What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2022-02-28 compared with 2021-03-30 · 97 added, 90 removed, 192 unchanged (49% of the section changed)

1 unchanged sentence

RISKS RELATED TO OUR INVESTIGATION, RESTATEMENT AND MATERIAL WEAKNESSES

We restated our consolidated financial statements for several prior periods and failed to timely file our Annual and Quarterly Reports with the SEC, which has affected and may continue to affect investor confidence, our stock price, our ability to raise capital in the future, and our reputation with our customers, which may result in additional stockholder litigation and may reduce customer confidence in our ability to complete new contract opportunities . 

As disclosed in our Annual Report on Form 10-K for the year ended December 31, 2019, we restated our consolidated financial statements for the years ended December 31, 2018 and 2017 and unaudited quarterly financial information for the first three quarters of the year ended December 31, 2019 and for each of the quarters in the year ended December 31, 2018 to correct misstatements associated with project forecasts in the Heavy Civil operating group discovered in connection with the independent investigation (the “Investigation”) of the Audit/Compliance Committee (the “Audit Committee”) of our Board of Directors.

It may also result in additional stockholder litigation and may reduce customer confidence in our ability to complete new contract opportunities . 

As disclosed in our Annual Report on Form 10-K for the year ended December 31, 2019, we restated our consolidated financial statements for the years ended December 31, 2018 and 2017 and unaudited quarterly financial information for the first three quarters of the year ended December 31, 2019 and for each of the quarters in the year ended December 31, 2018 to correct misstatements associated with project forecasts in our former Heavy Civil operating group, which is now part of our Central operating group, discovered in connection with the independent investigation (the “Investigation”) of the Audit/Compliance Committee (the “Audit Committee”) of our Board of Directors.

As a result of the Investigation and restatement process, we failed to timely file our Annual and Quarterly Reports with the SEC.

Such restatement and failure to timely file our Annual and Quarterly Reports with the SEC:

has had and may continue to have the effect of eroding investor confidence in us and our financial reporting and accounting practices and processes;

has negatively impacted and may continue to negatively impact the trading price of our common stock;

Such Investigation, restatement and failure to timely file our Annual and Quarterly Reports with the SEC:

had and may continue to have the effect of eroding investor confidence in us and our financial reporting and accounting practices and processes;

negatively impacted and may continue to negatively impact the trading price of our common stock;

required that we incur significant expenses related to the Investigation, restatement and remediation of the deficiencies in our internal control over financial reporting and may require that we incur significant additional expenses relating to any additional stockholder litigation;

may result in additional stockholder litigation;

may make it more difficult, expensive and time consuming for us to raise capital, if necessary, on acceptable terms, if at all, pursue transactions or implement business strategies that might otherwise be beneficial to our business;

may make it more difficult, expensive and time consuming for us to raise capital, if necessary, on acceptable terms, if at all;

may make it more difficult to pursue transactions or implement business strategies that might otherwise be beneficial to our business;

may negatively impact our reputation with our customers;

has limited and may continue to limit our ability to bid for new projects;

may cause customers to place new orders with other companies.

The absence of timely and accurate financial information has hindered and may in the future hinder our ability to effectively manage our business.

The Investigation, the restatement process, the completion of our financial statements for the year ended December 31, 2020 and the remediation process have diverted, and will continue to divert, management and other human resources from the operation of our business. The Board of Directors, members of management, and our accounting, legal, administrative and other staff have spent significant time on the Investigation, the restatement process, the completion of our financial statements for the year ended December 31, 2020 and the remediation process and will continue to spend significant time on remediation of disclosure controls and procedures and internal control over our financial reporting.

These resources have been, and will likely continue to be, diverted from the strategic and day-to-day management of our business and may have an adverse effect on our ability to accomplish our strategic objectives.

We identified material weaknesses in our internal control over financial reporting which could, if not remediated, adversely impact the reliability of our financial statements, cause us to submit our financial statements in an untimely fashion, result in material misstatements in our financial statements and cause current and potential stockholders to lose confidence in our financial reporting, which in turn could adversely affect the trading price of our common stock.

 We have concluded that the material weaknesses initially identified in our Annual Report on Form 10-K for the year ended December 31, 2019 still exist.

For additional information on the material weaknesses identified and our remedial efforts, see “Item 9A, Controls and Procedures.”

