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SHIPYARD TRANSACTION AND DISCONTINUED OPERATIONS | 12 Months Ended
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Dec. 31, 2021
Discontinued Operations And Disposal Groups [Abstract] |
Shipyard Transaction and Discontinued Operations | 3. SHIPYARD TRANSACTION AND DISCONTINUED OPERATIONS Shipyard Transaction Transaction Summary – On April 19, 2021 (“Transaction Date”), we entered into a definitive agreement and sold our Shipyard Division operating assets and certain construction contracts (“Shipyard Transaction”) to Bollinger Houma Shipyards, L.L.C. and Bollinger Shipyards Lockport, L.L.C. (collectively, “Bollinger”) for approximately $28.6 million (“Transaction Price”) ($26.1 million, net of transaction and other costs). We received $27.7 million of the Transaction Price during 2021 and the remaining $0.9 million (“Deferred Transaction Price”) will be received upon Bollinger’s collection of certain customer payments associated with the Divested Shipyard Contracts (defined below). The Deferred Transaction Price is anticipated to be received in the second quarter 2022, and has been reflected within prepaid expenses and other assets on our Balance Sheet at December 31, 2021. We also received $7.8 million during 2021 associated with changes in working capital for the Divested Shipyard Contracts from December 31, 2020 through the Transaction Date (“Working Capital True-Up”). Included in the Shipyard Transaction were the Shipyard Division’s:
| • | Shipyard Facility and inventory and equipment in Houma, Louisiana;
| • | Contracts and related obligations for our three research vessel projects and five towing, salvage and rescue ship projects (collectively, the “Divested Shipyard Contracts”);
| • | Contract retentions, contract assets, contract liabilities and certain accounts payable associated with the Divested Shipyard Contracts as of the Closing Date; and
| • | Four drydocks (three of which previously supported our Shipyard Division operations in our Lake Charles Facility and Jennings Facility).
Bollinger offered employment to most of the employees of our Shipyard Division associated with the Divested Shipyard Contracts. Excluded from the Shipyard Transaction were the Shipyard Division’s:
| • | Accounts receivable, certain accounts payable and other accrued liabilities associated with the Divested Shipyard Contracts as of the Closing Date;
| • | Contracts and related obligations for our seventy-vehicle ferry project and two forty-vehicle ferry projects that are under construction (“Active Retained Shipyard Contracts”) and two multi-purpose supply vessel (“MPSV”) projects that are subject to dispute (collectively with the Active Retained Shipyard Contracts, the “Retained Shipyard Contracts”), together with the associated accounts receivable, accounts payable and other accrued liabilities;
| • | Lake Charles Facility and Jennings Facility (which were closed in the fourth quarter 2020) and related lease obligations; and
| • | Remaining assets and liabilities of the Shipyard Division.
We retained those employees of our Shipyard Division associated with the Active Retained Shipyard Contracts. In connection with the Shipyard Transaction, we recorded a total pre-tax loss of $25.3 million during 2021, of which $22.8 million was related to the impairment of our Shipyard Division’s long-lived assets (discussed further below) and $2.6 million was related to transaction and other costs associated with the Shipyard Transaction. At December 31, 2021, the net liabilities on our Balance Sheet associated with the Retained Shipyard Contracts and other retained Shipyard Division operations totaled $8.7 million. The wind down of the Shipyard Division operations is anticipated to occur by the third quarter 2022. Impairment – During the first quarter 2021, events and changes in circumstances indicated that the carrying amount of our Shipyard Division’s long-lived assets may not be recoverable. These changes in circumstances were primarily attributable to a reassessment of our asset groups within our Shipyard Division as well as revisions to our probability assessment of net future cash flows of the applicable asset group based on the likelihood, that existed as of March 31, 2021, of the Shipyard Transaction occurring. Based on these assessments, we determined that an impairment of our Shipyard Division’s property, plant and equipment had occurred during the first quarter 2021. We measured the impairment by comparing the carrying amount of the applicable asset group at March 31, 2021 to an estimate of its fair value (which represents a Level 3 fair value measurement), resulting in an impairment charge of $22.8 million during 2021. We based our fair value estimate on the Transaction Price, inclusive of the Working Capital True-Up, associated with the Shipyard Transaction. Discontinued Operations The Shipyard Transaction (which included, among other things, our owned Shipyard Facility, Divested Shipyard Contracts and drydocks), and the fourth quarter 2020 closures of our leased Lake Charles Facility and Jennings Facility, represented the disposal and closure of a substantial portion of our Shipyard Division operations and the culmination of a strategic shift that will have a major effect on our ongoing operations and financial results. Therefore, we determined the assets, liabilities and operations associated with the Shipyard Transaction, and associated with the previously closed Shipyard Division facilities, to be discontinued operations in 2021. Accordingly, such operating results for 2021 have been classified as discontinued operations on our Statement of Operations. We had no material assets and liabilities of discontinued operations at December 31, 2021. Our classification of these operations as discontinued requires retrospective application to financial information for prior periods presented. Therefore, such