; an EBITDA CAGR of approximately 8% from 2016 through 2022; and a terminal growth rate of 2.5%.
Other Factors —The fair value of each of our reporting units is also sensitive to changes in estimated discount rates. A hypothetical change in a reporting unit's discount rate of 0.5% would have resulted in a change in the fair value of the reporting unit by approximately 6%.
Foreign Currency Exchange Rate Derivatives— We do not engage in currency speculation; however, we utilize foreign currency exchange rate derivatives on an ongoing basis to hedge against certain foreign currency related operating exposures. We generally seek hedge accounting treatment for contracts used to hedge operating exposures and designate them as cash flow hedges. Therefore, gains and losses, exclusive of credit risk and forward points (which represent the time value component of the fair value of our derivative positions), are included in AOCI until the associated underlying operating exposure impacts our earnings. Changes in the fair value of (1) credit risk and forward points, (2) instruments deemed ineffective during the period, and (3) instruments that we do not designate as cash flow hedges, are recognized within cost of revenue.
Interest Rate Derivatives— At March 31, 2016 , we continued to utilize a swap arrangement to hedge against interest rate variability associated with $347.2 million of our outstanding $412.5 million Term Loan. The swap arrangement has been designated as a cash flow hedge as its critical terms matched those of the Term Loan at inception and through March 31, 2016 . Accordingly, changes in the fair value of the swap arrangement are included in AOCI until the associated underlying exposure impacts our earnings.
31.1 (1) Certification of the Company’s Chief Executive Officer pursuant to Rule 13A-14 of the Securities Exchange Act of 1934 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 (1) Certification of the Company’s Chief Financial Officer pursuant to Rule 13A-14 of the Securities Exchange Act of 1934 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 (1) Certification of the Company’s Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2 (1) Certification of the Company’s Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS (1),(2) XBRL Instance Document
101.SCH (1),(2) XBRL Taxonomy Extension Schema Document
101.CAL (1),(2) XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF (1),(2) XBRL Taxonomy Extension Definition Linkbase Document
101.LAB (1),(2) XBRL Taxonomy Extension Label Linkbase Document
101.PRE (1),(2) XBRL Taxonomy Extension Presentation Linkbase Document
(2) Attached as Exhibit 101 to this report are the following documents formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Statements of Operations for the three months ended March 31, 2016 and 2015 , (ii) the Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2016 and 2015 , (iii) the Condensed Consolidated Balance Sheets at March 31, 2016 and December 31, 2015 , (iv) the Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2016 and 2015 , (v) the Condensed Consolidated Statements of Changes in Shareholders’ Equity for the three months ended March 31, 2016 and 2015 , and (vi) the Notes to Financial Statements.
Chicago Bridge & Iron Company N.V.
By: Chicago Bridge & Iron Company B.V.
Its: Managing Director
By: /s/ Michael S. Taff
Michael S. Taff
Managing Director
(Principal Financial Officer and Duly Authorized Officer)

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