These material weaknesses initially identified in our Annual Report on Form 10-K for the year ended December 31, 2019 resulted in the restatement of our consolidated financial statements and related disclosures for the years ended December 31, 2018 and 2017 and unaudited quarterly financial information for the first three quarters of the year ended December 31, 2019 and for each of the quarters in the year ended December 31, 2018 to correct misstatements associated with project forecasts in the Heavy Civil operating group. Because the material weaknesses still exist as of December 31, 2020, management has determined that our disclosure controls and procedures and internal control over financial reporting were not effective as of December 31, 2020. Under Public Company Accounting Oversight Board standards, a material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a misstatement of our consolidated annual or interim financial statements will not be prevented or detected on a timely basis.

The existence of this issue could adversely affect us, our reputation or investor perceptions of us.

We have and will continue to take additional measures to remediate the underlying causes of the material weaknesses noted above.

As we continue to evaluate and work to remediate the material weaknesses, we may determine to take additional measures to address the control deficiencies.

Although we plan to complete this remediation process as quickly as possible, we cannot at this time estimate how long it will take, and our measures may not prove to be successful in remediating these material weaknesses.

If our remedial measures are insufficient to address the material weaknesses, or if additional material weaknesses or significant deficiencies in our internal control over financial reporting are discovered or occur in the future, our consolidated financial statements may contain misstatements and we could be required to restate our financial results.

In addition, if we are unable to successfully remediate these material weaknesses and if we are unable to produce accurate and timely consolidated financial statements, our stock price, liquidity and access to the capital markets may be adversely affected and we may be unable to maintain compliance with applicable stock exchange listing requirements and debt covenant requirements. Further, because of its inherent limitations, even our remediated and effective internal control over financial reporting may not prevent or detect all misstatements.

The occurrence or continued occurrence of any of the foregoing could have a material adverse effect on our business, financial condition and results of operations.

We identified material weaknesses in our internal control over financial reporting in our Annual Reports on Form 10-K for the years ended December 31, 2019 and 2020, which have been remediated.

If we identify material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, we may not be able to accurately and timely report our financial results, investors may lose confidence in us and the market price of our common stock may decrease.

 As disclosed in our Annual Reports on Form 10-K for the years ended December 31, 2019 and 2020, we identified control deficiencies that constituted material weaknesses, either individually or in the aggregate, and since 2020, Company management, with the assistance of outside consultants, has reviewed and revised our internal control over financial reporting in response to the material weaknesses. Management has now concluded that these material weaknesses have been remediated.

We may not be able to accurately and timely report our financial results and/or we may not be able to detect errors on a timely basis if in the future we:

(1) identify one or more material weaknesses in our internal control over financial reporting; (2) are unable to successfully remediate any future material weaknesses; (3) are unable to comply with the requirements of Section 404 in a timely manner; or (4) are unable to assert, or our independent registered public accounting firm is unable to attest, that our internal control over financial reporting is effective.

This could result in:

(i) our financial statements being materially misstated;

(ii) investors losing confidence in the accuracy and completeness of our financial reports;

(iii) the market price of our common stock decreasing (iv) our liquidity and access to the capital markets being adversely affected;

and (v) our inability to maintain compliance with applicable stock exchange listing requirements and debt covenants requirements.

We could also become subject to stockholder or other third-party litigation as well as investigations by the stock exchange on which our securities are listed, the SEC or other regulatory authorities, which could require additional financial and management resources and could result in fines, penalties, trading suspensions or other remedies.

Further, because of its inherent limitations, even our remediated and effective internal control over financial reporting may not prevent or detect all misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in our conditions, or that the degree of compliance with our policies or procedures may deteriorate.

We are involved in, and may in the future be subject to, litigation and regulatory examinations, investigations, proceedings or orders as a result of or relating to our restatement and our failure to timely file our Annual and Quarterly Reports with the SEC and if any of these are resolved adversely against us, it could harm our business, financial condition and results of operations.

We are currently the subject of securities class action litigation.

Additionally, in connection with our disclosure of the Audit Committee’s independent Investigation, we voluntarily contacted the San Francisco office of the SEC Division of Enforcement regarding that Investigation. Since contacting the SEC, we have produced documents to the SEC regarding the accounting issues identified during the independent Investigation and will continue to cooperate with the SEC in its investigation.

The SEC’s investigation is ongoing and was not resolved when the Audit Committee completed the Investigation or when the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 was filed.

The restatement and our failure to timely file our Annual and Quarterly Reports with the SEC, as well as our reported material weaknesses in internal control over financial reporting, may subject us to additional litigation and regulatory examinations, investigations, proceedings or orders, including a cease and desist order, the suspension of trading of our securities, delisting of our securities, the assessment of civil monetary penalties, and other equitable remedies.

