What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2023-02-21 compared with 2022-02-28 · 1381 added, 846 removed, 1906 unchanged (54% of the section changed)

CONTROLS AND PROCEDURES

As disclosed in the Explanatory Note and in Supplementary Data included in Part IV, Item 15(a) of this Form 10-K, we are restating our unaudited quarterly financial information for the first three quarters of the year ended December 31, 2022 to correct (a) errors related to deferred taxes and the calculation of income tax expense in connection with the sale of Inliner, which was completed in the first quarter of 2022 and was classified within discontinued operations in the Company’s condensed consolidated statement of operations during the first and second quarters of 2022 and (b) other immaterial errors, including certain errors that had previously been adjusted for as out of period corrections.

The errors were identified by management in connection with the preparation of this Form 10-K- through our annual review control processes.

Evaluation of Disclosure Controls and Procedures  

Based on their evaluation of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) of the Exchange Act) as required by paragraph (b) of Rule 13a-15 or Rule 15d-15 of the Exchange Act, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of December 31, 2021, the end of the period covered by this report.

Our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) are designed to provide reasonable assurance that information required to be disclosed by us in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and that information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Our management, including our principal executive and principal financial officers, have conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report and, based on their evaluation, our principal executive and principal financial officers have concluded our disclosure controls and procedures were not effective as of December 31, 2022, due to the material weakness in our internal control over financial reporting, as further described below.

In connection with our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2022, June 30, 2022 and September 30, 2022, filed on April 28, 2022, July 28, 2022 and October 27, 2022, respectively, management evaluated the effectiveness of the Company’s disclosure controls and procedures as of March 31, 2022, June 30, 2022 and September 30, 2022.

Based upon those evaluations, our principal executive and principal financial officers concluded that the Company's disclosure controls and procedures were effective as of those dates. Subsequent to those evaluations our principal executive and principal financial officers re-evaluated the effectiveness of the Company’s disclosure controls and procedures and concluded that our disclosure controls and procedures were not effective as of March 31, 2022, June 30, 2022 and September 30, 2022, because of the material weakness described below. 

Management nonetheless determined that the consolidated financial statements and related financial information included in this Form 10-K fairly present in all material respects our financial condition, results of operations and cash flows as of the dates presented, and for the periods ended on such dates, in conformity with accounting principles generally accepted in the United States of America (“U.S.

GAAP”).

Management’s determination is based on a number of factors, including, but not limited to, management’s performance of extensive analysis and other post-closing procedures as of and for the year ended December 31, 2022.

Management ’

s Report on Internal Control Over Financial Reporting

Our management, including our principal executive and principal financial officers, is responsible for establishing and maintaining adequate internal control over financial reporting.

Internal control over financial reporting is defined as a process designed by, or under the supervision of, the issuer’s principal executive and principal financial officers, or persons performing similar functions, and effected by the issuer’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S.

GAAP and includes those policies and procedures that:

Our management, including our principal executive and principal financial officers, is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Exchange Act Rules 13a-15(f) and 15d -15(f).

(1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the issuer;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S.

GAAP, and that receipts and expenditures of the issuer are being made only in accordance with authorizations of management and directors of the issuer;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the issuer are being made only in accordance with authorizations of management and directors of the issuer;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the issuer’s assets that could have a material effect on the financial statements.

Our management, under the supervision and with the participation of our principal executive and principal financial officers, has conducted an evaluation of the effectiveness of our internal control over financial reporting, using the criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2021.

Internal Control-Integrated Framework  (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this evaluation, management determined, based upon the existence of the material weakness described below, that we did not maintain effective internal control over financial reporting as of December 31, 2022.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

We did not design an effective control to assess the impact of significant and unusual discrete items on the interim tax provision, such as the divestiture of a business.

This material weakness resulted in the misstatement of our income tax expense, other costs, net and income tax payable, and in the restatement of the Company's unaudited quarterly financial information for the Restated Periods.

Additionally, this material weakness could result in a misstatement of the aforementioned account balances or disclosures that would result in a material misstatement to the interim consolidated financial statements that would not be prevented or detected.

PricewaterhouseCoopers LLP, our independent registered public accounting firm, has audited the effectiveness of our internal control over financial reporting as of December 31, 2022.

Their report is included in “Item 15.

Exhibits and Financial Statement Schedules”

under the heading “Report of Independent Registered Public Accounting Firm.”

Remediation of Prior Year Material Weaknesses

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.

The actions we took to remediate the material weaknesses included the following:

we implemented oversight, training and communication programs to reinforce:

(1) our ethical standards and Code of Conduct across the Company, which emphasized, among other things, the purpose and availability of the anonymous whistleblower hotline, (2) the responsibilities and obligations of public company officers, (3) our cost forecasting processes and policies, including proper and contemporaneous documentation to support cost forecast adjustments, (4) the principles and requirements of each cost forecasting control and (5) reporting communication protocols for internal audit reports;

we implemented additional internal controls related to cost forecasts including reviews from individuals who are independent of the operating group; and

we took appropriate personnel actions, including separations, dismissals and changes in leadership and/or responsibilities and implemented other organizational changes, including changes in reporting structures.

Management has concluded that the material weaknesses described in our Annual Reports on Form 10-K for the years ended December 31, 2019 and 2020 have been remediated because the applicable controls have operated for a sufficient period of time and management has concluded, through testing, that the controls operated effectively.

The report is included in Part IV, Item 15(a) of this Form 10-K under the heading “Report of Independent Registered Public Accounting Firm.”

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting during the quarter ended December 31, 2022.

Remediation Plan

Management is committed to implementing changes to our internal control over financial reporting to ensure that the material weakness is remediated.

We have evaluated the impact of the material weakness and will implement the following changes:

We will enhance our accounting for income tax controls on an interim basis to include specific activities to assess the impacts of significant and unusual transactions, such as divestitures of a business.

We will add additional reviews and approvals of the quarterly effective tax rate calculations with regard to significant and unusual transactions to ensure such discrete tax items are appropriately identified and accounted for accurately within the appropriate interim period.

While we believe that these actions will remediate the material weakness, we have not completed all of the corrective processes, procedures and related evaluation or remediation that we believe are necessary.

As we continue to evaluate and work to remediate the material weakness, we may take additional measures to address the material weakness.

Until the remediation steps set forth above, including the efforts to implement the necessary control activities we identify, are fully implemented and concluded to be operating effectively for a sufficient period of time, the material weakness described above will not be considered remediated.

OTHER INFORMATION

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Certain information required by Part III is omitted from this report.

We will file our definitive proxy statement for our 2022 Annual Meeting of Shareholders (the “Proxy Statement”) not later than 120 days after the end of the fiscal year covered by this report, and certain information included therein is incorporated herein by reference.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

For information regarding our Directors, we direct you to the section entitled “Proposal 1 - Election and Ratification of Directors” in the Proxy Statement.

For information regarding our Audit/Compliance Committee and our Audit/Compliance Committee’s financial expert, we direct you to the section entitled “Information about the Board of Directors and Corporate Governance - Committees of the Board - Audit/Compliance Committee”

in the Proxy Statement.

For information regarding our Code of Conduct, we direct you to the section entitled “Information about the Board of Directors and Corporate Governance - Code of Conduct”

in the Proxy Statement. Information regarding our executive officers is contained in the section entitled “Executive Officers of the Registrant,”

in Part I, Item I of this report.

This information is incorporated herein by reference.

The information required in response to this Item 10 is incorporated herein by reference to our definitive proxy statement to be filed with the SEC pursuant to Regulation 14A promulgated under the Exchange Act not later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.

EXECUTIVE COMPENSATION

For information regarding our Executive Compensation, we direct you to the section captioned “Executive and Director Compensation and Other Matters”

in the Proxy Statement.

This information is incorporated herein by reference.

The information required in response to this Item 11 is incorporated herein by reference to our definitive proxy statement to be filed with the SEC pursuant to Regulation 14A promulgated under the Exchange Act not later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

This information is located in the sections captioned “Stock Ownership of Certain Beneficial Owners Management”

and “Equity Compensation Plan Information” in the Proxy Statement.

This information is incorporated herein by reference.

The information required in response to this Item 12 is incorporated herein by reference to our definitive proxy statement to be filed with the SEC pursuant to Regulation 14A promulgated under the Exchange Act not later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

You will find this information in the sections captioned “Transactions with Related Persons”

and “Information about the Board of Directors and Corporate Governance - Director Independence” in the Proxy Statement.

This information is incorporated herein by reference.

The information required in response to this Item 13 is incorporated herein by reference to our definitive proxy statement to be filed with the SEC pursuant to Regulation 14A promulgated under the Exchange Act not later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

You will find this information in the section captioned “Independent Registered Public Accountants - Principal Accountant Fees and Services”

in the Proxy Statement.

This information is incorporated herein by reference.

The information required in response to this Item 14 is incorporated herein by reference to our definitive proxy statement to be filed with the SEC pursuant to Regulation 14A promulgated under the Exchange Act not later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES

The following documents are filed as part of this report:

(a) The following documents are filed as part of this report:

Financial Statements.

1 unchanged sentence

Financial Statements

Report of Independent Registered Public Accounting Firm

F-1  to F-2

Report of Independent Registered Public Accounting Firm  (PCAOB ID 238 )

Consolidated Balance Sheets

5 unchanged sentences

F-8  to F-33

Quarterly Financial Data (unaudited)

Supplementary Data F-34  to F-43

Financial Statement Schedules.

4 unchanged sentences

Agreement and Plan of Merger by and among Granite Construction Incorporated, Layne Christensen Company and Lowercase Merger Sub Incorporated, dated as of February 13, 2018 [Exhibit 2.1 to the Company’s Form 8-K filed on February 14, 2018]

2.2 * Purchase Agreement, dated February 2, 2022, by and among Layne Heavy Civil, Inc., Granite Construction International, Granite Construction Incorporated, Inland Pipe Rehabilitation LLC and 1000097155 Ontario Inc.

[Exhibit 2.1 to the Company’s Form 8-K filed on February 3, 2022]

Certificate of Incorporation of Granite Construction Incorporated, as amended [Exhibit 3.1.b to the Company’s Form 10-Q for the quarter ended June 30, 2006]

4 unchanged sentences

Form of Amended and Restated Director and Officer Indemnification Agreement [Exhibit 10.10 to the Company’s Form 10-K for the year ended December 31, 2002]

Granite Construction Incorporated Annual Incentive Plan effective January 1, 2010, as amended [Exhibit 10.22 to the Company’s Form 10-K for the year ended December 31, 2011]

Amendment No.

2 to the Granite Construction Incorporated Annual Incentive Plan effective January 1, 2012 [Exhibit 10.23 to the Company’s Form 10-K for the year ended December 31, 2011]

Granite Construction Incorporated Annual Incentive Plan adopted by the Board of Directors on March 30, 2022 [Exhibit 10.1 to the Company’s Form 8-K filed on April 1, 2022]

Form of Annual Incentive Plan Participation Agreement [Exhibit 10.2 to the Company’s Form 8-K filed on April 1, 2022]

Granite Construction Incorporated Long Term Incentive Plan effective January 1, 2010, as amended [Exhibit 10.24 to the Company’s Form 10-K for the year ended December 31, 2011]

5 unchanged sentences

Granite Construction Incorporated Form of Restricted Stock Unit Agreement (3 Year Vesting Schedule) (2012 Equity Incentive Plan) [Exhibit 10.31 to the Company's Form 10-K for the year ended December 31, 2012]

Third Amended and Restated Credit Agreement, dated May 31, 2018 by and among Granite Construction Incorporated, Granite Construction Company, GILC Incorporated, the lenders party thereto and Bank of America, N.A., as Administrative Agent, Collateral Agent, Swing Line Lender, and L/C Issuer [Exhibit 10.1 to the Company’s Form 8-K filed on June 5, 2018]

Third Amended and Restated Guaranty Agreement, dated May 31, 2018, by and among Granite Construction Incorporated, the guarantors party thereto and Bank of America, N.A., as Administrative Agent [Exhibit 10.2 to the Company’s Form 8-K filed on June 5, 2018]

Amendment No 1 to Third Amended and Restated Credit Agreement, dated July 29, 2019, by and among the Company, Granite Construction Company, and GILC Incorporated, as borrowers, Bank of America, N.A., as Administrative Agent, and the lenders party thereto [Exhibit 10.1 to the Company’s Form 8-K filed on August 2, 2019]

Amendment No.

2 to Third Amended and Restated Credit Agreement, dated October 29, 2019, by and among the Company, Granite Construction Company, and GILC Incorporated, as borrowers, Bank of America, N.A., as Administrative Agent, and the lenders party thereto [Exhibit 10.1 to the Company’s Form 8-K filed on October 30, 2019]

Fourth Amended and Restated Credit Agreement, dated June 2, 2022, by and among Granite Construction Incorporated, Granite Construction Company, GILC Incorporated, Bank of America, N.A., as Administrative Agent, Collateral Agent, Swing Line Lender and L/C Issuer, and the lenders and other parties thereto [Exhibit 10.1 to the Company’s Form 8-K filed on June 6, 2022]

Fourth Amended and Restated Guaranty Agreement, dated June 2, 2022, by and among Granite Construction Incorporated, the guarantors party thereto and Bank of America, N.A., as Administrative Agent [Exhibit 10.2 to the Company’s Form 8-K filed on June 6, 2022]

Form of Bond Hedge Confirmation [Exhibit 10.1 to the Company’s Form 8-K filed on November 1, 2019]

Form of Warrant Confirmation [Exhibit 10.2 to the Company’s Form 8-K filed on November 1, 2019]

Amendment No.

3 to Third Amended and Restated Credit Agreement, dated March 26, 2020, by and among the Company, Granite Construction Company, and GILC Incorporated, as borrowers, Bank of America, N.A., as Administrative Agent, and the lenders party thereto [Exhibit 10.1 to the Company’s Form 10-Q for the quarter ended March 31, 2020]

Executive Retention and Severance Plan III and Participation Agreement [Exhibit 10.1 to the Company's Form 8-K filed on March 30, 2020]

1 unchanged sentence

LTIP Award Agreement (2020 Long Term Incentive Plan) [Exhibit 10.3 to the Company's Form 8-K filed on March 30, 2020]

Amendment No.

4 to Third Amended and Restated Credit Agreement, dated June 19, 2020, by and among the Company, Granite Construction Company, and GILC Incorporated, as borrowers, Bank of America, N.A., as Administrative Agent, and the lenders party thereto [Exhibit 10.1 to the Company’s Form 10-Q for the quarter ended June 30, 2020]

Retirement and Transition Agreement dated October 20, 2020 by and between the Company and Mr.

Roberts [Exhibit 10.1 to the Company’s Form 8-K filed on October 23, 2020]

Amendment No.

5 to Third Amended and Restated Credit Agreement, dated November 12, 2020, by and among the Company and certain subsidiaries of the Company, each as borrowers, the guarantors, the lenders party thereto and Bank of America, N.A., as administrative agent [Exhibit 10.24 to the Company’s Form 10-K for the year ended December 31, 2020]

Amendment No.

6 to Third Amended and Restated Credit Agreement, dated February 19, 2021, by and among the Company and certain subsidiaries of the Company, each as borrowers, the guarantors, the lenders party thereto and Bank of America, N.A., as administrative agent [Exhibit 10.1 to the Company’s Form 10-Q for the quarter ended March 31, 2021]

Stipulation and Agreement of Settlement, dated as of April 29, 2021 [Exhibit 10.1 to the Company’s Form 8-K filed on April 30, 2021]

Granite Construction Incorporated 2021 Equity Incentive Plan [Exhibit 10.2 to the Company’s Form 8-K filed on June 4, 2021]

2 unchanged sentences

Form of Employee TSR Award Restricted Stock Unit Agreement (2021 Equity Incentive Plan) [Exhibit 10.5 to the Company’s Form 8-K filed on June 4, 2021]

Separation and Transition Agreement, dated November 14, 2021 by and between the Company and Ms.

Desai [Exhibit 10.1 to the Company’s Form 8-K filed on November 15, 2021]

10.24 * Stipulation and Agreement of Settlement, dated as of April 29, 2021 [Exhibit 10.1 to the Company’s Form 8-K filed on April 30, 2021]  

10.25 * Notice of Pendency and Proposed Settlement of Actions [Exhibit 99.1 to the Company's Form 8-K filed on June 9, 2022]

Exhibit Description

38 unchanged sentences

February 21, 2023

Curtis, Executive Vice President and Chief Financial Officer (Principal Financial Officer)

Woolsey  

February 21, 2023

Woolsey, Chief Accounting Officer (Principal Accounting Officer)

Caldera  

February 21, 2023

Caldera, Director

Campbell  

February 21, 2023

Campbell, Director

February 21, 2023

3 unchanged sentences

Galloway, Director

Kelsey  

February 21, 2023

Kelsey, Director

February 21, 2023

Krusi, Director

/s/ Jeffrey J.

4 unchanged sentences

Mastin, Director

Mullen  

February 21, 2023

Mullen, Director

Vasquez 

February 25, 2022

Vasquez, Director

February 21, 2023

Vasquez, Director  

Report of Independent Registered Public Accounting Firm

5 unchanged sentences

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Change in Accounting Principle

As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2019.

Also in our opinion, the Company did not maintain, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO because a material weakness in internal control over financial reporting existed as of that date related to not designing an effective control to assess the impact of significant and unusual discrete items on the interim tax provision, such as the divestiture of a business.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

The material weakness referred to above is described in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A.

We considered this material weakness in determining the nature, timing, and extent of audit tests applied in our audit of the 2022 consolidated financial statements, and our opinion regarding the effectiveness of the Company’s internal control over financial reporting does not affect our opinion on those consolidated financial statements.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management's Report on Internal Control over Financial Reporting appearing under Item 9A.

Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits.

2 unchanged sentences

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

10 unchanged sentences

Because of its inherent limitations, internal control over financial reporting may not prevent or detect 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 conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

1 unchanged sentence

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue Recognition - Estimates of the Forecasted Revenue and Costs to Complete for Multi-Year Fixed Price Contracts in the Construction Segment, and Revisions in those Estimate s

As described in Notes 1, 3, and 4 to the consolidated financial statements, the revenue for the Construction segment for the year ended December 31, 2021 was $2,602 million, a portion of which related to multi-year fixed price contracts inclusive of unconsolidated joint venture projects.

Revenue Recognition - Estimates of the forecasted revenue and costs to complete for multi-year fixed price contracts in the construction segment

As described in Notes 1, 3, and 4 to the consolidated financial statements, the revenue for the construction segment for the year ended December 31, 2022 was $2,802 million, a portion of which related to multi-year fixed price contracts.

Revenue in the construction segment is ordinarily recognized over time as control is transferred to the customers by measuring the progress toward complete satisfaction of the performance obligation(s) using an input (i.e., cost to cost) method.

3 unchanged sentences

Provisions for losses are recognized at the uncompleted performance obligation level for the amount of total estimated losses in the period that evidence indicates that the estimated total cost of a performance obligation exceeds its estimated total revenue.

For the year ended December 31, 2021, revisions in estimates, which had an impact of $5 million or more on gross profit on the individual project, resulted in a net decrease to project profitability of $71 million.

The estimates of transaction price and costs to complete can vary significantly in the normal course of business as projects progress, circumstances develop and evolve, and uncertainties are resolved.

2 unchanged sentences

Under this method, revisions in estimates are accounted for in their entirety in the period of change.

and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to the estimates of forecasted revenue and costs to complete for multi-year fixed price contracts in the Construction segment, and revisions in those estimates.

As disclosed by management, a material weakness previously existed during the year related to this matter.

The principal considerations for our determination that performing procedures relating to estimates of the forecasted revenue and costs to complete for multi-year fixed price contracts in the construction segment, and revisions in those estimates, is a critical audit matter are (i) the significant judgment by management in forecasting project revenue and costs to complete and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to the estimates of forecasted revenue and costs to complete for multi-year fixed price contracts in the construction segment, and revisions in those estimates.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the revenue recognition process, including controls over estimates of forecasted revenue and costs to complete for multi-year fixed price contracts in the construction segment, and revisions in those estimates.

These procedures also included, among others, for a sample of contracts, evaluating and testing management’s process for determining the estimates of forecasted revenue and costs to complete, which included (i) assessing management’s ability to reasonably estimate the forecasted revenue and costs to complete by evaluating management’s methodologies and assessing the consistency of management’s approach over the life of the contract, and (ii) evaluating the timely identification of circumstances that may warrant a modification to estimated forecasted revenue and costs to complete.

