Equity Method Investments and Variable Interest Entities

We conduct some of our operations through joint ventures which operate through partnership, corporations, undivided interest and other business forms and are principally accounted for using the equity method of accounting. Additionally, the majority of our joint ventures are also VIEs.

The following table presents a rollforward of our equity in and advances to unconsolidated affiliates:



	March 31,			December 31,
Dollars in millions	2015			2014
Beginning balance	$	151		$	156
Equity in earnings of unconsolidated affiliates	35			163
Distribution of earnings of unconsolidated affiliates	(37		)	(249		)
Advances	(6		)	(13		)
Foreign currency translation adjustments	(6		)	(1		)
Other	1			—
Balance before reclassification	$	138		$	56
Reclassification of excess distribution	9			102
Recognition of excess distributions	(3		)	(7		)
Ending balance	$	144		$	151

During 2014, we received cash dividends of $102 million in excess of the carrying value of one of our investments. We had no obligation to return any portion of the cash dividends received. We recorded the excess dividend amount as “deferred income from unconsolidated affiliates” on our condensed consolidated balance sheets and will recognize these dividends as earnings are generated by the investment. We recognized $7 million of the excess dividends during 2014. During the first quarter 2015, we received an additional $9 million of cash dividends in excess of the carrying value of our investment and recognized $3 million of excess dividends.

Related Party Transactions

We often provide engineering, construction management and other services as a subcontractor to the joint ventures in which we participate. The amounts included in our revenues represent revenues from services we provide directly to the joint ventures. As of the three months ended March 31, 2015 and 2014, our revenues included $73 million and $68 million, respectively, related to services we provided to our joint ventures, primarily those in our E&C business segment.

Amounts included in our condensed consolidated balance sheets related to services we provided to our unconsolidated joint ventures as of March 31, 2015 and December 31, 2014 are as follows:



	March 31,		December 31,
Dollars in millions	2015		2014
Accounts receivable, net of allowance for doubtful accounts	$	4	$	7
Costs and estimated earnings in excess of billings on uncompleted contracts	$	2	$	2
Billings in excess of costs and estimated earnings on uncompleted contracts	$	32	$	21

Our related party accounts payable for both periods were immaterial.

Unconsolidated Variable Interest Entities

The following summarizes the total assets and total liabilities as reflected in our condensed consolidated balances sheets as well as our maximum exposure to losses related to our unconsolidated VIEs in which we have a significant variable interest but are not the primary beneficiary. Generally, our maximum exposure to loss is limited to our equity investment in the joint venture and any amounts payable to us for services we provided to the joint venture reduced for any unearned revenues on the projects.



	March 31, 2015
Dollars in millions	Total assets		Total liabilities		Maximum exposure to loss
Aspire Defence project	$	16	$	121	$	16
Ichthys Liquefied Natural Gas project	$	49	$	42	$	49
U.K. Road projects	$	33	$	11	$	33
EBIC Ammonia project	$	40	$	2	$	25



Dollars in millions	December 31, 2014
Dollars in millions	Total assets		Total liabilities
Aspire Defence project	$	17	$	118
Ichthys Liquefied Natural Gas project	$	49	$	35
U.K. Road projects	$	34	$	11
EBIC Ammonia project	$	42	$	2

On the Aspire Defence project, in addition to the maximum exposure to loss indicated in the table above, we have exposure to any losses incurred by the construction or operating joint ventures under their respective subcontract arrangements with the project company. Our exposure is, however, limited to our equity participation in these entities. The Ichthys liquefied natural gas ("LNG") project joint venture executes a project that has a lump sum component; in addition to the maximum exposure to loss indicated in the table above, we have an exposure to losses if the project exceeds the lump sum component to the extent of our ownership percentage in the joint venture. Our maximum exposure to loss on the EBIC Ammonia project reflects our 65% ownership of the development corporation which owns 25% of the company that consolidates the ammonia plant. We continue to monitor the $40 million investment in our EBIC Ammonia project joint venture indicated in the March 31, 2015 table above, as the profitability of its operations has been affected by the availability of natural gas feedstock in Egypt.

Consolidated Variable Interest Entities

We consolidate VIEs if we determine we are the primary beneficiary of the project entity because we control the activities that most significantly impact the economic performance of the entity. The following is a summary of the significant VIEs where we are the primary beneficiary:



Dollars in millions	March 31, 2015
Dollars in millions	Total assets		Total liabilities
Gorgon LNG project	$	212	$	236
Escravos Gas-to-Liquids project	$	14	$	30
Fasttrax Limited project	$	82	$	79



Dollars in millions	December 31, 2014
Dollars in millions	Total assets		Total liabilities
Gorgon LNG project	$	282	$	309
Escravos Gas-to-Liquids project	$	23	$	36
Fasttrax Limited project	$	83	$	81

Acquisition of Noncontrolling Interest

During the three months ended March 31, 2015, we entered into an agreement to acquire the noncontrolling interest in one of our consolidated joint ventures for $40 million. We paid the partner previously accrued expenses of $8 million. The acquisition of these shares was recorded as an equity transaction, with a $40 million reduction in our paid-in capital in excess of par.