JOINT VENTURES

6 Months Ended

Jul. 04, 2014

Notes to Financial Statements [Abstract]

NOTE 5. JOINT VENTURES

We analyze all of our joint ventures and classify them into two groups:

Joint ventures that must be consolidated either because they are not variable interest entities (“VIEs”) and we hold the majority voting interest, or because they are VIEs of which we are the primary beneficiary; and
Joint ventures that do not need to be consolidated either because they are not VIEs and we do not hold a majority voting interest, or because they are VIEs of which we are not the primary beneficiary.

We perform a quarterly review of our joint ventures to determine whether there were any changes in the status of the VIEs or changes to the primary beneficiary designation of each VIE. We determined that no such changes occurred during the six months ended July 4, 2014.

In the table below, we have aggregated financial information relating to our VIEs because their nature and risk and reward characteristics are similar. None of our current joint ventures that meets the characteristics of a VIE is individually significant to our consolidated financial statements.

			July 4,		January 3,
(In millions)			2014		2014
Cash and cash equivalents			$	89	$	89
Net accounts receivable				215		200
Other current assets				2		3
Noncurrent assets				148		143
		Total assets	$	454	$	435

Accounts and subcontractors payable			$	108	$	94
Billings in excess of costs and accrued earnings on contracts				5		15
Accrued expenses and other				34		40
Noncurrent liabilities				14		12
	Total liabilities			161		161

Total URS equity				148		128
Noncontrolling interests				145		146
	Total owners’ equity			293		274
		Total liabilities and owners’ equity	$	454	$	435

Total revenues of the consolidated joint ventures were $296 million and $275 million for the three months ended July 4, 2014 and June 28, 2013, respectively, and $517 million and $529 million for the six months ended July 4, 2014 and June 28, 2013, respectively.

The assets of our consolidated joint ventures are restricted for use only by the particular joint venture and are not available for our general operations.

Unconsolidated Joint Ventures

We use the equity method of accounting for our unconsolidated joint ventures. Under the equity method, we recognize our proportionate share of the net earnings of these joint ventures as a single line item under “Equity in income of unconsolidated joint ventures” in our Condensed Consolidated Statements of Operations.

The table below presents financial information, derived from the most recent financial statements provided to us, in aggregate, for our unconsolidated joint ventures:

	Unconsolidated
(In millions)	VIEs
July 4, 2014
Current assets	$	676
Noncurrent assets	$	31
Current liabilities	$	449
Noncurrent liabilities	$	30

January 3, 2014
Current assets	$	616
Noncurrent assets	$	37
Current liabilities	$	433
Noncurrent liabilities	$	7

Three months ended July 4, 2014⁽¹⁾
Revenues	$	522
Cost of revenues	$	(469)
Income from continuing operations before tax	$	53
Net income	$	49

Three months ended June 28, 2013⁽¹⁾
Revenues	$	566
Cost of revenues	$	(507)
Income from continuing operations before tax	$	59
Net income	$	54

Six months ended July 4, 2014⁽¹⁾
Revenues	$	1,046
Cost of revenues	$	(941)
Income from continuing operations before tax	$	105
Net income	$	96

Six months ended June 28, 2013⁽¹⁾
Revenues	$	1,112
Cost of revenues	$	(994)
Income from continuing operations before tax	$	118
Net income	$	110

Income from unconsolidated U.S. joint ventures is generally not taxable in most tax jurisdictions in the U.S. The tax expenses on our other unconsolidated joint ventures are primarily related to foreign taxes.

We received $25 million and $29 million, respectively, of distributions from unconsolidated joint ventures for the three months ended July 4, 2014 and June 28, 2013 and $44 million and $52 million, respectively, for the six months ended July 4, 2014 and June 28, 2013.

Exposure to Loss

In addition to potential losses arising out of the carrying values of the assets and liabilities of our unconsolidated joint ventures, our maximum exposure to loss also includes performance assurances and guarantees we sometimes provide to clients on behalf of joint ventures that we do not directly control. We enter into these guarantees primarily to support the contractual obligations associated with the joint ventures’ projects. The potential payment amount of an outstanding performance guarantee is typically the remaining cost of work to be performed by or on behalf of third parties under engineering and construction contracts.

However, the majority of the unconsolidated joint ventures in which we participate involve cost-reimbursable, level-of-effort projects that are accounted for as service-type projects, not engineering and construction projects that would follow the percentage-of-completion or completed-contract accounting method. Revenues for service-type contracts are recognized in proportion to the number of service activities performed, in proportion to the direct costs of performing the service activities, or evenly across the period of performance, depending upon the nature of the services provided. The services we provide on these cost-reimbursable contracts are management and operations services for government clients and operations and maintenance services for non-government clients. We believe that, due to the continual changes we experience in client funding and scope definitions, reliable estimates of performance guarantees cannot be calculated because they cannot be reliably predicted. In addition, we participate in joint ventures in which the level of our participation is so minimal that we do not have access to those joint ventures’ estimates to complete. The joint ventures where we perform engineering and construction contracts and where we have access to the estimates to complete, which are needed to calculate the performance guarantees, are immaterial.