Our management has devoted and may be required to devote significant time and attention to these matters.

We are currently the subject of securities class action litigation and derivative lawsuits.

Additionally, in connection with our disclosure of the Audit Committee’s independent Investigation, we voluntarily contacted the San Francisco office of the SEC Division of Enforcement regarding that Investigation. Since contacting the SEC, we have produced documents to the SEC regarding the accounting issues identified during the independent Investigation and will continue to cooperate with the SEC in its investigation.

The SEC’s investigation is ongoing and was not resolved when the Audit Committee completed the Investigation or when the Company’s Annual Reports on Form 10-K for the years ended December 31, 2019 and 2020 were filed.

The restatement and our failure to timely file our Annual and Quarterly Reports with the SEC, as well as our previously reported material weaknesses in internal control over financial reporting, may subject us to additional litigation and regulatory examinations, investigations, proceedings or orders, the assessment of civil monetary penalties, and other equitable remedies.

Our management has devoted and may continue to be required to devote significant time and attention to these matters.

If any of these matters are resolved adversely against us, it could harm our business, financial condition and results of operations.

Additionally, while we cannot estimate our potential exposure to these matters at this time, we have already expended significant amounts investigating the claims underlying and defending these matters and expect to continue to need to expend significant amounts to conclude these matters.

We have incurred significant expenses related to the Investigation, restatement and remediation of deficiencies in our internal control over financial reporting and disclosure controls and procedures and expect to continue to incur significant expenses related to the remediation of deficiencies and any resulting litigation.

We devoted substantial internal and external resources towards the Investigation, the restatement of our consolidated financial statements, remediation efforts, the management review process and other efforts to implement effective internal controls and expect to continue to incur significant expenses relating to the remediation of deficiencies and any resulting litigation.

Because of these efforts, we have incurred and expect that we will continue to incur significant fees and expenses for legal, accounting, financial and other consulting and professional services, as well as the implementation and maintenance of systems and processes that will need to be updated, supplemented or replaced.

We have taken a number of remediation efforts in response to the independent Investigation.

However, there can be no assurance that these steps will be successful.

To the extent these steps are not successful, we could be required to incur significant additional time and expense. The expenses and time management devoted towards the Investigation, the restatement and identifying and addressing the internal control deficiencies and the expenses we expect to continue to incur toward addressing the internal control deficiencies, could have a material adverse effect on our business, financial condition and results of operations.

RISKS RELATED TO OUR BUSINESS

1 unchanged sentence

Our ability to perform work may be significantly affected by public health events.

If a public health epidemic or pandemic or other contagious outbreak, including the novel coronavirus (referred to as COVID-19), interferes with our ability, or that of our employees, contractors, suppliers, customers and other business partners to perform our and their respective responsibilities and obligations relative to the conduct of our business, our operations may be affected, which could have a material adverse effect on our business, financial condition and results of operations.

If a public health epidemic or pandemic or other contagious outbreak, including COVID-19, interferes with our ability, or that of our employees, contractors, suppliers, customers and other business partners to perform our and their respective responsibilities and obligations relative to the conduct of our business, our operations may be affected, which could have a material adverse effect on our business, financial condition and results of operations.

Unfavorable economic conditions may have an adverse impact on our business.

Volatility in the global financial system, deterioration in general economic activity, and fiscal, monetary and other policies that federal, state and local governments may enact, including infrastructure spending or deficit reduction measures, may have an adverse impact on our business, financial position, results of operations, cash flows and liquidity. In particular, low tax revenues, budget deficits, financing constraints, including timing of long-term federal, state and local funding releases, and competing priorities could negatively impact the ability of government agencies to fund existing or new infrastructure projects in the public sector.

These factors could have a material adverse effect on the financial market and economic conditions in the United States as well as throughout the world, which may limit our ability and the ability of our customers to obtain financing and/or could impair our ability to execute our acquisition strategy.

In addition, levels of new commercial and residential construction projects could be adversely affected by oversupply of existing inventories of commercial and residential properties, low property values and a restrictive financing environment.

3 unchanged sentences

An increase in competition may result in a decrease in new awards, a decrease in profit margins, or both.

In addition, should downturns in residential and commercial construction activity occur, the competition for available public sector work would intensify, which could impact our revenue, contract backlog and profit margins.

Our financial position could be impacted by worse than anticipated results in our Heavy Civil operating group.

