Planned Divestiture of Texas Heavy Civil Business Unit

12 Months Ended

Dec. 31, 2016

Planned Divestiture of Texas Heavy Civil Business Unit

Planned Divestiture of Texas Heavy Civil Business Unit

Note 16 –Planned Divestiture of Texas Heavy Civil Business Unit

In October 2016, the Company announced that it planned to divest its Texas heavy civil business unit, which operates as a division of JCG.  Until completion of a sale, the Company will continue to operate the business unit.  The Company has engaged a financial advisor to assist in the sale and is actively marketing the business unit, though a sales price and other terms have not yet been established.  As a result, the planned divestiture is not classified as “held for sale” under ASC Topic 360.     

The Company recorded a charge of $37.3 million during the third quarter 2016 for the Belton area projects, which are part of the Texas heavy civil business that the Company is planning to divest.  This charge includes a reduction of the expected profitability of certain projects in the Belton, Texas area for the division and a reduction of costs and estimated earnings in excess of billings and an increase to the reserve for anticipated job losses.   Revenues of $10.0 million have been recognized for these projects as a result of incurred costs associated with claims.

In addition, under the provisions of ASC 350, the planned divestiture triggered an analysis of the goodwill amount recorded on the JCG books in September 2016.  The analysis resulted in the Company recording a pretax, non-cash goodwill impairment charge of approximately $2.7 million in the third quarter 2016. 

There can be no assurance that the Company will enter into a sales transaction for the division nor is it possible to determine at this time the impact on results of operations or cash flow from a potential transaction.