These procedures also included, among others, for a sample of contracts, evaluating and testing management’s process for determining the estimates of forecasted revenue and costs to complete, which included (i) assessing management’s ability to reasonably estimate the forecasted revenue and costs to complete by evaluating management’s methodology and assessing the consistency of management’s approach over the life of the contract and (ii) evaluating the timely identification of circumstances that may warrant a modification to estimated forecasted revenue and costs to complete.

/s/ PricewaterhouseCoopers LLP

9 unchanged sentences

$ 395,647  

Short-term marketable securities

39,374  

Receivables, net ($ 39,281 and $ 49,534 related to CCJVs)

14 unchanged sentences

392,641  

171,263  

Total current assets

6 unchanged sentences

26,569  

15,600  

Investments in affiliates

12 unchanged sentences

67,888  

Noncurrent assets held-for-sale

$ 2,167,933  

$ 2,494,927  

$ 2,379,996  

LIABILITIES AND EQUITY

14 unchanged sentences

83,408  

68,959  

Total current liabilities

11 unchanged sentences

64,071  

Long-term liabilities held-for-sale

10,350  

Commitments and contingencies (see Note 20)

6 unchanged sentences

559,752  

Accumulated other comprehensive loss

( 3,359 )  

Accumulated other comprehensive income (loss)

Retained earnings

21 unchanged sentences

Selling, general and administrative expenses

Other costs (see Note 1)

Non-cash impairment charges (see Note 1)

Other costs, net (See Note 1)

Gain on sales of property and equipment, net (see Note 11)

4 unchanged sentences

Equity in income of affiliates, net

Other income, net

Other (income) expense, net

Total other (income) expense, net

Income (loss) from continuing operations before provision for (benefit from) income taxes

Provision for (benefit from) income taxes on continuing operations

Net income (loss) from continuing operations

Net income (loss) from discontinued operations

Income (loss) before income taxes

Provision for (benefit from) income taxes

Net income (loss)

Amount attributable to non-controlling interests from continuing operations

Net income (loss) attributable to Granite Construction Incorporated from continuing operations

Net income (loss) attributable to Granite Construction Incorporated from discontinued operations

Amount attributable to non-controlling interests

Net income (loss) attributable to Granite Construction Incorporated

Net income (loss) per share attributable to common shareholders (see Note 18):

Basic continuing operations per share

Basic discontinued operations per share

Basic earnings per share

Diluted continuing operations per share

Diluted discontinued operations per share

Diluted earnings per share

Net income per share attributable to common shareholders (see Note 18):

Basic earnings (loss) per share

Diluted earnings (loss) per share

Weighted average shares outstanding:

6 unchanged sentences

Other comprehensive income (loss), net of tax:

Net unrealized gain (loss) on derivatives

reclassification for net (gains) losses included in interest expense

Net unrealized gain (loss) on cash flow hedges, net of tax

reclassification for net gains included in interest expense, net of tax

Foreign currency translation adjustments, net

Other comprehensive income (loss)

Comprehensive income (loss)

Non-controlling interests in comprehensive income

Comprehensive income (loss) attributable to Granite Construction Incorporated

Other comprehensive income (loss), net of tax

Comprehensive income (loss), net of tax

Non-controlling interests in comprehensive income, net of tax

Comprehensive income (loss) attributable to Granite Construction Incorporated, net of tax

The accompanying notes are an integral part of these consolidated financial statements.

16 unchanged sentences

$ 1,178,416  

Net income (loss)

( 145,117 )  

Other comprehensive loss

( 21,064 )  

( 1,896 )  

Restricted stock units (“RSU”s) vested

262,859  

Stock-based compensation expense

Other comprehensive loss

( 2,390 )  

5 unchanged sentences

( 885 )  

Shares repurchased and retired

( 1,360,000 )  

Dividends on common stock ($ 0.52 per share)

( 23,734 )  

Effect of adopting ASC Topic 326

( 366 )  

Dividends on common stock ($ 0.52 per share)

( 366 )  

Transactions with non-controlling interests, net

Stock-based compensation expense and other

34,169  

Effect of adopting Accounting Standards Codification (“ASC”) Topic 842

( 301 )  

Balances at December 31, 2020

45,668,541  

Sale of common stock warrant, net

555,407  

1 unchanged sentence

424,835  

Transactions with non-controlling interests, net

975,664  

1 unchanged sentence

991,610  

Balances at December 31, 2019

Net income (loss)

10,096  

1 unchanged sentence

( 7,682 )  

Other comprehensive income

235,234  

Common stock purchased for employee tax withholding for vested RSUs

( 68,580 )  

1 unchanged sentence

( 2,730 )  

Dividends on common stock ($ 0.52 per share)

( 23,826 )  

Transactions with non-controlling interests, net

19,617  

Other comprehensive loss

19,617  

Stock-based compensation expense and other

( 274 )  

Balances at December 31, 2021

45,840,260  

Stock-based compensation expense

Common stock purchased for employee tax withholding for vested RSUs

559,752  

1 unchanged sentence

410,831  

Dividends on common stock ($ 0.52 per share)

967,682  

27,881  

Effect of adopting ASC Topic 326

995,563  

Cumulative effect of newly adopted accounting standard (see Note 1)

( 26,961 )  

Transactions with non-controlling interests, net

10,543  

( 16,418 )  

Balances at December 31, 2020

Balances at January 1, 2022

45,840,260  

9 unchanged sentences

( 4,445 )  

78,857  

Other comprehensive income

Repurchases of common stock (1)

( 2,376,020 )  

Stock-based compensation expense

Common stock purchased for employee tax withholding for vested RSUs

( 24 )  

1 unchanged sentence

( 70,901 )  

262,748  

Dividends on common stock ($ 0.52 per share)

2 unchanged sentences

Transactions with non-controlling interests, net

19,617  

Stock-based compensation expense and other

16,919  

6 unchanged sentences

$ 985,145  

$ 995,563  

(1) This amount represents employee tax withholding for RSUs vested under our 2012 and 2021 Equity Incentive Plans and stock repurchased, including shares purchased in connection with the accelerated share repurchase in 2022 (see Note 1) under the Board-approved repurchase plan.

The accompanying notes are an integral part of these consolidated financial statements.

4 unchanged sentences

Operating activities

Net income (loss)

$ 78,857  

$ 2,414  

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

$ ( 166,181 )

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation, depletion and amortization

2 unchanged sentences

112,958  

Amortization related to the 2.75 % Convertible Notes (see Note 14)

Amortization related to long-term debt (see Note 14)

Gain on sales of property and equipment, net (see Note 11)

4 unchanged sentences

Stock-based compensation

10,213  

Equity in net loss from unconsolidated joint ventures

9 unchanged sentences

59,623  

( 11,317 )  

Contract assets, net

1 unchanged sentence

12,046  

123,670  

( 14,307 )  

Contributions to unconsolidated construction joint ventures

7 unchanged sentences

129,000  

( 129,000 )  

Other assets, net

3 unchanged sentences

( 9,778 )  

140,027  

Accrual for legal settlement (see Note 20)

( 129,000 )  

129,000  

Accrued expenses and other liabilities, net

1 unchanged sentence

( 882 )  

49,805  

Net cash provided by operating activities

14 unchanged sentences

( 94,810 )  

Proceeds from sales of property and equipment (see Note 11)

Proceeds from sales of property and equipment

26,064  

1 unchanged sentence

16,702  

Cash paid to purchase business

Proceeds from the sale of a business

Issuance of notes receivable, net of collection

Proceeds from the sale of business (see Note 2)

140,576  

Other investing activities, net

Net cash used in investing activities

Issuance of notes receivable

( 7,560 )  

( 20,400 )  

Financing activities

Proceeds from debt

Collection of notes receivable

Net cash used in investing activities

$ ( 11,000 )  

$ ( 21,478 )  

Proceeds from issuance of 2.75% Convertible Notes

Financing activities

Proceeds from long-term debt

50,000  

Proceeds from issuance of warrants

50,000  

Purchase of Hedge Option, net

Debt principal repayments

4 unchanged sentences

( 23,804 )  

Repurchases of common stock

Repurchases of common stock (See Note 17)

( 70,898 )  

3 unchanged sentences

20,126  

11,875  

Distributions to non-controlling partners

1 unchanged sentence

( 9,514 )  

Debt issuance costs

Other financing activities, net

5 unchanged sentences

( 23,993 )  

169,540  

Cash, cash equivalents and $ 1,512 , $ 1,512 and $ 5,835 in restricted cash at beginning of period

6 unchanged sentences

$ 437,648  

Cash, cash equivalents and $ 1,512 , $ 1,512 and $ 5,835 in restricted cash included in current assets held-for-sale at end of period

( 18,008 )  

( 12,356 )  

Cash and cash equivalents of continuing operations at end of period

$ 395,647  

$ 425,292  

$ 252,345  

Supplementary Information

3 unchanged sentences

$ 10,000  

Cash paid for operating lease liabilities

Cash paid during the period for:

Operating lease liabilities

$ 22,611  

1 unchanged sentence

$ 21,654  

Cash paid during the period for:

$ 11,511  

7 unchanged sentences

$ ( 17,409 )  

Non-cash investing and financing activities:

Reclassification of the equity portion of the 2.75% Convertible Notes from debt to equity (See Note 14)

$ ( 167 )  

Non-cash investing and financing activities:

RSUs issued, net of forfeitures

8 unchanged sentences

$ 4,110  

$ 9,006  

Accrued equipment purchases

$ 5,745  

$ ( 4,714 )  

The accompanying notes are an integral part of these consolidated financial statements.

3 unchanged sentences

Description of Business :

Granite Construction Incorporated is one of the largest diversified infrastructure companies in the United States, engaged in infrastructure projects including the construction of streets, roads, highways, mass transit facilities, airport infrastructure, bridges, dams, power-related facilities, utilities, tunnels and other infrastructure-related projects, site preparation, mining services, and infrastructure services for residential development, energy development, commercial and industrial sites, and other facilities, as well as construction management professional services.

Our continuing operations have offices located in Alaska, Arizona, California, Colorado, Florida, Guam, Illinois, Nevada, Texas, Utah and Washington.

Granite Construction Incorporated is one of the largest diversified infrastructure companies in the United States, engaged in infrastructure projects including the construction of streets, roads, highways, mass transit facilities, airport infrastructure, bridges, dams, power-related facilities, utilities, tunnels, water well drilling and other infrastructure-related projects, site preparation, mining services and infrastructure services for commercial and industrial sites, railways, residential development, energy development, as well as construction management professional services.

Our operations have primary offices located in Alaska, Arizona, California, Canada, Colorado, Florida, Guam, Illinois, Mexico, Nevada, Texas, Utah and Washington.

Unless otherwise indicated, the terms “we,”

4 unchanged sentences

refer to Granite Construction Incorporated and its wholly-owned and consolidated subsidiaries.

During the fourth quarter of 2021, the Company updated its strategy to focus on its core business capabilities, to leverage its current geographic based home markets in the civil construction and materials business and to target expansion based upon that combined strategy.

Through our strategic analysis, it was determined that the end markets and geographic structure of the former Water and Mineral Services operating group (“WMS”) did not align with the Company’s new strategy and the Board of Directors approved a plan to sell these businesses within the next twelve months.

As a result of these actions, we classified WMS as held-for-sale in the consolidated balance sheets and as discontinued operations in the consolidated statements of operations as of and for the year ended December 31, 2021 and applied these changes retrospectively for all other periods presented.

See Note 2 for WMS financial information, which has been excluded from all other disclosures unless explicitly stated otherwise.

Also related to our new strategic plan, during the fourth quarter of 2021, we reorganized our operating groups to improve operating efficiencies and better position the Company for long-term growth.

In alphabetical order, our continuing business operating groups are defined as follows:

Central (formerly Heavy Civil, Federal and Midwest operating groups), which primarily includes offices in Arizona (formerly in the Northwest operating group), Colorado, Florida, Illinois, Texas and Guam;

Mountain (formerly Northwest), which primarily includes offices in Alaska, Nevada, Utah and Washington.

In addition, we revised the financial information our chief operating decision maker, or decision-making group (our “CODM”), regularly reviews to allocate resources and assess our performance. This change is consistent with our new strategic plan and better aligns with our continuing civil construction and materials business.

Our CODM now regularly reviews financial information regarding our two primary product lines, construction and materials as well as our operating groups.

We identified our CODM as our Chief Executive Officer and our Chief Operating Officer.

As a result of these changes, in accordance with Financial Accounting Standards Board (“FASB”) ASC Topic 280, Segment Reporting , our reportable segments, which are the same as our operating segments, were changed to:

Construction and Materials.

The Construction segment replaces the previous Transportation, Water and Specialty reportable segments, with the composition of our Materials segment for our continuing operations remaining unchanged.

These changes have been applied retrospectively for all periods presented.

See Note 21 for more information about our reportable segments.

During the fourth quarter of 2021, we concluded that the assets and liabilities of our former Water and Mineral Services operating group (“WMS”) met the criteria for classification as held for sale and the results of operations were presented as discontinued operations. This included:

our trenchless and pipe rehabilitation services business (“Inliner”);

our water supply, treatment, delivery and maintenance business (“Water Resources”);

and our mineral exploration drilling business (“Mineral Services”).

During the 

first  quarter of 

2022 ,  we completed the sale of Inliner. As discussed in more detail in Note 

2,  in the 

third  quarter of 

2022 ,  we determined that the remaining WMS businesses, Water Resources and Mineral Services, 

no  longer met the criteria for classification as held for sale, and therefore also 

no  longer qualified for presentation as discontinued operations.

This change to our plan of sale was due to unfavorable market conditions which undermined our efforts to secure an appropriate value for the businesses.

We reclassified WMS from discontinued operations to continuing operations and it is reported within the Mountain operating group.

The operations of the remaining WMS businesses fall within the Construction segment.

Prior periods presented in the consolidated statements of operations have been conformed to the current period presentation.

The assets and liabilities of WMS met the criteria for classification as held for sale as of 

December 31, 2021, 

therefore our consolidated balance sheet continues to reflect these assets and liabilities as held for sale as of that date.

In alphabetical order, our business operating groups are as follows:

California, which is comprised of vertically integrated businesses in home markets across the state;

Central, which includes the vertically integrated Arizona region and regional civil construction businesses in Illinois, Florida and Texas.

The Central group also includes the Federal division which performs civil construction across the continental United States and Guam, and the Tunnel division;

Mountain, which is comprised of vertically integrated regional businesses in Alaska, Washington, Oregon, Utah and Nevada. The Mountain Group also includes national businesses in the Industrial & Energy division, which primarily focuses on commercial solar construction projects, Water Resources, which performs water well drilling and rehabilitation services and Mineral Services, which performs mineral exploration services for mining clients.

Principles of Consolidation :

4 unchanged sentences

The joint venture agreements typically provide that our interests in any profits and assets and our respective share in any losses and liabilities that may result from the performance of the contracts are limited to our stated percentage interest in the project.

However, due to the joint and several nature of the performance obligations under the related owner contracts, if any of the partners fail to perform, we and the remaining partners, if any, would be responsible for performance of the outstanding work (i.e., we provide a performance guarantee).

Under our joint venture contractual arrangements, we provide capital to these joint ventures in return for an ownership interest.

1 unchanged sentence

The operational risks of each construction joint venture are passed along to the joint venture members.

As we absorb our share of these risks, our investment in each venture is exposed to potential gains and losses. We consolidate joint ventures if we determine that through our participation we have a variable interest and are the primary beneficiary as defined by FASB ASC Topic 810, Consolidation , and related standards. The factors we use to determine the primary beneficiary of a variable interest entity (“VIE”) may include the decision authority of each partner, which partner manages the day-to-day operations of the project and the amount of our equity investment in relation to that of our partners.

As we absorb our share of these risks, our investment in each venture is exposed to potential gains and losses. We consolidate joint ventures if we determine that through our participation we have a variable interest and are the primary beneficiary as defined by the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 810, Consolidation , and related standards. The factors we use to determine the primary beneficiary of a variable interest entity (“VIE”) may include the decision authority of each partner, which partner manages the day-to-day operations of the project and the amount of our equity investment in relation to that of our partners.

Although not applicable for any of the years presented, if we determine that the power to direct the significant activities is shared equally by two or more joint venture parties, then there is no primary beneficiary and no party consolidates the VIE.

If we have determined we are not the primary beneficiary of a joint venture but do exercise significant influence, we account for our share of the operations of unconsolidated construction joint ventures on a pro rata basis in revenue and cost of revenue in the consolidated statements of operations.

If we have determined we are not the primary beneficiary of a joint venture but do exercise significant influence, we account for our share of the operations of the unconsolidated construction joint ventures on a pro rata basis in revenue and cost of revenue in the consolidated statements of operations.

We record the corresponding investment balance in equity in construction joint ventures in the consolidated balance sheets except when a project is in a loss position, the investment balance is recorded as a deficit in unconsolidated construction joint ventures and is included in accrued expenses and other current liabilities in the consolidated balance sheets. Our investment in unconsolidated construction joint ventures could extend beyond one year and is within the normal operating cycle of the associated construction projects.

6 unchanged sentences

Each partner accounts for its items of work individually as it would for any self-performed contract.

We account for our portion of these contracts as revenue and cost of revenue in the consolidated statements of operations and in relevant balances in the consolidated balance sheets.

We account for our portion of these contracts as revenue and cost of revenue in the consolidated statements of operations and in relevant balances in the consolidated balance sheets.

Use of Estimates in the Preparation of Financial Statements :

61 unchanged sentences

All state and federal government contracts and many of our other contracts provide for termination of the contract at the convenience of the party contracting with us, with provisions to pay us for work performed through the date of termination including demobilization cost.

Costs to obtain our contracts (“pre-bid costs”) that are not expected to be recovered from the customer are expensed as incurred and included in selling, general and administrative expenses on our consolidated statements of operations.

Although unusual, pre-bid costs that are explicitly chargeable to the customer even if the contract is not obtained are included in accounts receivable on our consolidated balance sheets when we are notified that we are not the low bidder with a corresponding reduction to selling, general and administrative expenses on our consolidated statements of operations.

Although unusual, pre-bid costs that are explicitly chargeable to the customer even if the contract is not obtained are included in accounts receivable in our consolidated balance sheets when we are notified that we are not the low bidder with a corresponding reduction to selling, general and administrative expenses in our consolidated statements of operations.

Unearned Revenue:

4 unchanged sentences

As of December 31,  

2021 and 2020 , unearned revenue from continuing operations was $ 2.6 billion and $ 2.8 billion, respectively.

Approximately $ 2.0  billion of the December 

31, 2021  unearned revenue from continuing operations is expected to be recognized within the next twelve months and the remaining amount will be recognized thereafter.

2022 and 2021 , unearned revenue was $ 2.9  billion and $ 2.6  billion, respectively.

Approximately $ 1.8  billion of the December 31,  

2022  unearned revenue is expected to be recognized within the next twelve months and the remaining amount will be recognized thereafter.

Substantially all of the contracts in our unearned revenue may be canceled or modified at the election of the customer;

3 unchanged sentences

Prepaid expenses and amounts receivable and payable under construction contracts (principally retentions) that may exist over the duration of the contract and could extend beyond one year are included in current assets and liabilities.

A one -year time period is used as the basis for classifying all other current assets and liabilities. Included in other current assets on the consolidated balance sheets as of December 31, 2021 is the $ 129.0 million deposit for legal settlement discussed in Note 20.

A one -year time period is used as the basis for classifying all other current assets and liabilities.

Included in other current assets on the consolidated balance sheets as of December 31,  

2021  was the $ 129.0 million deposit for the securities litigation settlement discussed in Note 20.

Cash and Cash Equivalents :

22 unchanged sentences

not  enter into derivative instruments for speculative or trading purposes.

The derivative transactions related to the 2.75 % Convertible Notes (as defined in Note 14 ) were recorded to equity on our consolidated balance sheets based on the cash proceeds and will not be remeasured as long as they continue to meet the conditions for equity classification. 

The derivative transactions related to the 2.75 % Convertible Notes (as defined in Note 14 ) were recorded to equity in our consolidated balance sheets based on the cash proceeds and will not be remeasured as long as they continue to meet the conditions for equity classification. 

