The Company’s revenue is derived from contracts for services with federal, state, local and foreign governmental entities and private customers. Revenues are generally derived from the enhancement or preservation of navigability of waterways or the protection of shorelines through the removal or replenishment of soil, sand or rock.

Prior to January 1, 2018, the Company measured completion based on engineering estimates of the physical percentage completed for dredging contracts. Under the new accounting principle, the Company measures progress toward completion on all contracts utilizing the cost-to-cost method. Additionally, the Company capitalizes certain pre-contract and pre-construction costs, and defers recognition over the life of the contract. At December 31, 2018, the impact of this change in accounting principle on the Consolidated Balance Sheets is as follows:

	December 31, 2018
ASSETS
Contract revenues in excess of billings	$	(18,334	)
Other current assets		8,953
Other		4,176
LIABILITIES AND EQUITY
Accrued expenses		(5,306	)
Billings in excess of contract revenues		5,834
Deferred taxes		(1,468	)

Accumulated deficit	$	(4,265	)

For the year ended December 31, 2018, the impact of this change in accounting principle on the Consolidated Statements of Operations is as follows:

	2018

Contract revenues	$	(14,696	)
Cost of contract revenues		(11,360	)
Income tax benefit		867
Loss from continuing operations		(2,469	)
Net loss	$	(2,469	)

Comprehensive loss	$	(2,469	)

Performance obligations

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account upon which the Company’s revenue is calculated. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue as the performance obligation is satisfied. Fixed-price contracts, which comprise substantially all of the Company’s revenue, will most often represent a single performance obligation as the promise to transfer the individual services is not separately identifiable from other promises in the contracts and, therefore, not distinct.

The Company capitalizes certain pre-contract and pre-construction costs, and defers recognition over the life of the contract. The Company’s performance obligations are satisfied over time and revenue is recognized using contract fulfillment costs incurred to date compared to total estimated costs at completion, also known as cost-to-cost, to measure progress towards completion. As the Company’s performance creates an asset that customer controls, this method provides a faithful depiction of the transfer of an asset to the customer. Generally, the Company has an enforceable right to payment for performance completed to date.

The Company typically satisfies its performance obligations upon completion of service. The majority of the Company’s contracts are completed in a year or less. At December 31, 2018, the Company had $707,091 of remaining performance obligations, which the Company refers to as total backlog. Approximately 76% of the Company’s backlog will be completed in 2019 with the remaining balance expected to be completed by 2020.

Transaction price

The transaction price is calculated using the Company’s estimated costs to complete a project. These costs are based on the types of equipment required to perform the specified service, project site conditions, the estimated project duration, seasonality, location and complexity of a project.

The nature of the Company’s contracts gives rise to several types of variable consideration, including pay on quantity dredged for dredging projects and contract modifications for both dredging and environmental & infrastructure projects. Estimated pay quantity is the amount of material the Company expects to dredge for which it will receive payment. Estimated quantity to be dredged is calculated using engineering estimates based on current survey data and the Company’s knowledge based on historical project experience. Contract modifications are changes in the scope or price (or both) of a contract that are approved by the parties to the contract. The Company recognizes a contract modification when the parties to a contract approve a modification that either creates new, or changes existing, enforceable rights and obligations of the parties to the contract. Contract modifications are included in the transaction price only if it is probable that the modification estimate will not result in a significant reversal of revenue. Contract modifications are routine in the performance of the Company’s contracts. In most instances, contract modifications are for services that are not distinct, and, therefore, are accounted for as part of the existing contract.

Revisions in estimated gross profit percentages are recorded in the period during which the change in circumstances is experienced or becomes known. As the duration of most of the Company’s contracts is one year or less, the cumulative net impact of these revisions in estimates, individually and in the aggregate across our projects, does not significantly affect our results across annual reporting periods. Provisions for estimated losses on contracts in progress are made in the period in which such losses are determined.

Revenue by category

Domestically, our work generally is performed in coastal waterways and deep water ports. The U.S. dredging market consists of four primary types of work: capital, coastal protection, maintenance and rivers & lakes. Foreign projects typically involve capital work.

The following table sets forth, by type of work, the Company’s contract revenues for the years ended December 31, 2018, 2017 and 2016:

Revenues	2018		2017		2016

Capital—U.S.	$	333,037	$	185,113	$	219,914
Capital—foreign		14,088		42,306		59,413
Coastal protection		175,923		191,070		215,041
Maintenance		53,427		134,923		92,274
Rivers & lakes		44,320		38,747		50,826
Total revenues	$	620,795	$	592,159	$	637,468

The following table sets forth, by type of customer, the Company’s contract revenues for the years ended December 31, 2018, 2017 and 2016:

Revenues	2018		2017		2016

Federal government	$	468,421	$	375,276	$	409,941
State and local government		93,499		145,196		126,395
Private		44,787		29,381		41,719
Foreign		14,088		42,306		59,413
Total revenues	$	620,795	$	592,159	$	637,468

Foreign dredging revenue was $14,088, $42,306 and $59,413 for the years ended December 31, 2018, 2017 and 2016 respectively, and was mostly attributable to work done in the Middle East.