 We completed our previously announced strategic review of our Heavy Civil operating group and have taken actions that we believe will be beneficial to us and our stockholders.

Our financial position could be impacted by worse than anticipated results in our former Heavy Civil operating group, which is now part of our Central operating group.

 We completed our previously announced strategic review of our former Heavy Civil operating group, which is now part of our Central operating group, and have taken actions that we believe will be beneficial to us and our stockholders.

However, the results of our planned actions, and the timing of expected benefits, remain uncertain.

In addition, it is possible that we may elect to undertake additional actions related to our Heavy Civil operating group.

Our results of operations, cash flows and liquidity could be materially impacted by underperformance in our Heavy Civil operating group.

In addition, it is possible that we may elect to undertake additional actions related to our Central operating group.

Our results of operations, cash flows and liquidity could be materially impacted by underperformance in our Central operating group.

Fixed price and fixed unit price contracts subject us to the risk of increased project cost.

2 unchanged sentences

This could result in reduced profits or a loss for that project and there could be a material adverse impact to our financial position, results of operations, cash flows and liquidity.

In connection with acquisitions or divestitures, we may become subject to liabilities.

In connection with any acquisitions, we may acquire liabilities or defects such as legal claims, including but not limited to third party  

liability and other tort claims;

As part of our growth strategy, we have made and may make future acquisitions, and acquisitions involve many risks and uncertainties.

These risks and uncertainties include: 

our ability to complete acquisitions in accordance with our expected plans, on terms and conditions acceptable to us or our anticipated time frame, or at all;

difficulties identifying all significant risks during our due diligence activities;

that acquisitions involve significant costs and require the time and attention of our management, which may divert management’s attention from ongoing operations;

potential difficulties and increased costs associated with completion of any assumed construction projects;

our ability to successfully manage or achieve the results we expect to experience from the acquisitions and that we may lose key employees or customers of the acquired companies;

assumption of liabilities of an acquired business, including liabilities that were unknown at the time the acquisition was negotiated;

difficulties related to integrating the operations and internal controls, assimilating personnel, services, and systems of an acquired business and to assimilating marketing and other operational capabilities;

increased burdens on our staff and on our administrative, internal control and operating systems, which may hinder our legal and regulatory compliance activities;

if we issue additional equity securities, such issuances could have the effect of diluting our earnings per share as well as our existing shareholders’ individual ownership percentages in the Company;

the recording of goodwill or other non-amortizable intangible assets that will be subject to subsequent impairment testing and potential impairment charges, as well as amortization expenses related to certain other intangible assets;

while we often obtain indemnification rights from the sellers of acquired businesses, such rights may be difficult to enforce and the indemnitors may not have the ability to financially support the indemnity.

Failure to successfully manage and integrate acquisitions could harm our business, financial condition and results of operations.

As part of our strategy, we may make divestitures, and divestitures involve many risks and uncertainties.

These risks and uncertainties include: 

our ability to locate suitable acquirors for our divestitures;

our ability to complete the divestitures in accordance with our expected plans or anticipated time frame, or at all;

our ability to complete the divestitures on terms and conditions acceptable to us;

difficulties separating the assets and personnel related to businesses that we expect to divest from the businesses we expect to retain;

that divestitures involve significant costs and require the time and attention of our management, which may divert management’s attention from ongoing operations;

our ability to successfully cause a buyer of a divested business to assume the liabilities of that business, or even if such liabilities are assumed, we may have difficulties enforcing our rights, contractual or otherwise against the buyer;

the need to obtain regulatory approvals and other third-party consents, which potentially could disrupt customer and vendor relationships;

potential additional tax obligations or the loss of tax benefits;

the divestiture could negatively impact our profitability because of losses that may result from a sale, the loss of revenue or a decrease in cash flows;

following the completion of a divestiture, we may have less diversity in our business and in the markets we serve as well as our client base.

Failure to successfully manage divestitures may generate fewer benefits than expected and could harm our business, financial condition and results of operations.

In connection with acquisitions or divestitures, we may become subject to liabilities. 

In connection with any acquisitions, we may acquire liabilities or defects such as legal claims, including but not limited to third party liability and other tort claims;

claims for breach of contract;

5 unchanged sentences

In connection with any divestitures, we may incur liabilities for breaches of representations and warranties or failure to comply with operating covenants under any agreement for a divestiture.

In addition, we may indemnify a counterparty in a divestiture for certain liabilities of the subsidiary or operations subject to the divestiture transaction.