GRANITE CONSTRUCTION INCORPORATED

16 unchanged sentences

We measure expected credit losses of financial assets based on historical loss and other information available to management using a loss rate method applied to asset groups with categorically similar risk characteristics.

These expected credit losses are recorded to an allowance for credit losses valuation account that is deducted from receivables and contract assets to present the net amount expected to be collected on the financial asset on the consolidated balance sheets.

Concentrations of Credit Risk:

1 unchanged sentence

We maintain our cash and cash equivalents and our marketable securities with several financial institutions.

We invest with high credit quality financial institutions and, by policy, limit the amount of credit exposure to any one financial institution. During the years ended December 31, 2021, 2020 and 2019,  our largest volume customer, including both prime and subcontractor arrangements, was the California Department of Transportation (“Caltrans”).

Revenue recognized from contracts with Caltrans during the years ended December 31, 2021, 2020 and 2019 represented $ 337.1  million ( 11.2 % of total revenue from continuing operations), $ 316.9  million ( 10.1 % of total revenue from continuing operations) and $ 226.2  million ( 7.8 % of total revenue from continuing operations), respectively, which was primarily in the Construction segment.

Other than Caltrans, none of our customers, including both prime and subcontractor arrangements, had revenue that individually exceeded 10% of total revenue during the years ended 

December 31, 2021 and 

2020 and none of our customers had revenue that individually exceeded 10% of total revenue during the year ended 

We invest with high credit quality financial institutions and, by policy, limit the amount of credit exposure to any one financial institution. During the years ended December 31,  

2022 , 2021 and 2020 , our largest volume customer, including both prime and subcontractor arrangements, was the California Department of Transportation (“Caltrans”).

Revenue recognized from contracts with Caltrans during the years ended December 31,  

2022 , 2021  and 

2020 represented $ 348.0  million ( 10.5 %  of total revenue), $ 337.1  million ( 9.6 %  of total revenue) and $ 316.9  million ( 8.9 %  of total revenue), respectively, which was primarily in the Construction segment.

Other than Caltrans, none of our customers, including both prime and subcontractor arrangements, had revenue that individually exceeded 10% of total revenue during the year ended 

December 31,  

None of our customers had revenue that individually exceeded 10% of total revenue during the years ended 

December 31,  

2021 and 2020 .

The majority of our receivables are from customers concentrated in the United States.

5 unchanged sentences

2021  in our consolidated balance sheets.

The balances billed but not paid by customers pursuant to these provisions generally become due upon completion and acceptance of the project work or products by the owners.

As of December 31,  

2021  and 

2020 , contract retention receivable from Virgin Trains USA Florida LLC represented 17.2 % and 13.2 %, respectively, of total contract assets.

No other contract retention receivable individually exceeded 10% at any of the presented dates.

The majority of the December 31, 2021 contract retention balance disclosed in Note 6 is expected to be collected within one year.

The balances billed but not paid by customers pursuant to these provisions generally become due upon completion and acceptance of the project work or products by the owners. The majority of the December 31,  

2022 contract retention balance disclosed in Note 6 is expected to be collected within one year.

We perform ongoing credit evaluations of our customers and generally do not require collateral, although the law provides us the ability to file mechanics’

liens on real property improved for private customers in the event of non-payment by such customers.

 Inventories relating to our continuing operations consist primarily of quarry products that are valued at the lower of average cost or net realizable value .

Foreign Currency Transactions and Translation: 

We have operations in Mexico and Canada which involve exposure to possible volatile movements in foreign currency exchange rates.

We account for foreign currency exchange transactions and translation in accordance with ASC Topic 830,  

Foreign Currency Matters .

In Mexico, most of our customer contracts and a significant portion of our costs are denominated in U.S.

therefore, the functional currency is U.S.

In Canada, the functional currency is the local currency.

Foreign currency transactions are remeasured into the functional currency with gains and losses included in other income, net in the consolidated statements of operations.

The impact from foreign currency transactions was immaterial for 2022 , 2021  and 

Assets and liabilities in functional currency are translated into U.S.

dollars at exchange rates prevailing at the balance sheet date.

Revenues and expenses are translated into U.S.

dollars at average foreign currency exchange rates prevailing during the reporting periods.

The translation adjustments from functional currency to U.S.

dollars are reported in accumulated other comprehensive income (loss) on the consolidated balance sheets.

 Inventories relating to our operations consist primarily of quarry products, contract-specific materials and water well drilling materials, supplies, as well as mineral extraction and drilling supplies located in the U.S.

Cost of inventories are valued at the lower of average cost or net realizable value .

We reserve quarry products based on estimated quantities of materials on hand in excess of approximately one year of demand.

2 unchanged sentences

We account for our share of the operating results of the equity method investments in equity in income from affiliates, net in the consolidated statements of operations and as a single line item in the consolidated balance sheets as investments in affiliates.

Our investments in affiliates include real estate entities and an asphalt terminal entity.

Our investments in affiliates include foreign entities, real estate entities and an asphalt terminal entity.

These investments are evaluated for impairment using the other-than-temporary impairment model, which requires an impairment charge to be recognized if our investment’s carrying amount exceeds its fair value, and the decline in fair value is deemed to be other than temporary.

7 unchanged sentences

significant changes to the development or business plans of a project.

Future undiscounted cash flows and fair value assessments for the asphalt terminal entity are estimated based on market conditions and the political climate.

Future undiscounted cash flows and fair value assessments for our foreign entities and for the asphalt terminal entity are estimated based on market conditions and the political climate.

Future undiscounted cash flows and fair value assessments for our real estate entities are estimated based on entitlement status, market conditions, cost of construction, debt load, development schedules, status of joint venture partners and other factors applicable to the specific project.

1 unchanged sentence

Our estimates of cash flows may differ from actual cash flows due to, among other things, fluctuations in interest rates, decisions made by jurisdictional agencies, economic conditions, or changes to our business operations. 

During the year ended December 31, 2020, the entities within our investments in foreign affiliates experienced other than temporary declines in fair value, which resulted in a non-cash impairment charge of $ 9.6 million.

Property and Equipment :

7 unchanged sentences

If material, such property is separately disclosed in the consolidated balance sheets, otherwise it is held in property and equipment until sold.

The cost and accumulated depreciation or depletion of property sold or retired is removed from the consolidated balance sheets and the resulting gains or losses, if any, are reflected in operating income on the consolidated statements of operations for the period.

The cost and accumulated depreciation or depletion of property sold or retired is removed from the consolidated balance sheets and the resulting gains or losses, if any, are reflected in operating income in the consolidated statements of operations for the period.

In the case that we abandon an asset, an amount equal to the carrying amount of the asset, less salvage value, if any, will be recognized as expense in the period that the asset was abandoned.

14 unchanged sentences

When an individual asset or group of assets is determined to no longer contribute to its vertically integrated construction and plant equipment asset group, it is assessed for impairment independently.

December 31,  

2022 , amortizable intangible assets, which primarily include permits and customer relationships, are being amortized over remaining terms from 

two  to 

fifteen  years.

All intangible assets are amortized on a straight-line basis except for customer relationships which will are amortized on a double declining basis.

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

 As a result of the changes in our reportable segments and operating groups, we reassessed our reporting units and have determined our continuing operations have 

 As of December 31, 2022, we had 

five reporting units in which goodwill was recorded as follows:

4 unchanged sentences

California Group Construction

We determined our discontinued operations have 

two reporting units in which goodwill was recorded as follows:

WMS Construction

WMS Materials

We perform our goodwill impairment tests annually as of November 1 and more frequently when events and circumstances occur that indicate a possible impairment of goodwill.

4 unchanged sentences

the testing for recoverability of a significant asset group within the segment.

In accordance with U.S.

GAAP, we can elect to perform a qualitative assessment to test a reporting unit’s goodwill for impairment or perform a quantitative impairment test.

In accordance with ASC Topic 350, Intangibles –

Goodwill and Other, we can elect to perform a qualitative assessment to test a reporting unit’s goodwill for impairment or perform a quantitative impairment test.

Based on a qualitative assessment, if we determine that the fair value of a reporting unit is more likely than not to be less than its carrying amount, the quantitative impairment test will be performed.

6 unchanged sentences

Our discount rate assumptions are based on an assessment of the equity cost of capital and appropriate capital structure for our reporting units. To assess for reasonableness, we compare the estimated fair values of the reporting units to our current market capitalization.

For our 2021 annual goodwill impairment test, we conducted quantitative impairment tests based on the operating structure in place at November 1.

Impairment tests were conducted for the Midwest Group Specialty and WMS Water, Specialty and Materials reporting units and concluded that goodwill was not impaired since the estimated fair value for each of those reporting units exceeded their respective carrying amounts.

The assessment for the Midwest Group Specialty as well as WMS Water and Specialty reporting units indicated that their estimated fair values exceeded their carrying amounts (i.e., headroom) by over 30%.

The assessment for the WMS Materials reporting unit indicated that its estimated fair value exceeded its carrying amount by 10% and the recent purchase and sale agreement for Inliner (see Note 2 ), which includes 100% of the WMS Materials reporting unit, supports its carrying value.

We elected to perform a qualitative assessment of the Midwest Group Transportation, Northwest Group Transportation, Northwest Group Materials and California Group Transportation reporting units and we determined that it was more likely than not that the fair values were greater than the carrying amounts;

For our 2022 annual goodwill impairment test, we elected to perform a qualitative assessment of the Central Group Materials, Mountain Group Construction, Mountain Group Materials and California Group Construction reporting units and we determined that it was more likely than not that the fair values were greater than the carrying amounts;

therefore, no quantitative goodwill impairment test was performed for these reporting units.

Factors we considered in our qualitative assessment were macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, changes in management or key personnel, changes in strategy, changes in customers and changes in the composition or carrying amount of the reporting unit’s net assets.

Due to the changes in our reporting structure and the resulting changes to reporting units, we conducted impairment tests immediately before and after the reorganization, which was effective December 1.

Since there were no significant changes to the reporting units from the time of the annual impairment test, we conducted qualitative assessments before the changes on the Midwest Group Specialty and the WMS Water, Specialty and Materials reporting units.

We determined that it was more likely than not that the fair values were greater than the carrying amounts;

therefore, no quantitative goodwill impairment test was performed for these reporting units.

The changes in our reporting structure had no impact on the Central Group Materials, Mountain Group Materials, California Group Construction or the WMS Materials reporting units and there were no significant changes to these reporting units from the time of the annual impairment test;

therefore, no further goodwill impairment assessment was performed on these reporting units after the changes.

We performed quantitative impairment tests after the changes on the reporting units that were affected by the changes in our reporting structure, which were the Central Group Construction, Mountain Group Construction and WMS Construction reporting units.

We calculated the estimated fair value of these reporting units consistent with the annual impairment assessment using the discounted cash flows and market multiple methods as well as the consideration to be paid for Inliner under the purchase and sale agreement, which includes a substantial portion of the WMS Construction reporting unit.

These tests indicated that the estimated fair values of the reporting units exceeded their carrying amounts with headroom in excess of 30%.

A quantitative impairment test was conducted for the Central Group Construction reporting unit, and we concluded that goodwill was not impaired.

The assessment indicated that the estimated fair value of the reporting unit exceeded its carrying amount (i.e., headroom) by over 80 %.

In the third quarter of 2022, in connection with our decision to retain the Water Resources and Mineral Services businesses, we performed impairment tests on the goodwill balances that had been previously held for sale.

We concluded that goodwill was not impaired and therefore it was reclassified as held and used at its carrying amount before being classified as held for sale. The assessment indicated the estimated fair value exceeded its carrying amount by approximately 40 %. At December 31, 2022, the goodwill associated with Water Resources and Mineral Services was included within the Mountain Group Construction reporting unit.

For our 2021 annual goodwill impairment test, we conducted quantitative impairment tests based on the operating structure in place at November 1, 2021.

Due to changes in our reporting structure and resulting changes to our reporting units in 2021, we conducted impairment tests immediately before and after the reorganization, which was effective December 1, 2021.

Based on the results of the tests performed, we concluded that goodwill was not impaired at either date since the estimated fair value of each reporting unit exceeded its respective carrying amount.

During the year ended December 31, 2020, our goodwill impairment tests resulted in a total impairment charge of $ 147.1 million, which is included in Non-cash impairment charges in the consolidated statements of operations.

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Right of use Assets ( “

Right of use Assets  

and Lease Liabilities:

A lease contract conveys the right to use an underlying asset for a period of time in exchange for consideration.

At inception, we determine whether a contract contains a lease by determining if there is an identified asset and if the contract conveys the right to control the use of the identified asset in exchange for consideration over a period of time.

We recognize leases in accordance with ASC Topic 842,  

Leases , and subsequently issued additional related ASUs (“Topic 842”

), which we adopted during our quarter ended 

March 31, 2019 using a modified retrospective transition approach.

At lease commencement, we measure and record a lease liability equal to the present value of the remaining lease payments, generally discounted using the borrowing rate on our secured debt as the implicit rate is not readily determinable on many of our leases.

We use a quarterly maturity discount rate if it is not materially different than the discount rates applied to each of the leases in the portfolio.

On the lease commencement date, the amount of the ROU assets consists of the following:

On the lease commencement date, the amount of the right of use assets consists of the following:

the amount of the initial measurement of the lease liability;

4 unchanged sentences

We assess the option for individual leases, and we generally consider the base term to be the term of lease contracts.

Lease contracts may contain nonlease components for which we elected to include both the lease and nonlease components as a single component and account for it as a lease.

Lease contracts may contain non-lease components for which we elected to include both the lease and non-lease components as a single component and account for it as a lease.

Contract Liabilities:

5 unchanged sentences

We account for the costs related to legal obligations to reclaim aggregate mining sites and other facilities by recording our estimated asset retirement obligation at fair value using Level 3 inputs, capitalizing the estimated liability as part of the related asset’s carrying amount and allocating it to expense over the asset’s useful life.

Many of our construction contracts contain warranty provisions covering defects in equipment, materials, design or workmanship that generally run from six months to one year after our customer accepts the contract.

Many of our construction contracts contain warranty provisions covering defects in equipment, materials, design or workmanship that generally run for less than two years after our customer accepts the contract.

Because of the nature of our projects, including contract owner inspections of the work both during construction and prior to acceptance, we have not experienced material warranty costs for these short-term warranties and, therefore, do not believe an accrual for these costs is necessary.

3 unchanged sentences

Accrued Insurance Costs:

The amounts for which we are liable range from the first $ 0.5 million to $ 1.5 million per occurrence. We accrue for probable losses, both reported and unreported, that are reasonably estimable using actuarial methods based on historic trends, modified, if necessary, by recent events.

We carry insurance policies to cover various risks, including general liability, automobile liability, workers compensation and employee medical expenses under which we are liable to reimburse the insurance company for certain losses. The amounts for which we are liable range from the first $ 0.5 million to $ 1.5 million per occurrence. We accrue for probable losses, both reported and unreported, that are reasonably estimable using actuarial methods based on historic trends, modified, if necessary, by recent events.

The establishment of accruals for estimated losses associated with our insurance policies are based on actuarial studies that include known facts and interpretations of circumstances, including our experience with similar cases and historical trends involving claim payment patterns, pending levels of unpaid claims, claim severity, frequency patterns and changing regulatory and legal environments.

1 unchanged sentence

Surety Bonds :

We generally are required to provide various types of surety bonds that provide an additional measure of security for our performance under certain public and private sector contracts.

At December 31,  

2021 , approximately $ 2.3  billion of our $ 4.0 billion Committed and Awarded Projects were bonded.

Performance bonds do not have stated expiration dates;

We generally are required to provide various types of surety bonds that provide an additional measure of security for our performance under certain public and private sector contracts. Performance bonds do not have stated expiration dates;

rather, we are generally released from the bonds after the owner accepts the work performed under contract.

1 unchanged sentence

Performance Guarantees:

 The agreements with our joint venture partners (“partner(s)”) for both construction joint ventures and line item joint ventures define each partner’s management role and financial responsibility in the project.

 The agreements with our joint venture partners (“partner(s)”) for both construction joint ventures and line item joint ventures define each partner’s management role and financial responsibility in the project.

The amount of operational exposure is generally limited to our stated ownership interest.

22 unchanged sentences

Other Costs: 

Other costs included on the consolidated statements of operations primarily consisted of $ 66  million in net settlement charges incurred during 2021  as further described in Note 20 .

 Other costs also included $ 21.6  million and $ 35.6  million for the years ended 

December 31, 2021 and 2020, respectively, of non-recurring legal and accounting fees.

The majority of these non-recurring fees related to the lawsuits discussed in Note 20 and to the Audit Committee’s independent investigation of prior-period reporting for the former Heavy Civil operating group, which was completed in early 2021.

 The remaining other costs includes personnel costs incurred in connection with our operating group reorganization during 2021 and integration expenses incurred in 2020 and 2019  related to the Layne Christensen Company (“Layne”) acquisition that occurred in 2018.

Other costs, net in the consolidated statements of operations include net costs related to settlements of certain legal matters and investigations, all discussed further in Note 20, as well as net divestiture costs, a gain on sale of a business in 2022 and personnel costs incurred in connection with our operating group reorganization during 2021.

Income Taxes :

6 unchanged sentences

Diluted net income (loss) per share is computed using the weighted-average number of common shares and dilutive potential common shares outstanding during the period.

Dilutive potential common shares include common share equivalents under the 2012 and 2021  Equity Incentive Plans using the if-converted method.

Dilutive potential common shares also include common share equivalents related to our 2.75% Convertible Notes assuming the share price of our common stock was in excess of $ 31.47 per share and common share equivalents relating to our warrants assuming the share price of our common stock was in excess of $ 53.44 , the exercise price of warrants.

Dilutive potential common shares include common share equivalents under the equity incentive plans and common share equivalents issuable under our 2.75% Convertible Notes using the if-converted method.

Dilutive potential common shares also include common share equivalents issuable under the terms of our warrants assuming the share price of our common stock was in excess of $ 53.44 , the exercise price of warrants.

See Note 14  for further discussion related to the 2.75% Convertible Notes and warrants.

1 unchanged sentence

GAAP requires certain convertible debt instruments that may be settled in cash on conversion to be separately accounted for into liability and equity components in a manner that reflects the issuer’s non-convertible debt borrowing rate.

Third party offering costs are allocated to the liability and equity components based on allocation of proceeds to those components, and are recorded net of the associated balances on the consolidated balance sheets and are generally amortized to interest expense through the maturity date of the debt. Therefore, cash received from the issuance of the 2.75% Convertible Notes (as defined in Note 14 ) was separated into liability and equity components on the consolidated balance sheets at the time of issuance based on the fair value of a similar liability that does not have an associated convertible feature.

Third party offering costs are allocated to the liability and equity components based on allocation of proceeds to those components and are recorded net of the associated balances on the consolidated balance sheets and are generally amortized to interest expense through the maturity date of the debt. Therefore, cash received from the issuance of the 2.75% Convertible Notes (as defined in Note 14 ) was separated into liability and equity components on the consolidated balance sheets at the time of issuance based on the fair value of a similar liability that does not have an associated convertible feature.

The difference between the principal amount and the liability component on the issuance date has been recorded to interest expense using an effective interest rate of 6.62 % over the expected life of the 2.75% Convertible Notes.

Debt discounts are recorded to the liability component through the maturity date of the debt.

Recently Issued Accounting Pronouncements:

In October 2021, the FASB issued ASU 2021 - 08, Business Combinations (Topic 805 ) - Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , which amended the current business combination accounting guidance in ASC 805 to require entities to apply Topic 606 in recognizing and measuring contract assets and contract liabilities acquired in a business combination.

The ASU is effective commencing with our quarter ending March 31, 2022 with early adoption permitted.

We early adopted this guidance in 2021;

however, this ASU did not impact the periods included in these consolidated financial statements and would be applicable only if we had a business combination and if the acquired entity had contract assets or liabilities.

August 2020, 

the FASB issued ASU 

2020 - 06 ,  

Debt -  

Debt with Conversion and Other Options (Subtopic  

470 - 20 ) and Derivatives and Hedging -  

Contracts in Entity ’

s Own Equity (Subtopic  

Accounting for Convertible Instruments and Contracts in an Entity ’

s Own Equity  (“ASU 

2020 - 06”

) ,  which simplifies the accounting for convertible instruments resulting in accounting for convertible debt instruments as a single liability measured at its amortized cost.

