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REVENUE, CONTRACT ASSETS AND LIABILITIES AND OTHER CONTRACT MATTERS | 12 Months Ended
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Dec. 31, 2019
Revenue From Contract With Customer [Abstract] |
REVENUE, CONTRACT ASSETS AND LIABILITIES AND OTHER CONTRACT MATTERS | 2. REVENUE, CONTRACT ASSETS AND LIABILITIES AND OTHER CONTRACT MATTERS As discussed in Note 1, we recognize revenue for our contracts in accordance with Topic 606. Summarized below are required disclosures under Topic 606 and other relevant guidance. Disaggregation of Revenue The following tables summarize revenue for each of our operating segments, disaggregated by contract type, for 2019, 2018 and 2017 (in thousands):
|  | 2019 |
|  | Fabrication |  |  | Shipyard |  |  | Services |  |  | Eliminations |  |  | Total |
Contract Type |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fixed-price and unit-rate (1) |  | $ | 70,052 |  |  | $ | 152,590 |  |  | $ | 30,147 |  |  | $ | (5,169 | ) |  | $ | 247,620 |
T&M (2) |  |  | — |  |  |  | 6,627 |  |  |  | 41,014 |  |  |  | — |  |  |  | 47,641 |
Other |  |  | — |  |  |  | — |  |  |  | 10,545 |  |  |  | (2,498 | ) |  |  | 8,047 |
Total |  | $ | 70,052 |  |  | $ | 159,217 |  |  | $ | 81,706 |  |  | $ | (7,667 | ) |  | $ | 303,308 |
|  | 2018 |
|  | Fabrication |  |  | Shipyard |  |  | Services |  |  | Eliminations |  |  | Total |
Contract Type |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fixed-price and unit-rate (1) |  | $ | 40,420 |  |  | $ | 88,887 |  |  | $ | 38,612 |  |  | $ | (2,414 | ) |  | $ | 165,505 |
T&M (2) |  |  | — |  |  |  | 7,537 |  |  |  | 43,481 |  |  |  | — |  |  |  | 51,018 |
Other |  |  | — |  |  |  | — |  |  |  | 6,137 |  |  |  | (1,413 | ) |  |  | 4,724 |
Total |  | $ | 40,420 |  |  | $ | 96,424 |  |  | $ | 88,230 |  |  | $ | (3,827 | ) |  | $ | 221,247 |
|  | 2017 |
|  | Fabrication |  |  | Shipyard |  |  | Services |  |  | Eliminations |  |  | Total |
Contract Type |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fixed-price and unit-rate (1) |  | $ | 58,078 |  |  | $ | 47,787 |  |  | $ | 28,465 |  |  | $ | (5,096 | ) |  | $ | 129,234 |
T&M (2) |  |  | — |  |  |  | 4,912 |  |  |  | 35,180 |  |  |  | — |  |  |  | 40,092 |
Other |  |  | — |  |  |  | — |  |  |  | 1,800 |  |  |  | (104 | ) |  |  | 1,696 |
Total |  | $ | 58,078 |  |  | $ | 52,699 |  |  | $ | 65,445 |  |  | $ | (5,200 | ) |  | $ | 171,022 |
| (1) | Revenue is recognized as the contract is progressed over time.
| (2) | Revenue is recognized at contracted rates when the work is performed and costs are incurred.
Future Performance Obligations Required Under Contracts The following table summarizes our remaining performance obligations by operating segment at December 31, 2019 (in thousands).
Segment |  | Performance Obligations |
Fabrication |  | $ | 50,145 |
Shipyard (1) |  |  | 352,081 |
Services |  |  | 13,212 |
Total |  | $ | 415,438 |
| (1) | Amount excludes approximately $21.9 million of remaining performance obligations related to contracts for the construction of two MPSVs that are subject to dispute pursuant to notices of termination from our customer. See Note 8 for further discussion of these contracts.
We expect to recognize revenue for our remaining performance obligations at December 31, 2019, in the following periods (in thousands):
Year |  | Total |
2020 |  | $ | 211,310 |
2021 |  |  | 108,252 |
2022 and beyond |  |  | 95,876 |
Total |  | $ | 415,438 |
Contracts Assets and Liabilities Revenue recognition and customer invoicing for our fixed-price and unit-rate contracts may occur at different times. Revenue recognition is based upon our estimated percentage-of-completion as discussed in Note 1; however, customer invoicing is generally dependent upon predetermined billing terms, which could provide for customer payments in advance of performing the work, milestone billings based on the completion of certain phases of the work, or when services are provided. Revenue recognized in excess of amounts billed is reflected as contract assets on our Balance Sheet. Amounts billed in excess of revenue recognized, and accrued contract losses, are reflected as contract liabilities on our Balance Sheet. Information with respect to uncompleted contracts at December 31, 2019 and 2018 is as follows (in thousands):
|  | December 31, |
|  | 2019 |  |  | 2018 |
Costs incurred on uncompleted contracts |  | $ | 386,932 |  |  | $ | 256,239 |
Estimated loss incurred to date |  |  | (48,895 | ) |  |  | (35,470 | )
Sub-total |  |  | 338,037 |  |  |  | 220,769 |
Billings to date |  |  | (295,136 | ) |  |  | (190,588 | )
Deferred revenue (1) |  |  | (4,592 | ) |  |  | (4,592 | )
Total |  | $ | 38,309 |  |  | $ | 25,589 |
| (1) | Deferred revenue is included within other noncurrent assets as further discussed below.