We may also retain exposure on financial or performance guarantees, contractual, employment, pension and severance obligations or other liabilities of the divested business and potential liabilities that may arise under law because of the disposition or the subsequent failure of an acquiror.

As a result, performance by the divested businesses or other conditions outside of our control could have a material adverse effect on our business, financial condition and results of operations.

In addition, we may indemnify a counterparty in a divestiture for certain liabilities of the divested business or operations subject to the divestiture transaction.

These liabilities, if they materialize, could have a material adverse effect on our business, financial condition and results of operations.

Design-build contracts subject us to the risk of design errors and omissions.

 Design-build has become a common method of project delivery as it provides the owner with a single point of responsibility for both design and construction.

 Design-build is a common method of project delivery as it provides the owner with a single point of responsibility for both design and construction.

We generally subcontract design responsibility to architectural and engineering firms. However, in the event of a design error or omission causing damages, there is risk that the subcontractor or their errors and omissions insurance would not be able to absorb the liability.

5 unchanged sentences

Our failure to adequately recover on affirmative claims brought by us against project owners or other project participants (e.g., back charges against subcontractors) for additional contract costs could have a negative impact on our liquidity and future operations.

In certain circumstances, we assert affirmative claims against project owners, engineers, consultants, subcontractors or others involved in a project for additional costs exceeding the contract price or for amounts not included in the original contract price.

In certain circumstances, we assert affirmative claims to which we believe Granite is entitled against project owners, engineers, consultants, subcontractors or others involved in a project for additional costs exceeding the contract price or for amounts not included in the original contract price.

These types of affirmative claims occur due to matters such as delays or changes from the initial project scope, both of which may result in additional costs.

8 unchanged sentences

An inability to obtain bonding could have a negative impact on our operations and results.

As more fully described in "Insurance and Bonding" under "Item 1.

Business," we generally are required to provide surety bonds securing our performance under the majority of our public and private sector contracts.

As more fully described in “Insurance and Bonding” under “Item 1.

Business,” we generally are required to provide surety bonds securing our performance under the majority of our public and private sector contracts.

Our inability to obtain reasonably priced surety bonds in the future and, while we monitor the financial health of our insurers and the insurance market, catastrophic events could reduce available limits or the breadth of coverage, both of which could significantly affect our ability to be awarded new contracts and could, therefore, have a material adverse effect on our financial position, results of operations, cash flows and liquidity.

1 unchanged sentence

We are exposed to various commodity price risks, including, but not limited to, diesel fuel, natural gas, propane, steel, cement and liquid asphalt arising from transactions that are entered into in the normal course of business.

We use petroleum based products, such as fuels, lubricants, and liquid asphalt, to power or lubricate our equipment, operate our plants, and as a significant ingredient in the asphaltic concrete we manufacture for sale to third parties and use in our asphalt paving construction projects.

We use petroleum based products, such as fuels, lubricants and liquid asphalt, to power or lubricate our equipment, operate our plants, and as a significant ingredient in the asphaltic concrete we manufacture for sale to third parties and use in our asphalt paving construction projects.

Although we are partially protected by asphalt or fuel price escalation clauses in some of our contracts, many contracts provide no such protection.

4 unchanged sentences

Significant price fluctuations could have a material adverse effect on financial position, results of operations, cash flows and liquidity

As a part of our growth strategy we have made and may make future acquisitions, and acquisitions involve many risks.

These risks include:

difficulties integrating the operations and personnel of the acquired companies;

diversion of management’s attention from ongoing operations;

potential difficulties and increased costs associated with completion of any assumed construction projects;

insufficient revenues to offset increased expenses associated with acquisitions and the potential loss of key employees or customers of the acquired companies;

assumption of liabilities of an acquired business, including liabilities that were unknown at the time the acquisition was negotiated;

difficulties relating to assimilating the personnel, services, and systems of an acquired business and to assimilating marketing and other operational capabilities;

increased burdens on our staff and on our administrative, internal control and operating systems, which may hinder our legal and regulatory compliance activities;

difficulties in applying and integrating our system of internal controls to an acquired business;

if we issue additional equity securities, such issuances could have the effect of diluting our earnings per share as well as our existing shareholders’

individual ownership percentages in the Company;

Failure to manage and successfully integrate acquisitions could harm our financial position, results of operations, cash flows and liquidity.

Weather can significantly affect our revenues and profitability.