This change will also reduce reported interest expense and increase reported net income as we issued a convertible instrument that was bifurcated according to previously existing rules.

In addition, the ASU requires the application of the if-converted method for calculating diluted earnings per share and eliminates the treasury stock method for convertible debt.

The ASU is effective commencing with our quarter ending 

March 31, 2022. 

We currently anticipate adopting this ASU using the modified retrospective transition approach.

Upon issuance of the 

Recently Issued and Adopted Accounting Pronouncements:

 We closely monitor all ASUs issued by the FASB and other authoritative guidance. There are currently no recently issued accounting pronouncements that are expected to have a material impact on our financial statements.

August 2020 ,  the FASB issued ASU 

2020 - 06 ,  which simplifies the accounting for convertible instruments resulting in accounting for convertible debt instruments as a single liability measured at its amortized cost and ASU 2020 - 06  is applicable to our 

2.75% convertible senior notes due 

2024  ( “2.75%  Convertible Notes”), cash received was separated into a $ 192.6  million debt component and a $ 37.4  million (less $ 9.5  million of taxes) equity component.

We have been increasing the debt component for the difference between the principal amount of $ 230.0 million and the $ 192.6  million (“debt discount”) with an offset to interest expense over the life of the loan using an effective interest rate.

Upon adoption of ASU 

2020 - 06 ,  the previously recorded equity component of the convertible instrument outstanding and debt issuance costs will be reclassified from equity to debt, net of tax, and the interest expense previously recorded from the amortization of the debt discount and debt issuance costs will be reversed through retained earnings with an offset to debt.

We expect the primary impact of this new standard will be to increase the carrying value of convertible debt by approximately $ 22 million, with an offsetting reduction in shareholders’

equity, and reduce reported interest expense in future periods.

In addition, using the if-converted method as compared to the treasury stock method may have a material impact to diluted earnings per share.

In addition, ASU 

2020 - 06  requires the application of the if-converted method for calculating diluted earnings per share and eliminates the treasury stock method for convertible debt.

We adopted ASU 

2020 - 06  effective 

January 1, 2022 ,  using the modified retrospective transition approach under which financial results reported in prior periods were 

not  adjusted.

Upon adoption, we recorded a net cumulative increase to debt of approximately $ 22.0  million and to deferred tax assets of $ 5.6  million, offset by a decrease to additional paid-in capital and retained earnings of $ 16.4  million (See Note 14 for details).

March 2020, 

the FASB issued ASU 

2020 - 04 ,  

Reference Rate Reform  

(Topic  

Facilitation of the Effects of Reference Rate Reform on Financial Reporting , which provides optional guidance to ease the potential burden in accounting for the effects of the transition away from LIBOR and other reference rates.

the FASB issued ASU 

2020 - 04,  which provides optional guidance to ease the potential burden in accounting for the effects of the transition away from LIBOR and other reference rates.

Also, in 

1 unchanged sentence

the FASB issued ASU 

2021 - 01 ,  

Reference Rate Reform (Topic  

Scope , which provided clarification guidance to ASU 

 These ASUs are effective at our option beginning with our quarter ended 

March 31, 2020 

through 

2021 - 01,  which provided clarification guidance to ASU 

 We adopted these ASUs during the quarter ended 

June 30, 2022, 

in conjunction with entering into our Fourth Amended and Restated Credit Agreement (the “Credit Agreement”) (see Note 

14 ), which replaced the London Interbank Offered Rate (“LIBOR”) with the Secured Overnight Financing Rate ("SOFR") administered by the Federal Reserve Bank of New York for purposes of setting floating interest rates.

In December 2022, the FASB issued ASU 2022 - 06, which extends the period of time preparers can utilize the reference rate reform relief guidance established in ASU 2020 - 04.

The adoption of these ASUs did 

not  have a material impact on our consolidated financial statements.

Assets and Liabilities Held for Sale

As discussed in Note 1, during the fourth quarter of 2021, we concluded the assets and liabilities of our former WMS businesses met the criteria for classification as held for sale.

This included:

Inliner, Water Resources and Mineral Services.

We concluded the planned disposal activities represented a strategic shift that would have a major effect on our operations and financial results and qualified for presentation as discontinued operations in accordance with ASC Topic 205 - 20, Presentation of financial statements - Discontinued operations . Additionally, beginning December 31, 2021, in accordance with ASC 360, Property, Plant, and Equipment , we ceased recording depreciation and amortization for WMS property, plant and equipment, finite-lived intangible assets and right of use lease assets.

During the first quarter of 2022 ,  we completed the sale of Inliner to Inland Pipe Rehabilitation LLC (“IPR”) and 

1000097155  Ontario Inc.

(“Ontario” and together with IPR, the “Purchasers”), investment affiliates of J.F.

Lehman & Company, for a purchase price of $ 159.7 million, subject to certain adjustments.

As a result of the sale and post-closing adjustments, we received cash proceeds of $ 140.6 million and recognized a gain of $ 1.8  million.

This gain is included in Other costs, net in the consolidated statements of operations for the year ended December 31, 2022. 

third  quarter of 

2022 ,  we announced our decision to retain the Water Resources and Mineral Services businesses.

This change to our plan of sale was due to unfavorable market conditions which undermined our efforts to secure an appropriate value for the businesses.

As a result, we have reclassified WMS from discontinued operations to continuing operations for all periods presented.

At the time of the change, we recorded an entry to adjust for depreciation and amortization that would have been recognized if the unsold businesses had been continually classified as held and used from the beginning of the year.

The assets and liabilities of WMS met the criteria for classification as held for sale as of 

December 31, 2021, 

and we expect to adopt in the 

second  quarter of 

 As our Third Amended and Restated Credit Agreement dated 

May 18, 2021, 

as subsequently amended (the “Credit Agreement”) currently incorporates the use of the secured overnight financing rate as an alternative to LIBOR, we do 

not  expect the adoption of these ASUs to have a material impact on our consolidated financial statements.

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Discontinued Operations and Held-for-Sale

As discussed in Note 1, during the fourth quarter of 2021, management determined that WMS no longer aligned with our new strategic plan, and our Board of Directors approved a plan to sell the associated businesses within the next twelve months.

This includes:

Inliner; our water supply, treatment, delivery and maintenance business (“Water Resources”); and our mineral exploration drilling business (“Mineral Services”).

This approval, in combination with previously existing facts and circumstances, resulted in the Company concluding that the assets and liabilities of WMS met the criteria for classification as held-for-sale. The Company concluded the planned disposal activities represented a strategic shift that will have a major effect on the Company’s operations and financial results and qualified for presentation as discontinued operations in accordance with ASC Topic 205 - 20, Presentation of financial statements - Discontinued operations . Additionally, beginning December 31, 2021, in accordance with ASC 360, Property, Plant, and Equipment , we ceased recording depreciation and amortization for WMS property, plant and equipment, finite-lived intangible assets and right of use lease assets.

On February 2, 2022, we entered into a purchase agreement with Inland Pipe Rehabilitation LLC (“IPR”) and 1000097155 Ontario Inc.

(“Ontario” and together with IPR, the “Purchasers”), investment affiliates of J.F.

Lehman & Company.

Per the terms of that agreement, the Company agreed to sell Inliner to the Purchasers for a purchase price of $ 159.7  million. The sale has been unanimously approved by the Company’s Board of Directors and is subject to customary covenants and closing conditions. The transaction is expected to close in the first half of 2022.

Water Resources and Mineral Services, which represent the remainder of WMS, are expected to be sold within the next twelve months.

The following table presents summarized balance sheet information of assets and liabilities held-for-sale (in thousands):

therefore our consolidated balance sheet continues to reflect these assets and liabilities as held for sale as of that date.

The following table presents summarized balance sheet information of assets and liabilities held for sale:

(in thousands)

December 31, 2021

Cash and cash equivalents

$ 16,496  

$ 10,844  

Receivables, net

102,208  

103,254  

Contract assets

1 unchanged sentence

19,625  

19,891  

Other current assets

1 unchanged sentence

70,912  

105,867  

Investments in affiliates

1 unchanged sentence

63,063  

63,062  

Right of use assets

2 unchanged sentences

16,176  

26,256  

Total assets classified as held for sale

$ 392,641  

$ 423,367  

Accounts payable

$ 37,997  

$ 37,813  

Contract liabilities

1 unchanged sentence

27,764  

22,750  

Deferred income taxes, net

Long-term lease liabilities

2 unchanged sentences

$ 83,408  

$ 79,309  

The following table represents summarized statements of operations information of discontinued operations (in thousands):

Years Ended December 31,

$ 491,812  

$ 433,580  

$ 530,729  

Cost of revenue

434,723  

393,445  

498,836  

Selling, general and administrative expenses

59,932  

63,405  

69,834  

Non-cash impairment charges (1)

156,690  

Gain on sales of property and equipment, net (2)

( 32,658 )  

( 2,005 )  

Other (income) expense, net

( 8,004 )  

( 3,472 )  

Provision for (benefit from) income taxes

20,950  

( 10,209 )  

Net income (loss) from discontinued operations

$ 10,673  

$ ( 164,399 )  

( 1 ) During 

2020 ,  we performed 

two interim goodwill impairment tests.

The first was on the WMS Materials and WMS Specialty reporting units due to an adverse change in the business climate for these reporting units, including a modified relationship with a business partner, increased competition and market consolidation ,  exacerbated by economic disruption and market conditions associated with the COVID- 19  pandemic.

The goodwill impairment test resulted in a $ 14.8 million impairment charge during the three months ended March 31, 2020 associated with the WMS Materials reporting unit and no impairment charge related to the WMS Specialty reporting unit.

The second test was on the WMS Water and WMS Materials reporting units due to the continued impact from an adverse change in the business climate, including reduced market share due to loss of strategic personnel during the 

three  months ended 

September 30, 2020.

The goodwill impairment test resulted in an additional impairment charge of $ 117.9  million and $ 14.4  million associated with our WMS Water and WMS Materials reporting units, respectively, during the three months ended September 

 In addition, we recorded an impairment charge of $ 9.6  million during the year ended December 31, 2020 related to entities within investments in foreign affiliates related due to other than temporary adverse changes in the associated business climate.

( 2 ) During 2021,  we completed a sale-leaseback transaction for  

two  properties in California.

The sale of these properties resulted in a reduction in net property and equipment of $ 11.1  million and a $ 2.4  million addition to both right of use assets and lease liabilities on the held-for-sale balance sheets, as well as a $ 29.7  million gain on sales of property and equipment on the discontinued operations statements of operations.

The significant components included in the consolidated statement of cash flows for the discontinued operations are as follows (in thousands):

For the Year Ended December 31,

Depreciation, depletion and amortization

$ 39,556  

$ 48,010  

$ 55,865  

Non-cash impairment charges (1)

$ 156,690  

Purchases of property and equipment

$ ( 11,982 )  

$ ( 16,657 )  

Proceeds from sales of property and equipment

$ 49,266  

$ 7,610  

$ 11,522  

( 1 ) During 

2020 the interim goodwill impairment tests resulted in impairment charges.

See further discussion in note ( 1 ) in the statements of operations table within this footnote.

GRANITE CONSTRUCTION INCORPORATED

10 unchanged sentences

In our review of these changes for the years ended 

December 31, 2021 and 2020, we did 

not  identify any material amounts that should have been recorded in a prior period.

Other than those identified in the 

2019  Annual Report on Form 

10 -K, we did 

not  identify any material amounts that should have been recorded in a prior period for the year ended December 31, 

The net changes in project profitability from revisions in estimates, both increases and decreases, which individually had an impact of $ 5.0 million or more on gross profit were net decreases of $ 70.6  million, $ 143.5  million and $ 199.1  million for the years ended 

December 31,  

31, 2021,  

2021  and 

2019, respectively.

2020 , we did 

not  identify any material amounts that should have been recorded in a prior period.

The net changes in project profitability from revisions in estimates, both increases and decreases, which individually had an impact of 

$5.0 million or more on gross profit were net decreases of $ 80.1  million, $ 70.6  million and $ 143.4  million for the years ended 

December 31,  

2021  and 2020 , respectively.

The projects are summarized as follows (dollars in millions except per share data):

3 unchanged sentences

$ 5.4 - 6.8  

Increase to project profitability

$ 6.2 - 9.2  

Increase to net income/decrease to net loss attributable to Granite Construction Incorporated from continuing operations

Increase to project profitability, net

$ 12.1  

Increase to net income/decrease to net loss per diluted share attributable to common shareholders from continuing operations

$ 15.4  

Increase to net income/decrease to net loss

$ 11.4  

Amounts attributable to non-controlling interests

Increase to net income/decrease to net loss attributable to Granite Construction Incorporated

$ 11.4  

Increase to net income/decrease to net loss per diluted share attributable to common shareholders

$ 0.13  

$ 0.24  

The increases during the year ended December 31,  

2021  were due to production at a higher rate than anticipated and a decrease in estimated cost from mitigated risks as well as settlement of outstanding customer affirmative claims. There were no amounts attributable to non-controlling interests for any of the periods presented.

2022  were due to production at a higher rate than anticipated and a decrease in estimated cost from mitigated risks. The increases during the year ended December 31, 2021 were due to production at a higher rate than anticipated and a decrease in estimated cost from mitigated risks as well as settlement of outstanding customer affirmative claims. There were no amounts attributable to non-controlling interests for 2021.

Years Ended December 31,

4 unchanged sentences

$ 6.7 - 49.9  

Decrease to project profitability

Decrease to project profitability, net

$ 92.2  

1 unchanged sentence

$ 143.4  

Decrease to net income/increase to net loss from continuing operations

Decrease to net income/increase to net loss

$ 74.1  

4 unchanged sentences

$ 20.5  

Decrease to net income/increase to net loss attributable to Granite Construction Incorporated from continuing operations

$ 31.9  

Decrease to net income/increase to net loss attributable to Granite Construction Incorporated

$ 52.4  

$ 48.6  

Decrease to net income/increase to net loss per diluted share attributable to common shareholders from continuing operations (1)

$ 82.9  

Decrease to net income/increase to net loss per diluted share attributable to common shareholders

$ 1.00  

$ 1.02  

( 1 ) The prior period amounts have been adjusted to correctly present the per share impact attributable to common shareholders.

$ 1.79  

The decreases during the year ended December 31,  

2021  were due primarily to additional costs from acceleration of work coupled with lower productivity and higher costs than originally anticipated, unfavorable weather and extended project duration.

2022  were due to additional costs related to extended project duration, increased labor and materials costs, and disputed work being performed where there are ongoing legal claims.

The decreases during the year ended December 31,  

2020  were due to increases in design, production, weather-related and labor contingency costs.

The decreases during the year ended December 31, 2019 were due to increased project completion costs, schedule delays, lower productivity than originally anticipated, performance of a significant amount of unresolved disputed work, an unfavorable court ruling on a designer back charge claim and additional weather-related costs partially offset by an increase in estimated recovery from customer affirmative claims.

2021  were primarily due to additional costs from acceleration of work coupled with lower productivity and higher costs than originally anticipated, unfavorable weather and extended project duration.

The decreases during the year ended December 31, 2020, were due to increases in design, production, weather-related and labor contingency costs.

GRANITE CONSTRUCTION INCORPORATED

4 unchanged sentences

Construction and Materials.

In alphabetical order, our operating groups from continuing operations are: California, Central and Mountain. The following tables present our disaggregated revenue (in thousands):

In alphabetical order, our operating groups are: California, Central and Mountain.

In connection with the reclassification of the WMS businesses from discontinued operations to continuing operations, the Consolidated Statements of Operations have been revised to include Inliner, through the date of sale and Water Resources and Mineral Services in the Mountain operating group for all periods presented (see Note 2 ).

The following tables present our disaggregated revenue (in thousands):

Years ended December 31,

$ 811,623  

37 unchanged sentences

Unearned Revenue

The following table presents our unearned revenue from continuing operations as of the respective periods (in thousands):

The following table presents our unearned revenue as of the respective periods:

(in thousands)

December 31, 2022

December 31, 2021 (1)

$ 945,971  

$ 771,759  

1,444,983  

1,334,901  

486,524  

488,425  

$ 2,877,478  

$ 2,595,085  

( 1 ) These balances do not include amounts held for sale (see Note 2 ).

Contract Assets and Liabilities

During the years ended December 31,  

2020  and 2019 , we recognized revenue of $ 176.2  million, $ 110.9  million and $ 116.1  million, respectively, that was included in the contract liability balances at 

December 31,  

2019  and 2018, respectively.

As a result of changes in contract transaction price related to performance obligations that were satisfied or partially satisfied prior to the end of the periods we recognized revenue of $ 182.8  million, $ 153.9  million and $ 176.1  million during the years ended December 31,  

13 unchanged sentences

$ 145,437  

The following tables summarize changes in the contract asset balance for the periods presented (in thousands):

Balance at December 31, 2020

$ 132,097  

Change in the measure of progress on projects, net

547,450  

Revisions in estimates, net

Receipts related to contract retention

Balance at December 31, 2021

$ 145,437  

Balance at December 31, 2019

$ 163,578  

Change in the measure of progress on projects, net

656,460  

Revisions in estimates, net

Receipts related to contract retention

Balance at December 31, 2020

$ 132,097  

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

( 1 ) These balances do not include amounts held for sale (see Note 2 ).

The increase in contract assets is primarily due to unresolved disputed work and increased retention balances related to certain ongoing projects. As of 

December 31,  

2022  and 

2021 , contract retention receivable from Brightline Trains Florida LLC represented 

11.7 %, and 

17.2 %, respectively, of total contract assets. 

No other contract retention receivable individually exceeded 10%  of total contract assets at any of the presented dates.

The majority of the contract retention balance is expected to be collected within one  year.

As work is performed, revenue is recognized and the corresponding contract liabilities are reduced.

During the years ended December 31,  

2022  and 

2021  and 2020, we recognized revenue of $ 223.7  million, $ 176.2  million and $ 110.9  million, respectively, that was included in the contract liability balances at 

December 31, 

2020  and 2019, respectively.

The components of the contract liability balances as of the respective dates were as follows (in thousands):

8 unchanged sentences

$ 200,041  

The following table summarizes changes in the contract liability balance for the periods presented (in thousands):

Balance at December 31, 2020

( 1 ) These balances do not include amounts held for sale (see Note 2 ).

The decrease in contract liabilities is primarily due to revenue recognized in excess of billings as well as reductions in provisions for losses as certain loss projects progress towards completion.

Receivables, net

Receivables include billed and unbilled amounts for services provided to clients for which we have an unconditional right to payment as of the end of the applicable period and generally do not bear interest.

The following table presents major categories of receivables (in thousands):

Contracts completed and in progress:

$ 220,809  

Change in the measure of progress on projects, net

( 1,770,667 )

Revisions in estimates, net

$ 236,053  

120,348  

Change in provision for loss, net

Balance at December 31, 2021

126,371  

Balance at December 31, 2019

Total contracts completed and in progress

341,157  

Change in the measure of progress on projects, net

( 1,748,830 )

Revisions in estimates, net

362,424  

Change in provision for loss, net

Materials sales

52,182  

Balance at December 31, 2020

43,746  

Receivables, net

The following table presents major categories of receivables (in thousands):

Contracts completed and in progress:

Total contracts completed and in progress

Material sales

71,790  

59,496  

Total gross receivables

465,129  

465,666  

allowance for credit losses

Total net receivables

$ 463,987  

$ 464,588  

( 1 ) These balances do not include amounts held for sale (see Note 2 ).

Included in other receivables at 

1 unchanged sentence

2022  and 

2020  were items such as estimated recovery from back charge claims, notes receivable, fuel tax refunds and income tax refunds. Other receivables at December 31, 2021 also included $ 20.4 million of working capital contributions in the form of a loan to a partner in one of our unconsolidated joint ventures that bears interest at 6.25 % per annum.

2021  were items such as estimated recovery from back charge claims, notes receivable, fuel tax refunds and income tax refunds.

Other receivables at December 31,  

2022  and 

2021 and also included $ 24.9  million and $ 20.4  million of working capital contributions in the form of a loan to a partner in one of our unconsolidated joint ventures that bears interest at prime plus 3.0 % per annum. 

No  receivable individually exceeded 10 % of total net receivables at any of these dates.