The above amounts are included within the following captions in our Balance Sheet at December 31, 2019 and 2018 (in thousands):
|  | December 31, |
|  | 2019 |  |  | 2018 |
Contract assets |  | $ | 52,128 |  |  | $ | 29,982 |
Contract liabilities (1), (2), (3) |  |  | (26,271 | ) |  |  | (16,845 | )
Sub-total |  |  | 25,857 |  |  |  | 13,137 |
Contract assets, noncurrent (1) |  |  | 12,452 |  |  |  | 12,452 |
Total |  | $ | 38,309 |  |  | $ | 25,589 |
| (1) | The increase in contract liabilities compared to December 31, 2018, was primarily due to advance payments on a project in our Shipyard Division and three projects in our Fabrication Division and an increase in accrued contract losses, offset partially by the unwind of advance payments on a project in our Fabrication Division as a result of project progress. Contract assets, noncurrent at December 31, 2019 and 2018 consisted of our contract asset, accrued contract losses, and deferred revenue balances at the time of our customer’s purported termination of our two MPSV contracts. See Note 8 for further discussion of these contracts.
| (2) | Revenue recognized during 2019 and 2018 related to amounts included in our contract liabilities balance at December 31, 2018 and 2017, was $14.3 million and $5.1 million, respectively.
| (3) | Contract liabilities at December 31, 2019 and 2018, includes accrued contract losses of $6.4 million and $2.4 million, respectively. See "Project Changes in Estimates" below for further discussion of our accrued contract losses.
Significant Customers We are not dependent on any one customer, and the revenue derived from each customer varies from year to year based on new project awards for each customer. However, for 2019, 2018 and 2017, certain customers individually accounted for 10% or more of our consolidated revenue as follows (in thousands):
Customer |  | 2019 |  |  | 2018 |  |  | 2017 |
A |  | $ | 52,310 |  |  | * |  |  | * |
B |  |  | 39,897 |  |  | * |  |  | * |
C |  |  | 36,175 |  |  |  | 49,123 |  |  |  | 21,781 |
D |  |  | 34,448 |  |  | * |  |  | * |
E |  | * |  |  |  | 25,873 |  |  | * |
F |  | * |  |  |  | 23,279 |  |  | * |
G |  | * |  |  | * |  |  |  | 44,724 |
| * | The customer revenue was less than 10% of consolidated revenue for the year.
Allowance for Doubtful Accounts For 2019, 2018 and 2017, our provision for bad debts was $59,000, $30,000 and $21,000, respectively. Our provision for bad debts is included in other (income) expense, net on our Statement of Operations. Our allowance for doubtful accounts at December 31, 2019 and 2018 was $15,000 and $0.4 million, respectively. Variable Consideration For 2019, 2018 and 2017, we had no material amounts in revenue related to unapproved change orders, claims or incentives. However, at December 31, 2019 and 2018, certain projects reflected a reduction in contract price for liquidated damages of $12.9 million and $11.2 million, of which $11.2 million was recorded during 2017. Changes in Project Estimates Changes in Estimates for 2019 - For 2019, significant changes in estimated margins on projects negatively impacted our operating results by $17.2 million. The changes in estimates were associated with the following: Shipyard Division
| • | Harbor Tug Projects: Increased forecast costs and forecast liquidated damages of $4.9 million for our harbor tug projects within our Shipyard Division, primarily associated with increased craft labor and subcontracted services costs and extensions of schedule. The impacts were primarily due to limitations in craft labor availability and the required use of contract labor in lieu of direct hire labor, the need to supplement and re-perform work for an under-performing paint subcontractor, higher than anticipated costs for paint scopes that were assumed by us from our paint subcontractor, higher cost estimates from our electrical and instrumentation subcontractor, our inability to achieve previously anticipated labor productivity improvements, and expectations of future labor productivity. The revised forecasts incorporate actual results realized from completion of the sixth vessel in the fourth quarter 2019 and progress achieved on the seventh vessel which was completed in February 2020. At December 31, 2019, the uncompleted vessels were at various stages of completion ranging from approximately 60% to 93% and are forecast to be completed at various dates ranging from the first quarter 2020 through the third quarter 2020. The projects were in a loss position at December 31, 2019 and our reserve for estimated losses was $1.6 million. If future craft labor productivity differs from our current estimates, we are unable to achieve our progress estimates, our schedules are further extended or the projects incur additional schedule liquidated damages, the projects would experience further losses.