3 unchanged sentences

Force majeure events, including natural disasters and terrorists' actions, could negatively impact our business, which may affect our financial condition, results of operations or cash flows.

Force majeure or extraordinary events beyond the control of the contracting parties, such as natural and man-made disasters, as well as terrorist actions, could negatively impact the economies in which we operate.  We typically negotiate contract language where we are allowed certain relief from force majeure events in private client contracts and review and attempt to mitigate force majeure events in both public and private client contracts.

We remain obligated to perform our services after most extraordinary events subject to relief that may be available pursuant to a force majeure clause.  If we are not able to react quickly to force majeure events, our operations may be affected, which could have a material adverse effect on our financial position, results of operations, cash flows and liquidity.

Our contract backlog is subject to unexpected adjustments and cancellations and could be an uncertain indicator of our future earnings.

We cannot guarantee that the revenues projected in our contract backlog will be realized or, if realized, will be profitable.

Projects reflected in our contract backlog may be affected by project cancellations, scope adjustments, time extensions or other changes.

Force majeure or extraordinary events beyond the control of the contracting parties, such as natural and man-made disasters, as well as terrorist actions, could negatively impact the economies in which we operate. We typically negotiate contract language where we are allowed certain relief from force majeure events in private client contracts and review and attempt to mitigate force majeure events in both public and private client contracts.

We remain obligated to perform our services after most extraordinary events subject to relief that may be available pursuant to a force majeure clause. If we are not able to react quickly to force majeure events, our operations may be affected, which could have a material adverse effect on our financial position, results of operations, cash flows and liquidity.

Our CAP is subject to unexpected adjustments and cancellations and could be an uncertain indicator of our future earnings.

We cannot guarantee that the revenues projected in our CAP will be realized or, if realized, will be profitable.

Projects reflected in our CAP may be affected by project cancellations, scope adjustments, time extensions or other changes.

Such changes may adversely affect the revenue and profit we ultimately realize on these projects.

9 unchanged sentences

Failure to maintain safe work sites could result in significant losses .

On many sites, we are responsible for safety and, accordingly, must implement safety procedures. 

If we fail to implement these procedures or if the procedures we implement are ineffective, we may suffer the loss of or injury to our employees, as well as expose ourselves to possible litigation.

Construction and maintenance sites are potentially dangerous workplaces and often put our employees and others in close proximity with mechanized equipment, moving vehicles, chemical and manufacturing processes, and highly regulated materials. On many sites, we are responsible for safety and, accordingly, must implement safety procedures. If we fail to implement these procedures or if the procedures we implement are ineffective, we may suffer the loss of or injury to our employees, as well as expose ourselves to possible litigation.

Our failure to maintain adequate safety standards through our safety programs could result in reduced profitability or the loss of projects or clients, and could have a material adverse impact on our financial position, results of operations, cash flows and liquidity.

8 unchanged sentences

Our joint venture contracts subject us to risks and uncertainties, some of which are outside of our control .

As further described in Note 1 of “Notes to the Consolidated Financial Statements” and under “Item 1.

Joint Ventures,” we perform certain construction contracts as a limited or minority member of joint ventures.

As further described in Note 1 of “Notes to the Consolidated Financial Statements” and in “Joint Ventures”

under “Item 1.

Business,” we perform certain construction contracts as a limited or minority member of joint ventures.

Participating in these arrangements exposes us to risks and uncertainties, including the risk that if our partners fail to perform under joint and several liability contracts, we could be liable for completion of the entire contract.

4 unchanged sentences

While we have controls to mitigate the risks associated with reliance on their control environment and financial information, to the extent the controlling partner makes decisions that negatively impact the joint venture or internal control problems arise within the joint venture, it could have a material adverse impact on our business, financial position, results of operations, cash flows and liquidity. 

We may be unable to identify and contract with qualified Disadvantaged Business Enterprise (“DBE”) contractors to perform as subcontractors.

We may be unable to identify and contract with qualified DBE contractors to perform as subcontractors.

Certain of our government agency projects contain minimum DBE participation clauses.

2 unchanged sentences

We may be required to contribute cash to meet our unfunded pension obligations in certain multi-employer plans.

 As of December 31, 2020, five of our wholly-owned subsidiaries, Granite Construction Company, Granite Construction Northeast, Inc., Granite Industrial, Inc., Granite Inliner, LLC, and Layne Christensen Company participate in various domestic multi-employer pension plans on behalf of union employees. Union employee benefits generally are based on a fixed amount for each year of service.