9 unchanged sentences

$ 99,806  

$ 65,233  

Accrued and other current liabilities

Interest rate swap

$ 3,514  

Total liabilities

Other current assets

Commodity swap

$ 99,806  

14 unchanged sentences

$ 3,514  

( 1 ) These balances do not include amounts held for sale (see Note 2 ).

Interest Rate Swaps

In connection with the Third Amended and Restated Credit Agreement (as discussed further in Note 14 ), we entered into 

In connection with entering into the Third Amended and Restated Credit Agreement in May 2018, we entered into 

two  interest rate swaps with a combined initial notional amount of $ 150.0  million and an effective date of 

May 2018 that mature in 

 The interest rate swaps are designed to convert the interest rate on the term loan from a variable interest rate of LIBOR plus an applicable margin to a fixed rate of 

2.76 % plus the same applicable margin. The interest rate swaps are measured at fair value on the consolidated balance sheets using the income approach, which discounts the future net cash settlements expected under the derivative contracts to a present value.

These valuations primarily utilize indirectly observable inputs, including contractual terms, interest rates and yield curves observable at commonly quoted intervals.

The interest rate swaps were designated as cash flow hedges through the 

three  months ended 

March 31, 2021.

May 2018 and a maturity date of May 2023 .

During the 

three  months ended 

June 30, 

2021,  we determined that the interest rate swaps were 

no  longer highly effective in offsetting changes to expected future cash flows on hedged transactions and were therefore de-designated as cash flow hedges.

As a result of this de-designation, the $ 5.4  million unrealized loss recorded to accumulated other comprehensive loss prior to de-designation will continue to be amortized to interest expense through the maturity date of 

May 2023. 

The impact from the interest rate swap de-designation that was included in interest expense on the consolidated statements of operations was immaterial for the year ended December 31, 2021 .

second  quarter of 

2022,  we terminated the entirety of our floating-to-fixed interest rate swaps in connection with the prepayments of our term loan (see Note 

14 ). The impact to interest expense in the consolidated statements of operations was $ 2.2  million for the year ended December 31, 2022.

GRANITE CONSTRUCTION INCORPORATED

1 unchanged sentence

Commodity Swaps

In December 2021, we entered into two commodity swaps designed as cash flow hedges for crude oil covering the period from April 2022 to October 2022 with a total notional value of $ 8.1  million.

The financial statement impact during the year ended 

December 31, 2021 was immaterial.

In December 2022, we entered into a commodity swap designed as a cash flow hedge for crude oil with a notional amount of $ 7.0  million and a maturity date of October 31, 2023. 

In December 2021, we entered into two  commodity swaps designed as cash flow hedges for crude oil covering the period from April 2022 to October 2022 

with a total notional amount of $ 8.1  million.

The financial statement impact of these swaps during the year ended 

December 31, 2022 was a realized gain of $ 4.1 million and an unrealized gain of $ 0.4  million.

The financial statement impact during the year ended December 31, 2021 was immaterial. 

Other Assets and Liabilities

14 unchanged sentences

$ 313,785  

Credit Agreement - term loan (2)

Third Amended and Restated Credit Agreement - term loan (2)

$ 123,750  

$ 124,598  

Fourth Amended and Restated Credit Agreement - revolver (2)

$ 50,000  

4 unchanged sentences

( 2 ) The fair value of the 2.75 % Convertible Notes is based on the median price of the notes in an active market as of 

December 31, 2021 and 2020.

The fair value of the Credit Agreement term loan is based on borrowing rates available to us for long-term loans with similar terms, average maturities, and credit risk. See Note 14  for definitions of, and more information about the 2.75% Convertible Notes and Credit Agreement.

( 3 ) Excluded from carrying value is $ 22.6  million and $ 29.7  million of debt discount as of 

December 31, 2021  and 2020 , respectively, related to the 

December 31, 2022  and 

The fair value of the Credit Agreement term loan and revolver are based on borrowing rates available to us for long-term loans with similar terms, average maturities, and credit risk. See Note 14  for definitions of, and more information about the 2.75% Convertible Notes and Credit Agreement.

( 3 ) Excluded from carrying value is $ 22.6  million of debt discount as of 

December 31,  

2021 , related to the 

2.75%  Convertible Notes (see Note 

There is no debt discount in 2022  due to the adoption of ASU 2020 - 06.

The carrying value of marketable securities approximates their fair value as determined by market quotes.

12 unchanged sentences

See Note 11  

for details of the asset retirement balances.

We estimate our liability for performance guarantees for our unconsolidated construction joint ventures and line item joint ventures using estimated partner bond rates, which are Level 2 inputs, and include them in accrued expenses and other current liabilities (see Note 13 ) with a corresponding increase in equity in construction joint ventures in the consolidated balance sheets.

for details of the asset retirement obligation balances.

We estimate our liability for performance guarantees for our unconsolidated construction joint ventures and line item joint ventures using estimated partner bond rates, which are Level 2 inputs, and include them in accrued expenses and other current liabilities (see Note 13 ) with a corresponding increase in equity in construction joint ventures in the consolidated balance sheets.

See Note 1 for further discussion on performance guarantees.

During the years ended December 31, 

2021 and 2020, we had no material nonfinancial asset and liability fair value adjustments related to our continuing operations.

During the years ended December 31, 2022  and 2021 , we had no material nonfinancial asset and liability fair value adjustments.

GRANITE CONSTRUCTION INCORPORATED

7 unchanged sentences

At December 31,  

2021 , there was $ 0.7  billion of construction revenue to be recognized on unconsolidated and line item construction joint venture contracts of which $ 0.3  billion represented our share and the remaining $ 0.4  billion represented our partners’

2022 , there was $ 246.4  million of remaining contract value on unconsolidated and line item construction joint venture contracts of which $ 110.9  million represented our share and the remaining $ 135.5  million represented our partners’

We are not able to estimate amounts that may be required beyond the remaining cost of the work to be performed.

4 unchanged sentences

2022 , we were engaged in 

eight  active CCJV projects with total contract values ranging from $ 2.3  million to $ 436.3  million for a combined total of $ 1.6  billion of which our share was $ 939.8  million.

As of December 31, 2021, our share of revenue remaining to be recognized on these CCJVs was $ 267.0  million and ranged from $ 0.6  million to $ 83.3  million by project.

ten  active CCJV projects with total contract values ranging from $ 2.5  million to $ 433.4  million for a combined total of $ 1.8  billion of which our share was $ 1.0  billion.

As of December 31,  

2022 , our share of revenue remaining to be recognized on these CCJVs was $ 120.0  million and ranged from $ 1.3  million to $ 24.6  million by project.

Our proportionate share of the equity in these joint ventures was between 

3 unchanged sentences

2021  and 

2019 , total revenue from CCJVs was $ 405.1  million, $ 312.5  million and $ 261.2  million, respectively.

2020 , total revenue from CCJVs was $ 437.1 million, $ 405.1 million and $ 312.5  million, respectively.

During the years ended 

6 unchanged sentences

2022 , we were engaged in 

nine  active unconsolidated joint venture projects with total contract values ranging from $ 13.7  million to $ 3.8  billion for a combined total of $ 10.7  billion of which our share was $ 3.0  billion.

seven  active unconsolidated joint venture projects with total contract values ranging from $ 12.3  million to $ 3.8  billion for a combined total of $ 8.9  billion of which our share was $ 2.6  billion.

Our proportionate share of the equity in these unconsolidated joint ventures ranged from 23.0 % to 50.0 %.

74 unchanged sentences

$ 410,675  

Granite’s interest in gross loss

Granite’s interest in gross profit (loss)

$ ( 19,381 )  

$ ( 981 )  

$ ( 121,312 )

Net Income (Loss)

$ ( 47,904 )  

5 unchanged sentences

( 14,765 )  

Granite’s interest in net loss

Granite’s interest in net income (loss) (2)

$ ( 19,676 )  

$ ( 768 )  

$ ( 120,611 )

1 ) Partners’

interest and adjustments includes amounts to reconcile total revenue and total cost of revenue as reported by our partners to Granite’s interest adjusted to reflect our accounting policies and estimates primarily related to contract forecast and/or actual differences.

During each of the years ended December 31,  

2021 , and 

2020 , there was a material variance on one project and during the year ended December 31,  

2019  there were material variances on three  projects between our estimated and/or actual total revenue and cost of revenue when compared to that of our partners’ due to timing of recognition from differing accounting policies and public company quarterly reporting requirements. The joint venture net loss amounts exclude our corporate overhead required to manage the joint ventures and include taxes only to the extent the applicable states have joint venture level taxes.

Line Item Joint Ventures

2 ) These joint ventures net income (loss) amounts exclude our corporate overhead required to manage the joint ventures and include taxes only to the extent the applicable states have joint venture level taxes.

December 31,  

2021 , we were engaged in 

three  active line item joint venture construction projects with a total contract value of $ 337.1  million of which our portion was $ 221.0  million.

2022 , we were engaged in

three  active line item joint venture construction projects with a total contract value of $

327.7  million of which our portion was $

206.7  million.

December 31,  

2021 , our share of revenue remaining to be recognized on these line item joint ventures was $ 70.9 million.

2022 , our share of revenue remaining to be recognized on these line item joint ventures was $

37.5  million.

During the years ended 

1 unchanged sentence

2021  and 

2019 , our portion of revenue from line item joint ventures was $ 67.8  million, $ 80.8  million and $ 18.7  million, respectively.

2020 , our portion of revenue from line item joint ventures was $

35.4  million, $

67.8  million and $

80.8  million, respectively.

Investments in Affiliates

Our investments in affiliates balance is related to our investments in unconsolidated non-construction entities that we account for using the equity method of accounting, including investments in real estate entities and an asphalt terminal entity.

The real estate entities were formed to accomplish specific real estate development projects in which our wholly-owned subsidiary, Granite Land Company, participates with third -party partners. The asphalt terminal entity is a 50 % interest in a limited liability company which owns and operates an asphalt terminal and operates an emulsion plant in Nevada.

We have determined that the real estate entities are not consolidated because although they are VIEs, we are not the primary beneficiary.

We have determined that the asphalt terminal entity is not consolidated because it is 

not VIE and we do not hold the majority voting interest.

As such, this entity is accounted for using the equity method.

Our investments in affiliates balance is related to our investments in unconsolidated non-construction entities that we account for using the equity method of accounting, including investments in foreign affiliates, real estate entities and an asphalt terminal entity.

The foreign affiliates in which we are invested are engaged in mineral drilling services and the manufacture and supply of drilling equipment, parts and supplies in Latin America.

The real estate entities were formed to accomplish specific real estate development projects in which our wholly owned subsidiary, Granite Land Company, participates with 

third -party partners. The asphalt terminal entity is a 

50 % interest in a limited liability company which owns and operates an asphalt terminal and operates an emulsion plant in Nevada.

We have determined that the real estate entities are 

not  consolidated because although they are VIEs, we are 

not  the primary beneficiary.

We have determined that the foreign affiliates and the asphalt terminal entity are 

not  consolidated because they are 

not  VIEs and we do 

not  hold the majority voting interest.

As such, these entities are accounted for using the equity method.

Our investments in affiliates balance consists of equity method investments in the following types of entities (in thousands):

$ 58,579  

$ 12,777  

Asphalt terminal

4 unchanged sentences

$ 23,368  

( 1 ) These balances do not include amounts held for sale (see Note 2 ).

GRANITE CONSTRUCTION INCORPORATED

23 unchanged sentences

$ 23,368  

( 1 ) The balance primarily related to local bank debt for equipment purchases and debt associated with our real estate investments. 

( 1 ) These balances do not include amounts held for sale (see Note 2 ).

( 2 ) The balance primarily related to local bank debt for equipment purchases, working capital in our foreign affiliates and debt associated with our real estate investments. 

Of the $ 366.8  million in total assets as of December 31,  

2022 , we had investments in 

two  real estate entities with total assets of $ 30.0  million and $ 51.2  million and the asphalt terminal entity had total assets of $ 32.0  million.

two  real estate entities with total assets of $ 31.0  million and $ 40.2  million, our foreign affiliates had total assets of $ 264.6  million, and the asphalt terminal entity had total assets of $ 31.0  million.

As of December 31,  

2 unchanged sentences

2022 , our percent ownership in the real estate entities ranged from 10 % to 25 %.

We have direct and indirect investments in our foreign affiliates, and our percent ownership in foreign affiliates ranged from 25 % to 

50 % as of December 31, 2022.

The following table provides summarized statements of operations information for our affiliates accounted for under the equity method on a combined basis (in thousands):

17 unchanged sentences

$ 8,783  

2020,  the entities within our investments in foreign affiliates experienced a change in business climate from a rise in operating costs, resulting in increased prices and decreased demand.

The corresponding decline in future operating cash flows resulted in the investments fair value to fall below the associated carrying amounts, which was considered to be other than temporary.

Therefore, we recorded a non-cash impairment charge of

$ 9.6  million during the year ended

December 31, 2020.

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Property and Equipment, net

Balances of major classes of assets and total accumulated depreciation and depletion are included in property and equipment, net in the consolidated balance sheets as follows (in thousands):

The following table presents the major classes of assets and total accumulated depreciation and depletion (in thousands):

Equipment and vehicles

22 unchanged sentences

$ 433,504  

Depreciation and depletion expense from continuing operations primarily included in cost of revenue in our consolidated statements of operations was $ 67.1  million, $ 62.7  million and $ 63.7  million for the years ended December 31,  

( 1 ) These balances do not include amounts held for sale (see Note 2 ).

Depreciation and depletion expense primarily included in cost of revenue in our consolidated statements of operations was $ 79.5  million, $ 97.7  million and $ 98.3  million for the years ended December 31,  

2022 , 2021  and 2020 , respectively.

In December 

2021,  we completed a sale-leaseback transaction associated with a property in California.

The sale of this property resulted in a reduction in net property and equipment of $ 3.1  million and a $ 1.4 million addition to both right of use assets and lease liabilities on the consolidated balance sheets, as well as a $ 19.8  million gain on sales of property and equipment on the consolidated statements of operations.

During 2021, we completed sale-leaseback transactions for three properties in California.

The sale of these properties resulted in a $ 49.5 million gain on sales of property and equipment in the consolidated statements of operations for the year ended December 31, 2021.

As discussed in Note 1, we have asset retirement obligations, which are liabilities associated with our legally required obligations to reclaim owned and leased quarry property and related facilities.

4 unchanged sentences

2022 , $ 11.9  million is expected to be settled by 2027 and the remaining is expected to be settled thereafter. 

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

The following is a reconciliation of these asset retirement obligations (in thousands):

The following table summarizes the asset retirement obligation balances for the periods presented (in thousands):

Years Ended December 31,

17 unchanged sentences

$ 53,715  

( 1 ) These balances do not include amounts held for sale (see Note 2 ).

Amortized Intangible Assets

As of December 31, 2021 and 2020,  amortized intangible assets included in other noncurrent assets in the consolidated balance sheets consisted of $ 9.5  million and $ 10.6  million, respectively, net of accumulated amortization of $ 14.5  million and $ 13.5  million, respectively, related to permits for our continuing operations.

The net amortization expense for continuing operations related to amortized intangible assets for each of the years ended December 31,  

2021 , 2020  and 2019  was $ 1.0  million and was primarily included in cost of revenue in the consolidated statements of operations. Amortization expense based on the amortized intangible assets balance at December 31,  

2021  is expected to be $ 1.0  million in each year from 

2022  to 

As of December 31,  

2022 and 2021 , amortized intangible assets included in other noncurrent assets in the consolidated balance sheets were $ 9.1  million and $ 9.5  million, respectively, net of accumulated amortization of $ 24.1  million and $ 14.5  million, respectively, primarily related to permits.

The net amortization expense related to amortized intangible assets for each of the years ended December 31,  

2022 , 2021  and 2020  was $ 2.0  million, $ 10.1  million and $ 13.5  million, respectively, and was primarily included in cost of revenue in the consolidated statements of operations. Amortization expense based on the amortized intangible assets balance at December 31,  

2022  is expected to be $ 1.2  in 2023  and 2024 , $ 1.1  in 2025 , $ 1.0  million in 

2026 , $ 0.6  million in 

2027  and $ 4.0  million thereafter.

3 unchanged sentences

Accrued insurance

$ 76,999  

$ 65,404  

Deficits in unconsolidated construction joint ventures (see Note 9)

28,636  

82,463  

Payroll and related employee benefits

87,460  

100,035  

Performance guarantees (see Note 1)

82,112  

82,280  

Accrued legal settlement (see Note 20)

129,000  

48,622  

51,565  

$ 452,829  

$ 381,747  

( 1 ) These balances do not include amounts held for sale (see Note 2 ).

The decrease in performance guarantees in the current year is due to receiving customer acceptance on two unconsolidated construction joint ventures during the year.

Other includes short-term lease liability, dividends payable, warranty reserves, asset retirement obligations, remediation reserves and other miscellaneous accruals, none of which are greater than 5% of total current liabilities.

3 unchanged sentences

$ 207,354  

Credit Agreement - term loan

Third Amended and Restated Credit Agreement - term loan

123,750  

Fourth Amended and Restated Credit Agreement - revolver

50,000  

7 unchanged sentences

The aggregate minimum principal maturities of long-term debt related to balances at December 31,  

2021  excluding debt issuance costs, including current maturities and the $ 22.6  million unamortized debt discount related to the 2.75 % Convertible Notes are as follows: $ 8.9  million in 

2022  excluding debt issuance costs, and including current maturities are as follows: $ 1.4  million in 

$ 231.5  million in 2024 ;

1 unchanged sentence

Credit Agreement

Granite entered into the Third Amended and Restated Credit Agreement dated May 31, 2018 which provides for, among other things, (i) a $ 150.0 million term loan and a $ 350.0 million revolving credit facility;

(ii) an increase to the revolving credit facility and/or term loan at the option of the Company, in an aggregate maximum amount up to $ 200.0 million subject to the lenders providing the additional commitments;

(iii) a maturity date of May 31, 2023 ( the “Maturity Date”);

and (iv) the elimination of the stipulation to have a $ 150.0 million minimum cash balance before and after a dividend payment.

There is an aggregate sublimit for letters of credit of $ 100.0 million and customary affirmative, restrictive and financial covenants.

In 2019, we entered into two amendments which, among other things, (i) amended the definition of Consolidated EBITDA which is used in the Consolidated Leverage Ratio financial covenant calculation;

and (ii) permitted the Company to issue the 2.75% Convertible Notes (as defined below), enter into the Hedge Option (as defined below) and execute the related warrant transaction.

In 2020, we entered into three amendments which (i) reduced the revolving credit facility from $ 350.0 million to $ 275.0 million;

(ii) amended the definition of Applicable Rate from 2.00 % to 3.00 % for loans bearing interest based on LIBOR;

(iii) amended the definition of Consolidated EBITDA which is used in the Consolidated Leverage Ratio financial covenant calculation; (iv) modified certain financial covenants to allow for investments in certain large projects during the four fiscal quarters during 2020;

(v) provided the Company additional time to deliver its annual and quarterly financial statements;

and (vi) provided for a reversion in the applicable rate from 3.00 % to the applicable rate table in the Credit Agreement upon filing of our Quarterly Report on Form 10 -Q for the quarter ending March 31, 2021.

On February 19, 2021, we entered into the Limited Waiver and Amendment No.

6 to the Third Amended and Restated Credit Agreement which waived any defaults or events of defaults that may have arisen in connection with the Company’s Restatement during the periods covered by the Restatement, the failure to comply with a financial covenant and any right of the lenders to collect interest at the default rate with respect to the waived defaults and events of default.

We refer to the Third Amended and Restated Credit Agreement dated 

May 31, 2018 and all subsequent amendments listed above as “Credit Agreement.” 

The Credit Agreement consists of a term loan and a revolving credit facility. 

The term loan requires that Granite repay 1.25 % of the principal balance each quarter until the Maturity Date, at which point the remaining balance is due. As of both 

During the 

first  half of 

2022 ,  we prepaid 

100 % of our outstanding term loan and replaced the Third Amended and Restated Credit Agreement dated 

May 31, 2018 

with the Fourth Amended and Restated Credit Agreement (the “Credit Agreement”) maturing 

June 2, 2027 .

 The Credit Agreement is a $ 350.0  million senior secured, 

five -year revolving facility (the “Revolver”), including an accordion feature allowing us to increase borrowings up to the greater of (a) $ 200.0  million and (b) 

100 % of 

twelve -month trailing EBITDA, subject to lender approval.