assets and liabilities at December 31, 2020, and operating results for 2020, have been recast and classified as discontinued operations on our Balance Sheet and Statement of Operations, respectively. We are completing construction of the Active Retained Shipyard Contracts within our F&S Facility and are winding down our Shipyard Division operations, which is anticipated to occur by the third quarter 2022. The assets, liabilities and operating results attributable to the Retained Shipyard Contracts and remaining assets and liabilities of our Shipyard Division operations that were excluded from the Shipyard Transaction, and are not associated with the previously closed facilities, represent our Shipyard operating segment and are classified as continuing operations on our Balance Sheet and Statement of Operations. Discontinued operations are presented separately from continuing operations on our Balance Sheet and Statement of Operations; however, they are not presented separately on our Statement of Cash Flows. Statement of Operations – A summary of the operating results constituting the loss from discontinued operations for 2021 and 2020, is as follows (in thousands):
|  | Years Ended December 31, |
|  | 2021 |  |  | 2020 |
Revenue |  | $ | 41,637 |  |  | $ | 133,230 |
Cost of revenue |  |  | 33,912 |  |  |  | 142,872 |
Gross profit (loss)(1) |  |  | 7,725 |  |  |  | (9,642 | )
General and administrative expense |  |  | 413 |  |  |  | 1,426 |
Impairments and (gain) loss on assets held for sale, net(2) |  |  | 25,331 |  |  |  | 1,639 |
Other (income) expense, net(3) |  |  | (647 | ) |  |  | 600 |
Operating loss |  |  | (17,372 | ) |  |  | (13,307 | )
Income tax (expense) benefit(4) |  |  | — |  |  |  | — |
Loss from discontinued operations, net of taxes |  | $ | (17,372 | ) |  | $ | (13,307 | )
| (1) | Gross profit for 2021 was positively impacted by changes in estimated margins on projects of $8.4 million. The impacts were associated with our towing, salvage and rescue ship projects, resulting from increased contract price primarily associated with an approved change order ($9.2 million impact), offset partially by increased forecast costs, primarily associated with increased craft labor costs ($0.8 million impact). Gross loss for 2020 was negatively impacted by changes in estimated margins on projects of $8.3 million. The impacts were associated with our towing, salvage and rescue ship projects and final two harbor tug projects, resulting from increased forecast costs, primarily associated with increased craft labor and subcontracted services costs and extensions of schedule.
| (2) | Expense for 2021 includes impairments of $22.8 million and transaction and other costs of $2.6 million associated with the Shipyard Transaction (see discussion above). Expense for 2020 includes charges of $1.6 million associated with impairments of drydocks sold in connection with the Shipyard Transaction, impairments of lease assets associated with our Lake Charles Facility, and closure costs associated with our Lake Charles Facility and Jennings Facility.
| (3) | Other income for 2021 includes a gain of $0.6 million, resulting from insurance recoveries associated with damage previously caused by Hurricane Laura to a drydock that was sold in connection with the Shipyard Transaction. Other expense for 2020 includes charges of $0.5 million associated with damage caused by Hurricane Laura to our drydocks sold in connection with the Shipyard Transaction and our ninth harbor tug project.
| (4) | Income taxes attributable to discontinued operations were not material for each period presented.
As a result of the Shipyard Transaction and classification of certain Shipyard Division operations as discontinued operations, certain allocations that were previously reflected within our Shipyard Division have been reclassified to our Corporate Division and Fabrication & Services Division for 2020. Further, legal costs associated with our MPSV dispute that were previously reflected within our Corporate Division have been reclassified to our Shipyard Division for 2020. See Note 12 for a summary of the reclassifications to our previously reported segment results and Note 10 for further discussion of our MPSV dispute. Assets and Liabilities – At December 31, 2021, we had no material assets or liabilities of discontinued operations. A summary of the carrying values of the major classes of assets and liabilities of discontinued operations at December 31, 2020, is as follows (in thousands):
|  | December 31, 2020 |
Current assets of discontinued operations: |  |  |  |
Contract receivables and retainage, net |  | $ | 1,304 |
Contract assets |  |  | 62,423 |
Prepaid expenses and other assets |  |  | 270 |
Inventory |  |  | 105 |
Assets held for sale |  |  | 2,014 |
Total current assets of discontinued operations |  | $ | 66,116 |
Noncurrent assets of discontinued operations: |  |  |  |
Property, plant and equipment, net |  | $ | 36,280 |
Other noncurrent assets |  |  | 2,889 |
Total noncurrent assets of discontinued operations |  | $ | 39,169 |
|  | December 31, 2020 |
Current liabilities of discontinued operations: |  |  |  |
Accounts payable |  | $ | 57,752 |
Contract liabilities |  |  | 4,867 |
Accrued expenses and other liabilities |  |  | 1,188 |
Total current liabilities of discontinued operations |  | $ | 63,807 |
Cash Flows – A summary of the cash flows of discontinued operations for 2021 and 2020, is as follows (in thousands):
|  | Years Ended December 31, |
|  | 2021 |  |  | 2020 |
Operating cash flows from discontinued operations |  | $ | (9,443 | ) |  | $ | (19,673 | )
Investing cash flows from discontinued operations |  | $ | 32,739 |  |  | $ | (8,954 | )

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -URI http://asc.fasb.org/topic&trid=2155823 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 + Details
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