We are required to make contributions to the plans in amounts established under collective bargaining agreements.  Pension expense is recognized as contributions are made.

 As of December 31, 2021, three of our wholly-owned subsidiaries within our continuing operations, Granite Construction Company, Granite Construction Northeast, Inc.

and Granite Industrial, Inc. participate in various domestic multi-employer pension plans on behalf of union employees. Union employee benefits generally are based on a fixed amount for each year of service.

We are required to make contributions to the plans in amounts established under collective bargaining agreements. Pension expense is recognized as contributions are made.

The domestic pension plans are subject to the Employee Retirement Income Security Act of 1974 (“ERISA”).

2 unchanged sentences

Government contractors are subject to suspension or debarment from government contracting.

Government contracts expose us to a variety of risks that differ from those associated with private sector contracts. Various statutes to which our operations are subject, including the Davis-Bacon Act (which regulates wages and benefits), the Walsh-Healy Act (which prescribes a minimum wage and regulates overtime and working conditions), Executive Order 11246 (which establishes equal employment opportunity and affirmative action requirements) and the Drug-Free Workplace Act, provide for mandatory suspension and/or debarment of contractors in certain circumstances involving statutory violations.

In addition, the Federal Acquisition Regulation and various state statutes provide for discretionary suspension and/or debarment in certain circumstances that might call into question a contractor's willingness or ability to act responsibly, including as a result of being convicted of, or being found civilly liable for, fraud or a criminal offense in connection with obtaining, attempting to obtain or performing a public contract or subcontract.

Government contracts expose us to a variety of risks that differ from those associated with private sector contracts. Various statutes to which our operations are subject, including, among others, the Davis-Bacon Act (which regulates wages and benefits), the Walsh-Healy Act (which prescribes a minimum wage and regulates overtime and working conditions), Executive Order 11246 (which establishes equal employment opportunity and affirmative action requirements) and the Drug-Free Workplace Act, provide for mandatory suspension and/or debarment of contractors in certain circumstances involving statutory violations.

In addition, the Federal Acquisition Regulation and various state statutes provide for discretionary suspension and/or debarment in certain circumstances that might call into question a contractor’s willingness or ability to act responsibly, including as a result of being convicted of, or being found civilly liable for, fraud or a criminal offense in connection with obtaining, attempting to obtain or performing a public contract or subcontract.

The scope and duration of any suspension or debarment may vary depending upon the facts and the statutory or regulatory grounds for debarment and could have a material adverse effect on our financial position, results of operations, cash flows and liquidity.

2 unchanged sentences

Government contracts generally have strict regulatory requirements.

Approximately 73.5% of our construction-related revenue in 2020 was derived from contracts funded by federal, state and local government agencies and authorities.

Approximately 75% of our construction-related revenue from continuing operations in 2021 was derived from contracts funded by federal, state and local government agencies and authorities.

Government contracts are subject to specific procurement regulations, contract provisions and a variety of socioeconomic requirements relating to their formation, administration, performance and accounting and often include express or implied certifications of compliance.

4 unchanged sentences

We are subject to environmental and other regulation.

As more fully described in “Environmental Regulations”

As more fully described in “Government Regulations”

under “Item 1. Business,”

we are subject to a number of federal, state, provincial, local and foreign laws and regulations relating to the environment, including the remediation of soil and groundwater contamination, emission and discharge of materials into the environment and reclamation and closure of operations, workplace health and safety and a variety of socioeconomic requirements and are required to obtain and maintain a number of environmental approvals, permits and financial assurances.

we are subject to a number of federal, state, local and foreign laws and regulations relating to the environment, including the remediation of soil and groundwater contamination, emission and discharge of materials into the environment and reclamation and closure of operations, workplace health and safety and a variety of socioeconomic requirements and are required to obtain and maintain a number of environmental approvals, permits and financial assurances.

Noncompliance with such laws, regulations and permits can result in, among other things, substantial penalties, or termination or suspension of government contracts or our operations as well as civil and criminal liability.

18 unchanged sentences

However, if such proposals were to be enacted, or if modifications were to be made to certain existing regulations, the consequences could have a material adverse impact on us, including increasing our tax burden, increasing our cost of tax compliance or otherwise adversely affecting our financial position, results of operations, cash flows and liquidity.

We may be exposed to liabilities under the Foreign Corrupt Practices Act (“FCPA”) and any determination that we or any of our subsidiaries has violated the FCPA could have a material adverse effect on our business.