The Credit Agreement includes a $ 150.0  million sublimit for letters of credit ($ 75.0  million for financial letters of credit) and a $ 20.0  million sublimit for swingline loans.

borrow on the Revolver, at our option, at either (a) the SOFR term rate plus a credit adjustment spread plus applicable margin ranging from 

1.0 % to 

2.0 %, or (b) a base rate plus an applicable margin ranging from 

0.0 % to 

The applicable margin is based on our Consolidated Leverage Ratio (as defined in our Credit Agreement), calculated quarterly.

December 31,  

2021  and 2020 , $ 7.5  million of the term loan balance was included in current maturities of long-term debt on the consolidated balance sheets and the remaining $ 116.3  million and $ 123.8  million, respectively, was included in long-term debt.

As of December 31,  

2021 , the total unused availability under the Credit Agreement was $ 232.0 million resulting from $ 43.0 million in issued and outstanding letters of credit and no amount drawn under the revolving credit facility.

The letters of credit will expire between March 2022 and December 

During the year ended 

2022 , the total unused availability under the Credit Agreement was $ 269.3  million, resulting from $ 30.7  million in issued and outstanding letters of credit and $ 50.0  million drawn under the Revolver.

The letters of credit had expiration dates between 

April 2023  and 

December 2026 . As of 

December 31,  

2020, $ 50.0 million in draws were made under the revolving credit facility and none were outstanding as of December 31, 2020.

Borrowings under the Credit Agreement bear interest at LIBOR, subject to a 0.75 % floor or a base rate (at our option), plus an applicable margin based on the Consolidated Leverage Ratio (as defined in the Credit Agreement) calculated quarterly.

LIBOR varies based on the applicable loan term, market conditions and other external factors.

The applicable margin was 

1.75 % for loans bearing interest based on LIBOR and 0.75 % for loans bearing interest at the base rate at December 31,  

Accordingly, the effective interest rate at 

2022 , the applicable rate was 

1.8 % for loans under the Credit Agreement bearing interest based on SOFR and 

0.8 % for loans bearing interest at the base rate.

Accordingly, the effective interest rates at 

December 31,  

2021  using three -month LIBOR and the base rate was 2.50 % and 4.00 %, respectively, and we elected to use LIBOR for the term loan. Using three -month LIBOR plus the applicable margin, future interest payments are expected to be $ 5.9 million in 2022 and $ 2.4 million 2023.

Convertible Notes

2022  for SOFR and base rate loans were 

6.2 % and 

8.3 %, respectively.

The amended Credit Agreement contains certain affirmative and restrictive covenants, and customary events of default.

The financial covenants include a maximum Consolidated Leverage Ratio (as defined in the Credit Agreement) of 

3.25  to 

1.00  and a minimum Consolidated Interest Coverage Ratio (as defined in the Credit Agreement) of 

3.00  to 

 As of 

December 31,  

2022 , the Consolidated Leverage Ratio was 

1.46 , which did 

not  exceed the maximum of 

Our Consolidated Interest Coverage Ratio was 

15.06 , which was above the minimum of 

Convertible Notes

In November 2019, we issued an aggregate principal amount of $ 230.0 million of convertible senior notes (the “2.75% Convertible Notes”) at an interest rate of 2.75 % per annum payable semiannually in arrears on May 

1 and November 

1 of each year, beginning on May 

1, 2020 and maturing on November 

1, 2024, unless earlier converted, redeemed or repurchased.

The 2.75% Convertible Notes will be convertible at the option of the holders prior to May 1, 2024 only during certain periods and upon the occurrence of certain events.

Thereafter, the 2.75% Convertible Notes will be convertible at the option of the holders at any time until October 30, 2024. 

Future interest payments are expected to be $ 6.3 million each year through 2024.

The initial conversion rate applicable to the 2.75% Convertible Notes is 31.7776 shares of Granite common stock per $1,000 principal amount of 2.75% Convertible Notes, which is equivalent to an initial conversion price of approximately $ 31.47 per share of Granite common stock.

As of December 31, 2022, the 2.75% Convertible Notes comprised our only convertible debt instrument.

The 2.75% Convertible Notes were issued in November 2019 in an aggregate principal amount of $ 230.0 million, with an interest rate of 2.75 % and a maturity date of November 1, 2024, unless earlier converted, redeemed or repurchased.

The 2.75% Convertible Notes are convertible at the option of the holders prior to May 1, 2024 only during certain periods and upon the occurrence of certain events.

After May 1, 2024, the 2.75% Convertible Notes will be convertible at the option of the holders at any time until the second scheduled trading day immediately preceding the maturity date.

The conversion rate applicable to the 2.75% Convertible Notes is 31.7776 shares of Granite common stock per $1,000 principal amount of 2.75% Convertible Notes, which is equivalent to a conversion price of approximately $ 31.47 per share of Granite common stock.

Upon conversion, we will pay or deliver shares of Granite common stock or a combination of cash and shares of Granite common stock, at our election.

In addition, upon the occurrence of a “make-whole fundamental change” as defined in the indenture governing the 2.75% Convertible Notes, (the “Indenture”) or if we deliver a notice of redemption, we will, in certain circumstances, increase the conversion rate for a holder that elects to convert its 2.75% Convertible Notes in connection with such a make-whole fundamental change or notice of redemption.

On or after November 

In addition, upon the occurrence of a “make-whole fundamental change”

as defined in the indenture governing the 2.75% Convertible Notes, (the “Indenture”) we will, in certain circumstances, increase the conversion rate for a holder that elects to convert its 2.75% Convertible Notes in connection with such a make-whole fundamental change.

We have the option to redeem for cash all or any portion of the 2.75% Convertible Notes if the last reported sale price of our common stock is equal to or greater than 130 % of the conversion price for a specified period of time.

1 unchanged sentence

as defined in the Indenture, holders may require us to repurchase for cash all or any portion of their 2.75% Convertible Notes at a price equal to 100 % of the principal amount plus any accrued and unpaid interest.

In addition, as described in the Indenture, certain events of default including, but not limited to, bankruptcy, insolvency or reorganization, may result in the 2.75% Convertible Notes becoming due and payable immediately. 

The cash received from the issuance of the 

2.75% Convertible Notes was separated into a $ 192.6 million liability component and a $ 37.4  million (less $ 9.5  million of taxes) equity component on the consolidated balance sheets at the time of issuance based on the fair value of a similar liability that does not have an associated convertible feature.

The $ 37.4 million difference between the principal amount and the $ 192.6 million (“debt discount”) will increase the debt balance over the expected life of the 2.75 % Convertible Notes.

The $ 6.4 million in third party offering costs (“debt issuance costs”) reduced the debt balance at original issuance and will increase the debt balance over the expected life of the 2.75% Convertible Notes. As of December 31,  

2021  and 2020, the carrying amount of the liability component was $ 207.4  million and $ 200.3  million, respectively, excluding $ 3.2  million and $ 4.3 million, respectively, of debt issuance costs, including $ 14.8  million and $ 7.7 million, respectively, of amortized debt discount.

As of December 31, 2021 and 2020, the remaining unamortized debt discount was $ 22.6  million and $ 29.7  million, respectively.

The equity component is not remeasured as long as it continues to meet the conditions for equity classification.

The debt discount has been recorded to interest expense using an effective interest rate of 6.62 % over the expected life of the 

2.75% Convertible Notes.

The debt issuance costs have been recorded to interest expense over the expected life of the 

2.75% Convertible Notes.

During the years ended December 31, 

2021  and 2020, we recorded $ 7.1  million and $ 6.6  million, respectively, of amortization related to the debt discount to interest expense in our consolidated statements of operations and $ 2.4  million and $ 2.1  million, respectively, of amortization related to debt issuance costs and fees to other (income) expense, net in our consolidated statements of operations.

Combined, the amortization of the debt discount and debt issuance costs were presented as amortization related to the 2.75% Convertible Notes on our consolidated statements of cash flows. 

On October 

29, 2019, in connection with the offering of our 2.75% Convertible Notes, we entered into a purchased equity derivative instrument for $ 37.4  million (less $ 9.5  million of taxes) to offset the potential common share dilution of any shares above $ 31.47  (“Hedge Option”) and sold warrants for $ 11.2  million to reduce the cost of the Hedge Option with potential common share dilution above $ 53.44 . The net costs incurred in connection with the Hedge Option and warrants were recorded as an increase to additional paid-in capital on our consolidated balance sheets. 

As of December 31,  

2022  and 

2021 , the balance in long-term debt in our consolidated balance sheets of the 2.75% Convertible Notes, excluding debt issuance costs, including $- million and $ 14.8  million, respectively, of amortized debt discount, was $ 230.0  million and $ 207.4  million, respectively.

As of December 31,  

2022  and 

2021 , the remaining unamortized debt discount was $- million and $ 22.6  million, respectively.

Effective January 1, 2022, 

we adopted ASU 2020 - 06  (see Note 1 ), which updated our accounting for the 2.75 % Convertible Notes.

During the year ended 

December 31,  

2022 , we did 

not  record amortization of the debt discount due to the implementation of ASU 

2020 - 06 ,  and during the years ended 

December 31,  

2021  and 2020 , we recorded $ 7.1  million and $ 6.6  million, respectively, of amortization of the debt discount.

During the years ended 

December 31,  

2021  and 2020 , we recorded $ 2.5  million, $ 3.2  million, and $ 4.3  million, respectively, of amortization related to debt issuance costs.

GRANITE CONSTRUCTION INCORPORATED

2 unchanged sentences

Our unconsolidated investments in real estate entities are subject to mortgage indebtedness.

This indebtedness is non-recourse to Granite, but is recourse to the real estate entity.

This indebtedness is non-recourse to Granite but is recourse to the real estate entity.

The terms of this indebtedness are typically renegotiated to reflect the evolving nature of the real estate project as it progresses through acquisition, entitlement and development.

16 unchanged sentences

We are not aware of any non-compliance by any of our unconsolidated real estate entities with the covenants contained in their debt agreements.

Our continuing operations have leases for office and shop space, as well as for equipment primarily utilized in our construction projects.

We have leases for office and shop space, as well as for equipment primarily utilized in our construction projects.

December 31,  

2021 , our lease contracts were primarily classified as operating leases and had terms ranging from month-to-month to 

2022 , our lease contracts were primarily classified as operating leases and had terms ranging from month-to-month to 

23  years.

December 31,  

2021  and 2020, ROU assets and long term lease liabilities were separately presented and short term lease liabilities of $ 18.8 million and $ 16.3  million, respectively, were included in accrued expenses and other current liabilities on our consolidated balance sheets.

2022  and 2021 , right of use assets and long term lease liabilities were separately presented and short term lease liabilities of $ 18.6 million and $ 18.8  million, respectively, were included in accrued expenses and other current liabilities in our consolidated balance sheets.

December 31,  

17 unchanged sentences

20,110  

12,822  

2028 through 2036

4 unchanged sentences

Excluded from the table above are minimum royalty requirements under all contracts, primarily quarry property, in effect at December 31,  

2021 which are payable as follows: $ 2.0  million in 2022 ;

2022 which are payable as follows:

$ 2.1  million in 2023 ;

2 unchanged sentences

$ 0.9  million in 2026 ;

$ 0.6  million in 2027 ;

and $ 3.8  million thereafter.

1 unchanged sentence

Profit Sharing and 401 (k) Plan :

Each employee’s combined pre-tax 401 (k) and post-tax (Roth) contributions cannot exceed 50 % of their eligible pay or Internal Revenue Code annual contribution limits. Our 401 (k) matching contributions can be up to 6 % of an employee’s gross pay at the discretion of the Board of Directors.

Our 401 (k) matching contributions to the 401 (k) Plan related to our continuing operations for the years ended December 31,  

The Profit Sharing and 401 (k) Plan (the “401 (k) Plan”) is a defined contribution plan covering all employees except employees covered by collective bargaining agreements and certain employees of our CCJVs. Our 401 (k) matching contributions can be up to 6 % of an employee’s gross pay at the discretion of the Board of Directors.

Our 401 (k) matching contributions to the 401 (k) Plan for the years ended December 31,  

2022 , 2021  and 2020  were $ 17.7  million, $ 19.1 million and $ 17.6 million, respectively. Profit sharing contributions from the Company may be made to the 401 (k) Plan in an amount determined by the Board of Directors. We made no profit sharing contributions during the years ended December 31,  

3 unchanged sentences

The NQDC Plan provides participants the opportunity to defer payment of certain compensation as defined in the NQDC Plan.

In October 2008, a Rabbi Trust was established to fund our NQDC Plan obligation and was fully funded as of December 31,  

Our NQDC Plan obligations are funded through a Rabbi Trust which was fully funded as of December 31,  

The assets held by the Rabbi Trust at December 31,  

5 unchanged sentences

2022  and 

2020 , respectively, and were primarily included in other long-term liabilities on the consolidated balance sheets. In addition, we had supplemental retirement benefits of $ 4.9  million and $5.3  million in other long-term liabilities on the consolidated balance sheets as of December 31, 

2021  and 2020, respectively.

2021 , respectively, and were primarily included in other long-term liabilities in the consolidated balance sheets. In addition, we had supplemental retirement benefits of $ 3.7 million and $ 4.9  million in other long-term liabilities in the consolidated balance sheets as of December 31,  

2022  and 

2021 , respectively.

GRANITE CONSTRUCTION INCORPORATED

2 unchanged sentences

December 31,  

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

and Granite Industrial, Inc. contribute to various multi-employer pension plans on behalf of union employees.

2022 , three of our wholly-owned subsidiaries, Granite Construction Company, Layne Christensen Company and Granite Industrial, Inc. contribute to various multi-employer pension plans on behalf of union employees.

The risks of participating in these multiemployer plans are different from single-employer plans in the following aspects:

18 unchanged sentences

3/31/2023 5/31/2024 5/31/2025

Pension Trust Fund for Operating Engineers Pension Plan

94 - 6090764  

Pension Trust Fund for Operating Engineers

94 - 6090764  

17 unchanged sentences

Pension trust funds with a range of expiration dates have various collective bargaining agreements.

Based upon the most recently available annual reports, the Company’s contribution to each of the individually significant plans listed in the table above was less than 5% of each plan’s total contributions.

Based upon the most recently available annual reports, our contribution to each of the individually significant plans listed in the table above was less than 5% of each plan’s total contributions.

We currently have no intention of withdrawing from any of the multi-employer pension plans in which we participate that would result in a significant withdrawal liability.

5 unchanged sentences

A total of 2,689,909  

shares of our  common stock have been reserved for issuance under the 2021 Plan of wh ich 2,321,541  remained av ailable as of December 31,  

shares of our  common stock were reserved for issuance under the 2021 Plan of wh ich 2,121,419  remained av ailable as of December 31,  

During the years ended December 31,  

32 unchanged sentences

$ 24.96  

Compensation cost related to continuing operations RSUs was $ 6.1  million ($ 4.5  million net of statutory tax rate), $ 5.9  million ($ 4.4  million net of statutory tax rate), and $ 9.4  million ($ 7.0  million net of statutory tax rate) for the years ended 

Compensation cost related to RSUs was $ 7.5  million ($ 5.6  million net of statutory tax rate), $ 6.6  million ($ 4.9  million net of statutory tax rate), and $ 6.4  million ($ 4.7  million net of statutory tax rate) for the years ended 

December 31,  

4 unchanged sentences

As of December 31,  

2021 , there was $ 6.6  million of unrecognized compensation cost related to continuing operations RSUs which will be recognized over a remaining weighted-average period of 

2022 , there was $ 8.2  million of unrecognized compensation cost related to RSUs which will be recognized over a remaining weighted-average period of 

1.4  years.

3 unchanged sentences

Dividends on shares held by the 401 (k) Plan are charged to retained earnings and all shares held by the 401 (k) Plan are treated as outstanding in computing our earnings per share.

Share Purchase Program:

As announced on April 29, 2016, on April 7, 2016, the Board of Directors authorized us to repurchase up to $ 200.0 million of our common stock at management’s discretion (the “2016 authorization”).

As part of the 2016 authorization, we established a plan to facilitate common stock repurchases.

We did not purchase shares under the share purchase program in any of the periods presented.

As of December 31,  

2021 , $ 157.2  million of the 2016 authorization remained available.

Share Purchase Program: 

As announced on February 3, 2022, on February 1, 2022, the Board of Directors authorized us to purchase up to $ 300.0 million of our common stock at management’s discretion (the “2022  authorization”).

The 2022 authorization replaced the 2016 authorization, including the amount available for repurchase, and no further repurchases will take place under the 2016 authorization. The specific timing and amount of any future repurchases will vary based on market conditions, securities law limitations and other factors.

The specific timing and amount of any future repurchases will vary based on market conditions, securities law limitations and other factors.

As of December 31,  

2022 , $ 231.5 million of the 2022 authorization remained available with purchases of 611,000 shares for $ 18.5 million in March 2022, 

1,320,568 shares for $ 40 million in May 2022 and 366,785 shares for $ 10 million in September 2022.

Weighted Average Shares Outstanding and Net Income (Loss) Per Share

The following table presents a reconciliation of the weighted average shares of common stock used in calculating basic and diluted net income (loss) per share as well as the calculation of basic and diluted net income (loss) per share (in thousands except per share amounts):

Years Ended December 31,

Numerator (basic and diluted)

Net income (loss) from continuing operations allocated to common shareholders

$ ( 577 )  

$ 19,282  

Net income (loss) from discontinued operations

Net income (loss) attributable to common shareholders for basic earnings per share

$ 83,302  

$ 10,096  

Net income (loss) allocated to common shareholders

$ ( 145,117 )

Interest expense related to 2.75 % Convertible Notes (1)

Net income (loss) attributable to common shareholders for diluted earnings per share

$ 89,192  

$ 10,096  

$ ( 145,117 )

Weighted average common shares outstanding, basic

2 unchanged sentences

45,614  

Dilutive effect of RSUs and convertible notes (1)(2)

Dilutive effect of RSUs (2)

Dilutive effect of 2.75 % Convertible Notes (1)(3)

Weighted average common shares outstanding, diluted

2 unchanged sentences

45,614  

Net income (loss) from continuing operations per share

$ ( 0.01 )  

$ 0.42  

Net income (loss) from discontinued operations per share

( 3.60 )  

Net income (loss) per share

$ 0.22  

$ ( 3.18 )  

Net income (loss) from continuing operations per share

$ ( 0.01 )  

Net income (loss) per share, basic

$ 1.87  

Net income (loss) from discontinued operations per share

$ 0.22  

Net income (loss) per share

Net income (loss) per share, diluted

$ 1.70  

$ 0.21  

( 1 ) Due to the net losses from continuing operations for the years ended December 31,  

2021  and 2019, RSUs representing approximately 533,000  and 

( 1 ) Beginning in 2022, with the adoption of ASU 2020 - 06, we have applied the if-converted method for calculating diluted earnings per share (see Note 1 ). 

( 2 ) Due to the net losses for the year ended December 31,  

2020, RSUs representing approximately 

589,000  shares, respectively, have been excluded from the number of shares used in calculating diluted net income (loss) per share, as their inclusion would be antidilutive.

( 2 ) The number of shares used in calculating diluted net income (loss) per share for the year ended December 31, 2021 

excluded the potential dilution from the 

2.75 % Convertible Notes converting into shares of common stock due to the net loss from continuing operations for the period.

The number of shares used in calculating diluted net income per share for the years ended 

( 3 ) The number of shares used in calculating diluted net income per share for the year ended 

December 31,  

2020 and 2019  excluded potential dilution from the 2.75% Convertible Notes converting into shares of common stock since the average stock price did not exceed $ 31.47 . 

2020, excluded potential dilution from the 2.75 % Convertible Notes converting into shares of common stock since the average stock price did not exceed $ 31.47 . 

(See Note 14  for further details).

The following is a summary of the income (loss) from continuing operations before provision for (benefit from) income taxes (in thousands):

The following is a summary of the income (loss) before income taxes (in thousands):

Years Ended December 31,

1 unchanged sentence

$ 13,531  

Total income (loss) from continuing operations before provision for (benefit from) income taxes

$ ( 176,448 )

( 5,418 )  

Total income (loss) before income taxes

$ 91,817  

The following is a summary of the provision for (benefit from) income taxes on continuing operations (in thousands):

$ 22,127  

$ ( 166,463 )

The following is a summary of the provision for (benefit from) income taxes (in thousands):

Years Ended December 31,

8 unchanged sentences

( 3,602 )  

( 1,071 )  

Total foreign

Total provision for (benefit from) income taxes on continuing operations

( 1,651 )  

Total provision for (benefit from) income taxes

$ 12,960  

$ 19,713  

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

The following is a reconciliation of our provision for (benefit from) income taxes on continuing operations based on the Federal statutory tax rate to our effective tax rate (dollars in thousands):

The following is a reconciliation of our provision for (benefit from) income taxes based on the Federal statutory tax rate to our effective tax rate (dollars in thousands):

Years Ended December 31,

6 unchanged sentences

State taxes, net of federal tax benefit

Foreign taxes

( 2,695 )  

( 2.9 )  

Foreign taxes

( 1,374 )  

4 unchanged sentences

( 4.6 )  

Non-controlling interests

( 1,096 )  

Non-controlling interests

Non-cash impairment charges

32,905  

Nondeductible expenses

( 13.7 )  

Company-owned life insurance

1 unchanged sentence

( 3.3 )  

Stock-based compensation

( 330 )  

( 0.4 )  

Stock-based compensation

( 664 )  

( 3.0 )  

Changes in uncertain tax positions

3 unchanged sentences

Valuation allowance

Purchase price accounting

( 3,212 )  

Provision to return adjustments

( 3.5 )  

1 unchanged sentence

( 2.3 )  

Assets held for sale

( 14,427 )  

1 unchanged sentence

10,089  

Gain on sale of business

( 3,827 )  

Nondeductible goodwill disposal

Provision to return adjustments

( 1,102 )  

2 unchanged sentences

( 0.3 )  

Provision for (benefit from) income taxes of $ 21.0 million, ($ 10.2 ) million and ($ 8.1 ) million were allocated to discontinued operations for the years ended December 31, 2021, 2020 and 2019, respectively.

The effective tax rates for discontinued operations were 66.2 %, 5.8 % and 21.9 % for the years ended December 31, 2021, 2020 and 2019, respectively.

The majority of the variance from the statutory tax rate in 2021 is due to the net deferred tax liability on basis differences on held for sale entities recorded in 2021 and the majority of the variance from the statutory tax rate in 2020 is due to the goodwill impairment and the investment in affiliates impairment recorded in 2020.

( 1,541 )  

$ 12,960  

14.1 %  

$ 19,713  

89.1 %  

$ ( 282 )  

The majority of the variance from the statutory tax rate in 2022 is due to the tax benefit associated with the reversal of net deferred tax liabilities related to businesses no longer held for sale and the release of valuation allowances related to the utilization of capital loss carryforwards.

These were partially offset by nondeductible goodwill associated with the sale of Inliner and the impact of the relative change in income before income taxes to the provision for income taxes.

GRANITE CONSTRUCTION INCORPORATED

8 unchanged sentences

11,133  

11,187  

Accrued compensation

11 unchanged sentences

( 19,919 )  

10,531  

Total long-term deferred tax assets

21 unchanged sentences

$ 18,915  

$ 13,733  

Federal net operating loss carryforwards

110,139  

23,129  

State net operating loss carryforwards

1 unchanged sentence

$ 196,507  

11,708  

Foreign tax loss carryforwards

17 unchanged sentences

$ 26,533  

The deduction to the valuation allowance is mainly due to the revaluation of our net deferred tax assets related to various state and local jurisdictions which is partially offset by additions to the valuation allowance that are insignificant for the year ended December 31, 2021.

The change in the valuation allowance is mainly due to the utilization of various state net operating losses as well as the release of valuation allowances related to the utilization of capital loss carryforwards.

We intend to indefinitely reinvest certain earnings of our foreign subsidiaries and affiliates.

There are generally

no federal income taxes on dividends from foreign subsidiaries therefore we would only be subject to other taxes, such as withholding and local taxes, upon distribution of these earnings.

$ 55.0 million of accumulated undistributed earnings that we consider indefinitely reinvested as of

December 31, 2022, it is

not practicable to determine the amount of taxes that would be payable upon remittance of these earnings.

Deferred foreign withholding taxes have been provided on undistributed earnings of certain foreign subsidiaries and foreign affiliates where the earnings are

not considered to be invested indefinitely.

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUE

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Uncertain tax positions:

4 unchanged sentences

federal examinations by tax authorities for years before 2017.

With few exceptions, as of December 31, 2021, we are no longer subject to state examinations by taxing authorities for years before 2012.

With few exceptions, as of December 31,  

2022 , we are no longer subject to state examinations by taxing authorities for years before 2017.

We file income tax returns in foreign jurisdictions where we operate.

1 unchanged sentence

The tax years subject to examination by foreign tax authorities vary by jurisdiction, but generally we are no longer subject to examinations by taxing authorities for years before 2016.

We had approximately $ 22.7 million of total gross unrecognized tax benefits as of both December 

31, 2021 and 2020.

There were approximately $ 5.4 million of unrecognized tax benefits that would affect the effective tax rate in any future period at both December 

We had approximately $ 22.8  million and $ 22.7 million of total gross unrecognized tax benefits as of 

December 31,  

2022 and 2021 , respectively.

There were approximately $ 5.5  million of unrecognized tax benefits that would affect the effective tax rate in any future period at both December 31,  

2022 and 2021 .

It is reasonably possible that our unrecognized tax benefit could decrease by approximately $ 1.8 million in 2022, of which $ 1.6 million would impact our effective tax rate in 2022.

It is reasonably possible that our unrecognized tax benefit could decrease by approximately $ 1.5  million in 2023, of which $ 1.3  million would impact our effective tax rate in 2023.

The decrease relates to anticipated statute expirations and anticipated resolution of outstanding unrecognized tax benefits.

4 unchanged sentences

$ 27,303  

Gross increases - acquisitions

Gross increases –

6 unchanged sentences

prior period tax positions

( 426 )  

Settlements with taxing authorities/lapse of statute of limitations

( 60 )  

( 69 )  

Reclassification of balances from (to) held for sale

( 518 )  

Ending balance

2 unchanged sentences

$ 23,320  

We record interest on uncertain tax positions in interest expense and penalties in other income, net in our consolidated statements of operations.

During the years ended December 

31, 2021, 2020 and 2019, we recognized approximately $ 0.4 million interest and penalty expense, $ 0.5 million interest and penalty income and $ 0.3 million interest and penalty expense, respectively.

Approximately $ 6.1 million and $ 5.8  million of accrued interest and penalties related to our uncertain tax position liability was included in other long-term liabilities and accrued expenses and other current liabilities in our consolidated balance sheets at December 

31, 2021 and 2020, respectively.

GRANITE CONSTRUCTION INCORPORATED

10 unchanged sentences

The total liabilities recorded as of 

December 31, 2021 

were $ 129.0  million, $ 63 million of which was paid through insurance proceeds, which have been fully funded into a settlement escrow account.

The balance of the settlement escrow account is included in other current assets in the consolidated balance sheets. As of 

December 31, 

2020, total liabilities were immaterial.

December 31, 2022 and 2021,  were $ 0 and $ 129  million, respectively.

The total range of possible loss related to (i) matters considered reasonably possible, and (ii) reasonably possible amounts in excess of accrued losses recorded for probable loss contingencies, including those related to liquidated damages, could have a material impact on our consolidated financial statements if they become probable and the reasonably estimable amount is determined.

8 unchanged sentences

be subject to early resolution as a result of our ongoing efforts to resolve the proceedings, whether or when any legal proceeding will be resolved is neither predictable nor guaranteed.

Securities Litigation and Derivative Lawsuits

August 13, 2019, 

a securities class action was filed in the United States District Court for the Northern District of California against the Company, James H.

Roberts, our former President and Chief Executive Officer, and Jigisha Desai, our former Senior Vice President and Chief Financial Officer and Executive Vice President and Chief Strategy Officer. An amended complaint was filed on 

February 20, 2020 

that, among other things, added Laurel Krzeminski, our former Chief Financial Officer, as a defendant.

The amended complaint is brought on behalf of an alleged class of persons or entities that acquired our common stock between 

April 30, 2018 

October 24, 2019, 

and alleges claims arising under Sections 

10 (b) and 

20 (a) of the Securities Exchange Act of 

1934  and Rule 

10b - 5  thereunder.

After the filing of the amended complaint, this case was re-titled 

Police Retirement System of St.

Securities Litigation and Derivative Lawsuits

On August 13, 2019, a securities class action was filed in the United States District Court for the Northern District of California against the Company, James H.

Roberts, our former President and Chief Executive Officer, and Jigisha Desai, our former Senior Vice President and Chief Financial Officer and Executive Vice President and Chief Strategy Officer.

An amended complaint was filed on February 20, 2020 that, among other things, added Laurel Krzeminski, our former Chief Financial Officer, as a defendant.

The amended complaint was brought on behalf of an alleged class of persons or entities that acquired our common stock between April 30, 2018 and October 24, 2019, and alleged claims arising under Sections 10 (b) and 20 (a) of the Securities Exchange Act of 1934 and Rule 10b - 5 thereunder.

After the filing of the amended complaint, this case was re-titled Police Retirement System of St.

Granite Construction Incorporated, et.

al . The amended complaint seeks damages based on allegations that the defendants made false and/or misleading statements and failed to disclose material adverse facts in the Company’s SEC filings about its business, operations and prospects.

May 20, 2020, 

the court denied, in part, our motion to dismiss the amended complaint. On 

January 21, 2021, 

the court granted plaintiff’s motion for class certification. 

October 23, 2019, 

a putative class action lawsuit, titled 

The amended complaint sought damages based on allegations that the defendants made false and/or misleading statements and failed to disclose material adverse facts in the Company’s SEC filings about its business, operations and prospects. On January 21, 2021, the court granted the plaintiff’s motion for class certification.

On October 23, 2019, a putative class action lawsuit, titled Nasseri v.

Granite Construction Incorporated, et.

, was filed in the Superior Court of California, County of Santa Cruz against the Company, James H.

Roberts, our former President and Chief Executive Officer, Laurel Krzeminski, our former Chief Financial Officer, and the then-serving Board of Directors on behalf of persons who acquired shares of Company common stock in the Company’s 

June 2018 

merger with Layne.

The complaint asserts causes of action under the Securities Act of 

1933  and alleges that the registration statement and prospectus were negligently prepared and included materially false and misleading statements and failed to disclose facts required to be disclosed and seeks monetary damages based on these allegations.

August 10, 2020, 

the court sustained our demurrer dismissing the complaint with leave to amend. On 

September 16, 2020, 

the plaintiff filed an amended complaint. We filed a demurrer seeking to dismiss the amended complaint. On 

April 9, 2021, 

the court entered an order overruling our demurrer seeking to dismiss the amended complaint.

May 14, 2021, 

the plaintiff filed a motion for class certification.

The hearing on the motion has been continued to 

March 25, 2022 

in light of the settlement proceedings in 

Police Retirement System of St.

Granite Construction Incorporated, et al . 

April 29, 2021, 

we entered into a stipulation of settlement (the “Settlement Agreement”) to settle 

Police Retirement System of St.

Granite Construction Incorporated, et al . The Settlement Agreement also settles claims alleged in 

Granite Construction Incorporated, et al . The settlement is subject to final court approval.

Under the Settlement Agreement, the Company agreed to pay or cause to be paid a total of $ 129.0  million in cash to a settlement fund that will be used to pay all settlement fees and expenses, attorneys’

, was filed in the Superior Court of California, County of Santa Cruz against the Company, James H.

Roberts, our former President and Chief Executive Officer, Laurel Krzeminski, our former Chief Financial Officer, and the then-serving Board of Directors on behalf of persons who acquired shares of Company common stock in the Company’s June 2018 merger with Layne Christensen Company (“Layne”).

The complaint asserted causes of action under the Securities Act of 1933 and alleged that the registration statement and prospectus were negligently prepared and included materially false and misleading statements and failed to disclose facts required to be disclosed and seeks monetary damages based on the allegations.

On April 29, 2021, we entered into a stipulation of settlement (the “Settlement Agreement”) to settle Police Retirement System of St.

Granite Construction Incorporated, et al.

The Settlement Agreement also settled claims alleged in Nasseri v.

Granite Construction Incorporated, et al.

Under the Settlement Agreement, the Company agreed to pay or cause to be paid a total of $ 129 million in cash, $ 63 million of which was paid through insurance proceeds, to a settlement fund that would pay all settlement fees and expenses, attorneys’

fees and expenses, and cash payments to members of the settlement class.

The settlement class has agreed to release us, the other defendants named in the lawsuits and certain of their respective related parties from any and all claims, rights, causes of action, liabilities, actions, suits, damages or demands of any kind whatsoever, that relate in any way to the purchase, acquisition, holding, sale or disposition of our common stock during the period between 

February 17, 2017 

October 24, 2019 

that arose out of or are based upon or related to the facts alleged or the claims or allegations set forth in 

Police Retirement System of St.

The settlement class agreed to release us, the other defendants named in the lawsuits and certain of their respective related parties from any and all claims, rights, causes of action, liabilities, actions, suits, damages or demands of any kind whatsoever, that relate in any way to the purchase, acquisition, holding, sale or disposition of our common stock during the period between February 17, 2017 and October 24, 2019 that arose out of or are based upon or related to the facts alleged or the claims or allegations set forth in Police Retirement System of St.

Granite Construction Incorporated, et al .

 or relate in any way to any alleged violation of the Securities Act of 

1933,  the Securities Exchange Act of 

1934,  or any other state, federal or foreign jurisdiction’s securities or other laws, any alleged misstatement, omission or disclosure (including in financial statements) or other alleged securities-related wrongdoing or misconduct, including all claims alleged in 

Granite Construction Incorporated, et al . The Settlement Agreement contains 

no  admission of liability, wrongdoing or responsibility by any of the parties.

April 30, 2021, 

the class representative in 

Police Retirement System of St.

or relate in any way to any alleged violation of the Securities Act of 1933, the Securities Exchange Act of 1934, or any other state, federal or foreign jurisdiction’s securities or other laws, any alleged misstatement, omission or disclosure (including in financial statements) or other alleged securities-related wrongdoing or misconduct, including all claims alleged in Nasseri v.

Granite Construction Incorporated, et al .

 filed a motion for preliminary approval of the settlement.

The plaintiff in 

The Settlement Agreement contained no admission of liability, wrongdoing or responsibility by any of the parties. As a result of entering into the Settlement Agreement, we recorded a pre-tax charge of approximately $ 66 million in the quarter ended March 31, 2021.

On October 6, 2021, the court issued an order granting preliminary approval of the settlement and, pursuant to the terms of the Settlement Agreement, $ 129 million was paid to the settlement escrow account.

$ 66 million was paid by the Company and $ 63 million was paid through insurance proceeds.

The total $ 129 million was included in the consolidated balance sheet as of December 31, 2021 

as an accrued liability and as a deposit in other current assets.

Members of the settlement class had the opportunity to object to the settlement at a fairness hearing held by the court to determine whether the settlement should be finally approved and whether the proposed order and final judgment should be entered.

The fairness hearing occurred on February 24, 2022.

On March 17, 2022, the court granted final approval of the settlement, granted the request for attorneys’

fees by class representative's counsel, granted in part and denied in part the request for attorneys’

fees by the plaintiff in Nasseri v.

Granite Construction Incorporated, et al.

 was permitted to intervene, although the court denied his application to be appointed as additional lead plaintiff. On 

October 6, 2021, 

the court issued an order granting preliminary approval of the settlement.

Pursuant to the terms of the Settlement Agreement, $ 129  million was paid to the settlement fund after preliminary approval in 

October 2021.

$ 66  million was paid by the Company and $ 63  million was paid through insurance proceeds into an escrow account.

The total $ 129  million is included in the balance sheet as deposits and an accrued liability. Members of the settlement class had the opportunity to object to the settlement at a fairness hearing held by the court to determine whether the settlement should be finally approved and whether the proposed order and final judgment should be entered.

The fairness hearing occurred on February 24, 2022 and the court took the motion for final approval of the settlement under submission. If the court approves the settlement, including the payment and release described above, and enters such order and final judgment, and such judgment is 

no  longer subject to further appeal or other review, the settlement fund will be disbursed in accordance with a plan of allocation approved by the court.

As a result of entering into the Settlement Agreement, we recorded a pre-tax charge of approximately $ 66  million in the quarter ended 

March 31, 2021.

May 6, 2020, 

a stockholder derivative lawsuit, titled 

, and entered final judgment.

On April 29, 2022, the Superior Court granted the request by plaintiff in Nasseri v.

Granite Construction Incorporated, et al . that the Nasseri case be dismissed with prejudice in light of the final approval of the settlement.

On December 15, 2022, the court approved the plaintiffs’

application to release payments to the class from the settlement fund. As a result, we removed the accrued liability and deposit from our consolidated balance sheet as of December 31, 2022.

On May 6, 2020, a stockholder derivative lawsuit, titled English v.

Roberts, et al.

, was filed in the United States District Court for the Northern District of California against James H.

Roberts, our former President and Chief Executive Officer, Jigisha Desai, our former Senior Vice President and Chief Financial Officer and Executive Vice President and Chief Strategy Officer, Laurel Krzeminski, our former Chief Financial Officer, and our then-current Board of Directors, and the Company, as a nominal defendant, asserting claims for breach of fiduciary duty, unjust enrichment, and violations of the Securities Exchange Act of 

1934  that allegedly occurred between 

April 30, 2018 

October 24, 2019. 

The lawsuit alleges that the individual defendants each knowingly inflated the Company’s revenue, income, and margins in violation of U.S.

GAAP, which caused the results during the relevant periods to be materially false and misleading. The complaint seeks monetary damages and corporate governance reforms. The court has ordered that the lawsuit in the derivative action be stayed until further order of the court or until entry of a final judgment in the putative securities class action lawsuit filed in the United States District Court for the Northern District of California.

May 12, 2021, 

a stockholder derivative lawsuit, titled 

, was filed in the United States District Court for the Northern District of California against James H.

The lawsuit alleged that the individual defendants each knowingly inflated the Company’s revenue, income, and margins in violation of U.S.

GAAP, which caused the results during the relevant periods to be materially false and misleading.

The complaint sought monetary damages and corporate governance reforms.

On May 12, 2021, a stockholder derivative lawsuit, titled Davydov v.

Roberts, et al.

, was filed in the Delaware Court of Chancery against James H.

Roberts, Jigisha Desai, Laurel Krzeminski, Craig Hall, our Senior Vice President, General Counsel, Corporate Compliance Officer, and Secretary, and our then-current Board of Directors, and the Company, as a nominal defendant, asserting claims for breach of fiduciary duty, unjust enrichment, and aiding and abetting breach of fiduciary duty that allegedly occurred between 

April 30, 2018 

October 24, 2019. 

The lawsuit alleges that the individual defendants each knowingly inflated the Company’s revenue, income, and margins in violation of U.S.

GAAP, which caused the results during the relevant periods to be materially false and misleading. The complaint seeks monetary damages and corporate governance reforms.

July 16, 2021, 

we filed a motion to dismiss the complaint.

We are in the preliminary stages of the litigation and, as a result, we cannot predict the outcome or consequences of these cases.

December 

2021,  other than the Settlement Agreement charge described above, we did 

not  record any liability related to the above matters because we concluded such liabilities were 

not  probable and the amounts of such liabilities were 

not  reasonably estimable.

The lawsuit alleged that the individual defendants each knowingly inflated the Company’s revenue, income, and margins in violation of U.S.

GAAP, which caused the results during the relevant periods to be materially false and misleading.

The complaint sought monetary damages and corporate governance reforms.

On April 14, 2022, the parties in Davydov v.

Roberts et al.

, the plaintiff in English v.

Roberts et al.

, and the Company entered into a Stipulation of Compromise and Settlement providing that (i) defendants will cause insurers to pay $ 7.5 million, which amount, less court-awarded attorneys’

fees and expenses, will be paid to the Company, (ii) the Company shall implement agreed upon corporate governance provisions within 30 days of final approval of the settlement, and (iii) all claims that were asserted or could have been asserted against the defendants or their related persons in Davydov v.

Roberts, et al.

, or any other proceeding on behalf of the Davydov plaintiff, the English plaintiff, the Company or any Granite stockholder, will be released.