| • | Ice-Breaker Tug Project: Increased forecast costs of $1.5 million for our ice-breaker tug project within our Shipyard Division, primarily associated with increased craft labor and subcontracted services costs and extensions of schedule. The impacts were primarily due to incomplete and deficient subcontracted production engineering which resulted in construction rework and disruption and lower than anticipated craft labor productivity, higher cost estimates from our various subcontractors, difficulties encountered to launch the vessel, and anticipated higher costs to deliver the vessel. At December 31, 2019, the vessel was approximately 91% complete and is forecast to be completed in the first quarter 2020 and delivered in the second quarter 2020. The project was in a loss position at December 31, 2019 and our reserve for estimated losses was $0.1 million. If future craft labor productivity and subcontractor costs differ from our current estimates, we are unable to achieve our progress estimates, our schedule is further extended, or we experience further delays or additional costs to deliver the vessel, the project would experience further losses.
| • | Research Vessel Projects: Reversal of $0.8 million of gross profit recognized prior to 2019 for our three research vessel projects within our Shipyard Division. The projects have experienced difficulties with subcontracted production engineering, due in part to vessel size constraints and complexities associated with vessel functionality, which has resulted in incomplete and deficient production engineering and construction delays, disruption and rework. As a result, we made a collective decision with our customer to delay construction activities on the projects until production engineering achieves a satisfactory level of completion to limit further impacts on construction, including disruption and rework. In addition, we have agreed to a change order with the customer that includes the following:
| - | The replacement of the current subcontracted production engineering firm with a different engineering subcontractor that will be contracted directly by the customer;
| - | Extensions of the schedule liquidated damages dates for the projects; and
| - | Increases in project price for the contracts to account for the estimated cost impacts of the production engineering and construction delays.
We are currently working collaboratively with the customer to identify opportunities to commence construction activities in advance of full completion of production engineering to minimize the schedule impacts to the projects. Based on our current forecast cost to complete the projects, the change order and collaborative nature of our discussions with the customer, we are not forecasting losses on the projects. However, due to uncertainties with respect to the timing of completion of production engineering and the potential impacts on our construction schedules and costs, as well as ongoing discussions with the customer, we are unable to reasonably estimate the amount of gross profit, if any, that will ultimately be realized on the projects. Accordingly, during the fourth quarter 2019 we reversed all previously recognized gross profit on the projects (including the reversal of $2.5 million of gross profit that was recognized prior to the fourth quarter 2019) and intend to only recognize revenue equal to costs on the projects until we are able to reasonably estimate the amount of gross profit, if any, expected to be realized on the projects. We anticipate being able to make such an estimate upon substantial completion of production engineering. If the projects experience further delays associated with production engineering or other matters, we are unable to achieve our progress estimates, our schedules are further extended, the projects incur schedule liquidated damages, future craft labor productivity and subcontractor costs differ from our current estimates, or we are unable to recover the costs of any of the aforementioned from our customer, the projects would experience losses. Fabrication Division
| • | Forty-Vehicle Ferry Projects: Increased forecast costs and forecast liquidated damages of $5.1 million for our two, forty-vehicle ferry projects within our Fabrication Division, primarily associated with increased craft labor, subcontracted services and materials costs. The impacts were primarily due to greater than anticipated rework, lower than anticipated productivity experienced primarily during the fourth quarter 2019, and our expectations of future labor productivity. The revised forecasts incorporate actual results realized to date on the first vehicle ferry and actual results realized on similar projects in backlog. At December 31, 2019, the projects were approximately 28% and 53% complete and are forecast to be completed in the fourth quarter 2020. The projects were in a loss position at December 31, 2019 and our reserve for estimated losses was $3.0 million. If future craft labor productivity and subcontractor costs differ from our current estimates, we are unable to achieve our progress estimates, our schedules are further extended or the projects incur additional schedule liquidated damages, the projects would experience further losses.
| • | Paddle Wheel River Boat Project: Increased forecast costs of $1.3 million for our paddle wheel river boat project within our Fabrication Division, primarily associated with increased craft labor costs. The impacts were primarily due to difficulties encountered in commissioning the vessel and the need to accelerate our schedule, including performing out of sequence work scopes, to enable subcontracted works scopes to commence and mitigate the schedule and cost impacts of delaying the subcontracted work scopes. At December 31, 2019, the project was approximately 88% complete and is forecast to be completed in the first quarter 2020. The project was in a loss position at December 31, 2019 and our reserve for estimated losses was $0.2 million. If future craft labor productivity and subcontractor costs differ from our current estimates, we are unable to achieve our progress estimates, our schedule is extended or the project incurs schedule liquidated damages, the project would experience further losses.