We may be exposed to liabilities under the FCPA and any determination that we or any of our subsidiaries has violated the FCPA could have a material adverse effect on our business.

The FCPA generally prohibits companies and their affiliates from making improper payment to non-U.S.

6 unchanged sentences

In addition, we could face other third-party claims by, among others, our stockholders, debt holders or other interest holders or constituents.

Violations of FCPA laws, allegations of such violations and/or disclosure related to any relevant investigation could have a material adverse impact on our financial position, results of operations, cash flows and liquidity for reasons including, but not limited to, an adverse effect our reputation, our ability to obtain new business or retain existing business, to attract and retain employees, to access the capital markets and/or could give rise to an event of default under the agreements governing our debt instruments.

Violations of FCPA laws, allegations of such violations and/or disclosure related to any relevant investigation could have a material adverse impact on our financial position, results of operations, cash flows and liquidity for reasons including, but not limited to, an adverse effect on our reputation, our ability to obtain new business or retain existing business, to attract and retain employees, to access the capital markets and/or could give rise to an event of default under the agreements governing our debt instruments.

RISKS RELATED TO INFORMATION TECHNOLOGY

Changes to our outsourced software or infrastructure vendors as well as any sudden loss, breach of security, disruption or unexpected data or vendor loss associated with our information technology systems could have a material adverse effect on our business.

We rely on third-party software and infrastructure to run critical accounting, project management and financial information systems. 

If software or infrastructure vendors decide to discontinue further development, integration or long-term maintenance support for our information systems, or there is any system interruption, delay, breach of security, loss of data or loss of a vendor, we may need to migrate some or all of our accounting, project management and financial information to other systems.

2 unchanged sentences

business interruptions, remediation costs and/or legal claims .

To protect confidential customer, vendor, financial and employee information, we employ information security measures that secure our information systems from cybersecurity attacks or breaches.

To protect confidential customer, vendor, financial and employee information, we employ information security measures, including cybersecurity training for all employees, that secure our information systems from cybersecurity attacks or breaches.

Even with these measures, we may be subject to unauthorized access of digital data with the intent to misappropriate information, corrupt data or cause operational disruptions.

3 unchanged sentences

Our failure to comply with any of the restrictive or financial covenants would constitute an event of default under our Credit Agreement.

Further, our failure to obtain a waiver or amendments relating to our non-compliance with any of the restrictive or financial covenants could result in an event of default under our Credit Agreement.

Our failure to pay principal, interest or other amounts when due or within the relevant grace period on our 2.75% Convertible Notes or our Credit Agreement would constitute an event of default under the indenture governing our 2.75% Convertible Notes or the Credit Agreement.

5 unchanged sentences

A default under the indenture governing our 2.75% Convertible Notes could result in acceleration of the maturity of the notes.

If we are unable to service our debt obligations or fund our other liquidity needs, we could be forced to curtail our operations, reorganize our capital structure (including through bankruptcy proceedings) or liquidate some or all of our assets in a manner that could cause holders of our securities to experience a partial or total loss of their investment in us. 

See definition of Credit Agreement and 2.75% Convertible Notes in Note 14 to “Notes to the Consolidated Financial Statements.”

Servicing our debt requires a significant amount of cash, and we may not have sufficient cash flow from our business to pay our debt.

8 unchanged sentences

The convertible note hedge transactions are expected generally to reduce the potential dilution to our common stock upon conversion of the 2.75% Convertible Notes and/or offset any cash payments we elect to make in excess of the principal amount of converted notes, as the case may be.

However, the warrant transactions could separately have a dilutive effect on our common stock to the extent that the market price per share of our common stock exceeds the strike price of the warrants and we deliver shares of our common stock upon exercise of such warrants instead of paying cash.

However, the warrant transactions could separately have a dilutive effect on our common stock to the extent that the market price per share of our common stock exceeds the strike price of the warrants ($53.44 per share) and we deliver shares of our common stock upon exercise of such warrants instead of paying cash.

Additionally, in connection with establishing their initial hedge of the convertible note hedge and warrant transactions, the option counterparties may have entered into various derivative transactions with respect to our common stock.

10 unchanged sentences

The price of our common stock historically has been volatile.

variations in our quarterly operating results from our expectations or those of securities analysts or investors;

Our stock price may continue to be volatile and subject to significant price and volume fluctuations in response to market and other factors, including the other factors discussed in “Risks Factors;” variations in our quarterly operating results from our expectations or those of securities analysts or investors;

downward revisions in securities analysts’ estimates;

12 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors