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CONTRACT COSTS
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3 Months Ended |
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Mar. 31, 2013
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| CONTRACT COSTS |
NOTE 4 – CONTRACT COSTS We define material, freight, equipment rental and sub-contractor services included in the direct costs of revenue associated with projects as pass-through costs. Since we use the percentage-of-completion accounting method to recognize revenue on construction contracts using a direct labor efforts expended method, pass-through costs have little or no impact in the determination of gross margin for a particular period. Pass-through costs as a percentage of revenue were 56.3% and 35.4% for the three-month periods ended March 31, 2013 and 2012, respectively. We recorded $31.8 million as of March 31, 2013 and $33.1 million as of December 31, 2012 of prepaid subcontractor costs. These costs primarily represent materials purchased using customer funds, but not installed on one of our major deepwater projects. These prepayments will be recognized as pass-through costs in future periods when installed. At March 31, 2013, we recorded revenue totaling $4.8 million related to certain change orders on three projects which have been approved as to scope but not price. We expect to resolve these change orders in the second and third quarters of 2013. At March 31, 2012, we recorded revenue totaling $588,000 related to certain change orders on two projects that had been approved as to scope but not price. |