| • | Jacket and Deck Project: Increased forecast costs and forecast liquidated damages of $2.0 million for our jacket and deck project within our Fabrication Division, primarily associated with increased subcontracted services costs and extensions of schedule. The impacts were primarily due to higher than anticipated cost estimates from our commissioning subcontractors and delays associated with customer related directives. We are disputing the scope of the commissioning responsibility with the customer and we believe the extensions of schedule and associated forecast liquidated damages are the result of the customer related directives. Accordingly, we are pursuing change orders from the customer to recover the increased forecast commissioning costs and to extend the schedule date for determination of liquidated damages. However, the customer is disputing the change orders, and accordingly, our forecast at December 31, 2019 does not reflect potential future benefits, if any, from any favorable resolution of the change orders. At December 31, 2019, the project was approximately 46% complete and is forecast to be completed in the third quarter 2020. The project was in a loss position at December 31, 2019 and our reserve for estimated losses was $1.1 million. If future craft labor productivity and subcontractor costs differ from our current estimates, we are unable to achieve our progress estimates, our schedules are further extended or the project incurs additional schedule liquidated damages, the project would experience further losses.
Services Division
| • | Subsea Components Project: Increased forecast costs and liquidated damages of $1.6 million for our subsea components project within our Services Division, primarily associated with increased craft labor, subcontracted services and materials costs and extensions of schedule. The impacts were primarily due to stringent welding procedure requirements and customer specifications which resulted in additional materials, craft labor, and subcontracted services and support. At December 31, 2019, the project was approximately 86% complete and is forecast to be completed in the first quarter 2020. The project was in a loss position at December 31, 2019 and our reserve for estimated losses was $0.2 million. If we continue to experience difficulties with the procedure requirements and specifications for the project or the schedule is further extended, the project would experience further losses.
Changes in estimates for 2018 - For 2018, significant changes in estimated margins on projects negatively impacted our operating results by $9.1 million. The changes in estimates were associated with the following:
| • | Petrochemical Modules Project: Increased forecast costs of $2.4 million for our petrochemical module project within our Fabrication Division, primarily associated with increased subcontracted services costs. The impacts were primarily due to higher cost estimates from our insulation and other subcontractors. The project was completed in 2018.
| • | Harbor Tug Projects: Increased forecast costs and liquidated damages of $6.7 million for our harbor tug projects within our Shipyard Division, primarily associated with craft labor costs and extensions of schedule. The impacts were primarily due to lower than anticipated craft labor productivity related to pipe installation and testing. The projects were in a loss position at December 31, 2019 and 2018. See further discussion above for associated impacts for 2019.
Changes in estimates for 2017 - For 2017, significant changes in estimated margins on projects negatively impacted our operating results by $34.5 million. The changes in estimates were associated with the following:
| • | MPSV Projects: Increased forecast costs and liquidated damages for our two multi-purpose service vessels (“MPSV”) within our Shipyard Division. The impacts were primarily due to complexities related to the installation of the power and communications systems and reductions in price of $11.2 million for liquidated damages (representing the maximum amount of liquidated damages under the contracts) which are in dispute. The projects were in a loss position at December 31, 2019 and 2018. We are currently in a dispute with the customer regarding the two MPSV projects. As a result of our dispute and uncertainty with respect to the timing of resolution, all contract assets, accrued contract losses, and deferred revenue balances associated with the projects have been classified within other noncurrent assets, resulting in a net contract asset balance of $12.5 million for these projects within other noncurrent assets on our Balance Sheet at December 31, 2019 and 2018. See Note 8 for further discussion of the dispute.
Other Project Matters Project Tariffs - Certain imported materials used, or forecast to be used, for our projects are currently subject to existing, new or increased tariffs or duties. We believe such amounts, if incurred, are recoverable from our customers under the contractual provisions of our contracts; however, we can provide no assurances that we will successfully recover such amounts. Other - At December 31, 2019 and 2018, other noncurrent assets on our Balance Sheet included $3.0 million of retention for a previously completed project in our Fabrication Division for the fabrication of petrochemical modules. This retention is billable to the customer upon expiration of the contractual warranty period, which is expected to occur in the second quarter 2020. In January 2020, the customer entered into a restructuring transaction through a prepackaged Chapter 11 process that is intended to enable the customer to fulfill its commitments to suppliers, including payment of our retention. However, the restructuring transaction, which is subject to court approval, could delay the timing of collection of the retention.

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- Definition The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI http://asc.fasb.org/topic&trid=49130388 + Details
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