Contract balances

Billings on contracts are generally submitted after verification with the customers of physical progress and are recognized as accounts receivable in the balance sheet. For billings that do not match the timing of revenue recognition, the difference between amounts billed and recognized as revenue is reflected in the balance sheet as either contract revenues in excess of billings or billings in excess of contract revenues. Certain pre-contract and pre-construction costs are capitalized and reflected as contract assets in the balance sheet. Customer advances, deposits and commissions are reflected in the balance sheet as contract liabilities.

Accounts receivable at December 31, 2018 and December 31, 2017 are as follows:

		2018			2017
Completed contracts	$	8,592		$	10,658
Contracts in progress		48,418			28,212
Retainage		7,969			17,545
		64,979			56,415
Allowance for doubtful accounts		(200	)		—

Total accounts receivable—net	$	64,779		$	56,415

Current portion of accounts receivable—net	$	64,779		$	51,940
Long-term accounts receivable and retainage		—			4,475
Total accounts receivable—net	$	64,779		$	56,415

The components of contracts in progress at December 31, 2018 and December 31, 2017 are as follows:

		2018			2017
Costs and earnings in excess of billings:
Costs and earnings for contracts in progress	$	433,093		$	507,037
Amounts billed		(416,956	)		(451,829	)
Costs and earnings in excess of billings for contracts in progress		16,137			55,208
Costs and earnings in excess of billings for completed contracts		3,928			22,699
Total contract revenues in excess of billings	$	20,065		$	77,907

Current portion of contract revenues in excess of billings	$	17,953		$	77,907
Long-term contract revenues in excess of billings		2,112			—
Total contract revenues in excess of billings	$	20,065		$	77,907

Billings in excess of costs and earnings:
Amounts billed	$	(260,691	)	$	(301,788	)
Costs and earnings for contracts in progress		242,898			299,202

Total billings in excess of contract revenues	$	(17,793	)	$	(2,586	)

For amounts included in billings in excess of contract revenues balance at the beginning of the year, the Company recognized nearly all of the related revenue during the year ended December 31, 2018.

At December 31, 2018 and January 1, 2018, costs to fulfill contracts with customers recognized as an asset were $13,129 and $6,754, respectively, and are recorded in other current assets and other noncurrent assets. These costs relate to pre-contract and pre-construction activities. During the year ended December 31, 2018, the company amortized $15,411 of pre-construction costs, respectively.

The Company derived revenues and gross profit from foreign project operations for the years ended December 31, 2018, 2017, and 2016, as follows:

	2018			2017			2016
Contract revenues	$	14,088		$	42,306		$	59,413
Costs of contract revenues		(19,866	)		(73,958	)		(66,729	)
Gross profit	$	(5,778	)	$	(31,652	)	$	(7,316	)

In 2018, 2017 and 2016, foreign revenues were primarily from work done in the Middle East. The majority of the Company’s long-lived assets are marine vessels and related equipment. At any point in time, the Company may employ certain assets outside of the U.S., as needed, to perform work on the Company’s foreign projects. As of December 31, 2018 and 2017, long-lived assets with a net book value of $30,601 and $47,563, respectively, were located outside of the U.S.

The Company’s primary customer is the U.S. Army Corps of Engineers (the “Corps”), which has responsibility for federally funded projects related to waterway navigation and flood control. In 2018, 2017 and 2016, 75.5%, 63.4% and 64.3%, respectively, of contract revenues were earned from contracts with federal government agencies, including the Corps, as well as other federal entities such as the U.S. Coast Guard and U.S. Navy. At December 31, 2018 and 2017, approximately 65.3% and 42.8%, respectively, of accounts receivable, including contract revenues in excess of billings and retainage, were due on contracts with federal government agencies. The Company depends on its ability to continue to obtain federal government contracts, and indirectly, on the amount of federal funding for new and current government dredging projects. Therefore, the Company’s operations can be influenced by the level and timing of federal funding.

Revenue from foreign projects has been concentrated in the Middle East which comprised less than 10% in 2018, 2017 and 2016. At December 31, 2018 and 2017, less than 10% of total accounts receivable, including retainage and contract revenues in excess of billings, were due on contracts in the Middle East. There is a dependence on future projects in the Middle East, as vessels are currently located there. However, some of the vessels located in Middle East can be moved back to the U.S. or all can be moved to other international markets as opportunities arise.