On April 14, 2022, the plaintiff in Davydov v.

Roberts, et al .

filed the Stipulation of Compromise and Settlement and a proposed scheduling order for a hearing in the Delaware Court of Chancery for review of the settlement.

The Delaware Court of Chancery held a fairness hearing concerning its review of the settlement on July 12, 2022.

On July 27, 2022, the Court in Davydov v.

Roberts, et al.

entered an order and final judgment approving the terms of the Stipulation of Compromise and Settlement and dismissed the case with prejudice.

On July 28, 2022, the Court in English v.

Roberts, et al.

entered a stipulation and order of dismissal that dismissed the case with prejudice.

The Company received a payment of $ 5.0 million for the settlement, which was net of court-awarded attorneys' fees and expenses, that was recorded in Other costs, net on the Consolidated Statement of Operations for the year ended December 31, 2022.

As of December 31, 2022 and December 31, 2021 ( other than the Settlement Agreement charge described above), we did not record any liability related to the above matters because we concluded such liabilities were resolved or not probable and the amounts of such liabilities were not reasonably estimable.

Other Matters

In connection with our prior disclosure of the Audit/Compliance Committee’s independent investigation of prior-period reporting for the former Heavy Civil operating group and the extent to which those matters affected the effectiveness of the Company’s internal control over financial reporting (the “Investigation”), we voluntarily contacted the San Francisco office of the SEC Division of Enforcement regarding the Investigation.

The SEC has issued subpoenas for documents in connection with the accounting issues identified in the Investigation.

We have produced documents to the SEC and will continue to cooperate with the SEC in its investigation.

In connection with our prior disclosure of the Audit/Compliance Committee’s independent investigation of prior-period reporting for the former Heavy Civil operating group and the extent to which those matters affected the effectiveness of the Company’s internal control over financial reporting (the “Investigation”), we voluntarily contacted the San Francisco office of the SEC Division of Enforcement regarding the Investigation.

The SEC issued subpoenas for documents in connection with the accounting issues identified in the Investigation.

We produced documents to the SEC and fully cooperated with the SEC in its investigation.

In the second quarter of 2022, we recorded a $ 12 million charge for the expected resolution of this investigation which was reflected in Other costs, net in the Consolidated Statement of Operations for the year ended December 31, 2022.

During the third quarter of 2022, we reached a settlement with the SEC.

Under the terms of the settlement, we, without admitting or denying any allegations made by the SEC, agreed to pay a civil penalty of $ 12 million and to be enjoined from violating specified provisions of the federal securities laws and rules promulgated thereunder.

On August 25, 2022, the SEC filed a complaint against us, along with our consent to the entry of judgment in the United States District Court for the Northern District of California, and requested entry of judgment.

Judgment concluding and resolving this matter in its entirety was entered on September 9, 2022, and on September 16, 2022, we paid the $ 12 million penalty.

Our wholly-owned subsidiary, Layne, was a subcontractor on the foundation for the Salesforce Tower office building in San Francisco in 

16 unchanged sentences

Layne ”

On February 4, 2022, CHDJV submitted an arbitration demand with the American Arbitration Association against Granite Construction Incorporated seeking to recover approximately $ 30 million for costs incurred by CHDJV to cure Layne’s allegedly defective work on the foundation of the Salesforce Tower. 

We believe Granite and Layne have multiple defenses and Layne has counterclaims to the claims at issue. 

Both companies intend to vigorously defend against the claims, and Layne intends to prosecute its counterclaims, but, we cannot provide assurance that Granite and Layne will be successful in these efforts.

) , was filed in the Superior Court of the State of California, County of San Francisco, seeking damages of approximately $ 70 million for costs incurred by Steadfast on behalf of CHDJV to cure Layne’s allegedly defective work on the foundation of the Salesforce Tower. On February 4, 2022, CHDJV submitted an arbitration demand with the American Arbitration Association against Granite Construction Incorporated seeking to recover approximately $ 30 million for costs incurred by CHDJV to cure Layne’s allegedly defective work on the foundation of the Salesforce Tower. CHDJV subsequently dismissed Granite and added Layne as a respondent to the arbitration.

March 8, 2022, 

we filed a motion to dismiss the CHDJV arbitration. On 

April 8, 2022, 

we filed a demurrer seeking to dismiss the Steadfast lawsuit.

May 6, 2022, 

CHDJV consolidated its claims with those of Steadfast and joined as a plaintiff in the Steadfast lawsuit, and on 

May 16, 2022, 

the arbitration was stayed. On 

June 14, 2022, 

we filed a demurrer to the amended complaint seeking to dismiss the claims of both Steadfast and CHDJV.

August 24, 2022, 

the court overruled our demurrer.

We believe Layne has multiple defenses and counterclaims to the claims at issue. Layne intends to vigorously defend against the claims and prosecute its counterclaims, but we cannot provide assurance that Layne will be successful in these efforts.

not  believe it is probable this matter will result in a material loss, however, if we are unsuccessful, we believe the range of reasonably possible loss upon final resolution of this matter could be up to approximately $ 100 million.

2 unchanged sentences

Reportable Segment Information

As discussed in Note 1, our reportable segments for continuing operations are:

Our reportable segments are the same as our operating segments and correspond with how our CODM regularly reviews financial information to allocate resources and assess performance. Our reportable segments are:

Construction and Materials.

The Construction segment focuses on construction and rehabilitation of roads, pavement preservation, bridges, rail lines, airports, marine ports, dams, reservoirs, aqueducts, infrastructure and site development for use by the general public and water-related construction for municipal agencies, commercial water suppliers, industrial facilities and energy companies. It also provides construction of various complex projects including infrastructure / site development, mining, public safety, tunnel, solar and other 

power-related projects.

The Materials segment focuses on production of aggregates and asphalt production for internal use and for sale to third parties.

As discussed in Note 2 ,  we have reclassified WMS from discontinued operations to continuing operations for all periods presented.

The Water Resources and Mineral Services businesses are included in the Construction segment.

Inliner, which was sold in the first quarter of 2022,  had both Construction and Materials operations.

The accounting policies of the segments are the same as those described in the Summary of Significant Accounting Policies (see Note 1 ).

We evaluate segment performance based on gross profit, and do not include selling, general and administrative expenses or non-operating income or expense. Segment assets include property and equipment, intangibles, goodwill, inventory and equity in construction joint ventures.

Summarized segment information for our continuing operations is as follows (in thousands):

Summarized segment information is as follows (in thousands, except per share data):

Years Ended December 31,

5 unchanged sentences

( 174,107 )  

$ ( 174,107 )

Revenue from external customers

9 unchanged sentences

$ 68,336  

Segment assets

Segment assets as of period end (1)

$ 432,868  

7 unchanged sentences

( 161,925 )  

$ ( 161,925 )

Revenue from external customers

9 unchanged sentences

$ 97,236  

Segment assets

Segment assets as of period end (1)

$ 358,561  

7 unchanged sentences

( 167,677 )  

$ ( 167,677 )

Revenue from external customers

9 unchanged sentences

$ 102,151  

A reconciliation of segment gross profit from continuing operations to consolidated income (loss) from continuing operations before provision for (benefit from) income taxes is as follows (in thousands):

( 1 ) These balances do not include amounts held for sale (see Note 2 ).

December 31, 2022 , 

2021  and 

2020  segment assets included $ 4.7  million, $ 10.3  million and $ 12.4  million, respectively, of property and equipment located in foreign countries (primarily Mexico).

During the years ended 

December 31, 2022 , 

2021  and 

2020  less than 

5 % of our revenue was derived from foreign operations.

A reconciliation of segment gross profit to consolidated income (loss) before income taxes is as follows (in thousands, except per share data):

Years Ended December 31,

Total gross profit from continuing operations

Total gross profit from reportable segments

$ 369,494  

5 unchanged sentences

316,284  

Other costs (see Note 1)

Non-cash impairment charges

156,690  

Other costs, net

24,120  

Gain on sales of property and equipment (see Note 11)

101,351  

37,089  

Total other expense (income), net

Gain on sales of property and equipment (see Note 11)

( 12,617 )  

( 66,439 )  

Income (loss) from continuing operations before provision for (benefit from) income taxes

Total other (income) expense, net

( 6,436 )  

Income (loss) before income taxes

$ 91,817  

$ 22,127  

$ ( 166,463 )

A reconciliation of segment assets to consolidated total assets is as follows (in thousands):

14 unchanged sentences

392,641  

171,263  

Property and equipment, net, excluding segment assets

1 unchanged sentence

56,658  

Long-term marketable securities

Short-term and long-term marketable securities

65,943  

15,600  

Investments in affiliates

10 unchanged sentences

58,271  

Noncurrent assets held for sale

252,104  

Consolidated total assets

1 unchanged sentence

$ 2,494,927  

The following table sets forth selected unaudited quarterly financial information for the years ended December 31, 2021 and 2020.

The following unaudited quarterly financial information has been adjusted retrospectively to give effect to the discontinued operations and assets held-for-sale reclassification.

See Note 2 for more information regarding discontinued operations and assets held-for-sale .

This information has been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, contains all adjustments necessary for a fair statement thereof.

Supplementary Data –

Restatement and Recast of Quarterly Financial Information

Quarterly Financial Data

The following tables set forth selected unaudited quarterly financial information for the years ended 

December 31, 2022  and 2021 .

 This unaudited quarterly financial information has been recast to remove the effect of discontinued operations as well as to correct the errors described below.

See Note 

2  for more information regarding discontinued operations and assets held for sale .

Net income (loss) per share calculations are based on the weighted average common shares outstanding for each period presented.

Accordingly, the sum of the quarterly net income (loss) per share amounts may not equal the per share amount reported for the year.

Accordingly, the sum of the quarterly net income (loss) per share amounts 

not  equal the per share amount reported for the year.

QUARTERLY FINANCIAL DATA

(unaudited - dollars in thousands, except per share data)

As Restated and Recast

Quarters Ended

December 31, 2022

September 30, 2022

June 30, 2022

March 31, 2022

As a percent of revenue

Net income (loss)

Net income (loss) attributable to Granite

Net income (loss) per share attributable to common shareholders

Basic earnings (loss) per share

Diluted earnings (loss) per share

Quarters Ended

December 31, 2021

September 30, 2021

June 30, 2021

March 31, 2021

$ 805,651  

9 unchanged sentences

12.1 %  

Net income (loss) from continuing operations

Net income (loss)

$ ( 20,433 )  

1 unchanged sentence

$ 55,747  

Net income (loss) from discontinued operations

Net income (loss) attributable to Granite

$ ( 13,213 )  

1 unchanged sentence

$ 54,461  

Net income (loss) per share attributable to common shareholders

Basic earnings (loss) per share

$ ( 0.29 )  

$ 0.76  

$ 1.19  

Diluted earnings (loss) per share

$ ( 0.29 )  

$ 0.73  

$ 1.14  

Restatement and Recast of Previously Issued Unaudited Condensed Consolidated Financial Statements

In connection with the preparation of this Form 10 -K, we identified errors related to deferred taxes and the calculation of income tax expense of $ 12.3 million in connection with the sale of Inliner, which was completed in the first quarter of 2022 and was classified within discontinued operations in the Company's condensed consolidated financial statements during the first and second quarters of 2022 and in Other costs, net and Provision for income taxes during the third quarter of 2022.

We have restated herein our previously issued unaudited condensed consolidated statements of operations and condensed consolidated balance sheets for each interim period within the nine months ended September 30, 2022.

The restated financial information also includes adjustments to correct other immaterial errors in the first three quarters of 2022, including certain errors (primarily in revenue and cost of revenue, including the associated tax impact) that had previously been adjusted for as out of period corrections in the period identified.

The impacts to the condensed consolidated statements of shareholders’

equity and comprehensive (loss) income as a result of the restatement were due to changes in net income during the each of the interim periods within the nine months ended September 30, 2022.

We have not included restated condensed consolidated statements of cash flows herein as Net cash provided by (used in) operating activities in each of these interim periods is unchanged by the restatements.

The errors offset within operating activities and none of the errors involved investing or financing activities.

The following tables represent our restated unaudited condensed consolidated statements of operations and condensed consolidated balance sheets for each interim period within the nine months ended September 30, 2022.

2022 comparative amounts presented in our 

2023  Quarterly Reports on Form 10 -Q will be changed retrospectively to reflect the restatement and recast.

There is no impact to the results reported in the 2022 annual financial statements as the errors originated and are being corrected within the annual period.

There was no impact to any previously reported annual periods or quarterly results within those annual periods.

We have presented below a reconciliation from the previously reported to the restated amounts for the quarters ended September 30, 2022, June 30, 2022 and March 31, 2022.

The amounts labeled “As Previously Reported”

were derived from our Quarterly Reports on Form 10 -Q filed on October 27, 2022, July 28, 2022 and April 28, 2022, respectively.

As discussed in Note 2, in September 2022, we announced our decision to retain the Water Resources and Mineral Services ("WMS") businesses that were previously classified as held for sale and reported in discontinued operations.

In connection with the reclassification of the WMS businesses from discontinued operations to continuing operations, the condensed consolidated statements of income for the periods ended June 30, 2022 and March 31, 2022, as previously reported, have been recast to include Inliner through the date of sale, as well as the ongoing operations of Water Resources and Mineral Services in continuing operations.

The effects of the prior-period errors and the recast of our WMS businesses as continuing operations on our condensed consolidated financial statements are as follows:

GRANITE CONSTRUCTION INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited - in thousands, except per share data)

As Restated and Recast

September 30, 2022

June 30, 2022

March 31, 2022

Three months ended

Nine months ended

Three months ended

Six months ended

Three months ended

Total revenue

Cost of revenue

Total cost of revenue

Selling, general and administrative expenses

Other costs, net

Gain on sales of property and equipment, net

Operating income (loss)

Other (income) expense

Interest income

Interest expense

Equity in income of affiliates

Other income, net

Total other (income) expense, net

Income (loss) before income taxes

Provision for (benefit from) income taxes

Net income (loss)

Amount attributable to non-controlling interests

Net income (loss) attributable to Granite Construction Incorporated

Net income per share attributable to common shareholders

Basic earnings (loss) per share

Diluted earnings (loss) per share

Weighted average shares outstanding:

GRANITE CONSTRUCTION INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited - in thousands)

September 30, 2022

June 30, 2022

March 31, 2022

Current assets

Cash and cash equivalents

$ 255,084  

1 unchanged sentence

$ 360,911  

Net income (loss) attributable to Granite from continuing operations

Short-term marketable securities

39,873  

1 unchanged sentence

14,953  

Net income (loss) attributable to Granite

Receivables, net

618,144  

1 unchanged sentence

380,502  

Per share data:

Continuing operations

Contract asset

237,407  

1 unchanged sentence

172,641  

Discontinued operations

81,296  

Net income (loss) per share

78,634  

74,356  

Equity in construction joint ventures

185,343  

Continuing operations

187,028  

191,183  

Other current assets

157,231  

Discontinued operations

160,923  

Net income (loss) per share

167,679  

Current assets held for sale

222,779  

211,639  

2020 Quarters Ended

September 30,

Total current assets

1,574,378  

1 unchanged sentence

1,573,864  

Property and equipment, net

500,827  

1 unchanged sentence

450,250  

Long-term marketable securities

21,575  

21,675  

As a percent of revenue

21,775  

Investment in affiliates

78,663  

23,203  

Net income (loss) from continuing operations

22,987  

1 unchanged sentence

53,715  

Net income (loss) from discontinued operations

53,715  

Right of use assets

49,590  

45,404  

48,920  

Deferred income taxes, net

45,650  

25,458  

25,880  

Other noncurrent assets

58,265  

64,008  

65,888  

$ 2,402,652  

$ 2,284,906  

$ 2,263,279  

LIABILITIES AND EQUITY

Current liabilities

Current maturities of long-term debt

$ 1,438  

$ 1,429  

$ 8,735  

Accounts payable

398,285  

331,728  

285,390  

Contract liabilities

191,037  

179,322  

160,994  

Accrued Expenses and other current liabilities

461,266  

440,899  

438,441  

Current liabilities held for sale

46,706  

42,106  

Total current liabilities

1,052,026  

1,000,084  

935,666  

Long-term debt

286,872  

286,801  

290,549  

Lease liabilities

32,701  

31,182  

32,682  

Other long-term liabilities

60,664  

61,868  

62,493  

Commitments and contingencies

Preferred stock

Additional Paid In Capital

468,662  

467,159  

515,262  

Accumulated other comprehensive income

Retained Earnings

465,134  

401,667  

388,756  

Total Granite Construction Incorporated shareholders’

934,768  

871,655  

906,045  

Non-controlling interest

35,621  

33,316  

35,844  

970,389  

904,971  

941,889  

Total liabilities and equity

$ 2,402,652  

$ 2,284,906  

$ 2,263,279  

GRANITE CONSTRUCTION INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited - in thousands, except per share data)

Three months ended September 30, 2022

As Previously Reported

Restatement Impacts

Total revenue

Cost of revenue

Total cost of revenue

Selling, general and administrative expenses

Other costs, net

Gain on sales of property and equipment, net

Operating income

Other (income) expense

Interest income

Interest expense

Equity in income of affiliates

Other income, net

Total other (income), net

Income before income taxes

Provision for (benefit from) income taxes

Amount attributable to non-controlling interests

Net income attributable to Granite Construction Incorporated

Net income per share attributable to common shareholders

Basic earnings per share

Diluted earnings per share

Weighted average shares outstanding:

GRANITE CONSTRUCTION INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited - in thousands, except per share data)

Nine months ended September 30, 2022

As Previously Reported

Restatement Impacts

Total revenue

Cost of revenue

Total cost of revenue

Selling, general and administrative expenses

Other costs, net

Gain on sales of property and equipment, net

Operating income

Other (income) expense

Interest income

Interest expense

Equity in income of affiliates

Other income, net

Total other expense, net

Income before income taxes

Provision for (benefit from) income taxes

Amount attributable to non-controlling interests

Net income attributable to Granite Construction Incorporated

Net income per share attributable to common shareholders

Basic earnings per share

Diluted earnings per share

Weighted average shares outstanding:

GRANITE CONSTRUCTION INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited - in thousands, except per share data)

Three months ended June 30, 2022

As Previously Reported

Restatement Impacts

Discontinued Operations Reclassification Impacts

As Restated and Recast

Total revenue

Cost of revenue

Total cost of revenue

Selling, general and administrative expenses

Other costs, net

Gain on sales of property and equipment, net

Operating income

Other (income) expense

Interest income

Interest expense

Equity in income of affiliates

Other income, net

Total other expense, net

Income (loss) from continuing operations before income taxes

Provision for (benefit from) income taxes on continuing operations

Net income (loss) from continuing operations

Net Income (loss) from discontinued operations

Amount attributable to non-controlling interests

Net income (loss) attributable to Granite Construction Incorporated from continuing operations

Net income attributable to Granite Construction Incorporated from discontinued operations

Net income attributable to Granite Construction Incorporated

Net income (loss) per share attributable to common shareholders

Basic continuing operations per share

Basic discontinued operations per share

Basic earnings per share

Diluted continuing operations per share

Diluted discontinued operations per share

Diluted earnings per share

Weighted average shares outstanding:

GRANITE CONSTRUCTION INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited - in thousands, except per share data)

Six months ended June 30, 2022

As Previously Reported

Restatement Impacts

Discontinued Operations Reclassification Impacts

As Restated and Recast

Total revenue

Cost of revenue

Total cost of revenue

Selling, general and administrative expenses

Other costs, net

Gain on sales of property and equipment, net

Operating income (loss)

Other (income) expense

Interest income

Interest expense

Equity in income of affiliates

Other income, net

Total other expense, net

Income (loss) from continuing operations before income taxes

Provision for (benefit from) income taxes on continuing operations

Net (loss) from continuing operations

Net Income from discontinued operations

Net income (loss)

Amount attributable to non-controlling interests

Net (loss) attributable to Granite Construction Incorporated from continuing operations

Net income attributable to Granite Construction Incorporated from discontinued operations

Net income (loss) attributable to Granite Construction Incorporated

Net income (loss) per share attributable to common shareholders

Basic continuing operations per share

Basic discontinued operations per share

Basic earnings (loss) per share

Diluted continuing operations per share

Diluted discontinued operations per share

Diluted earnings (loss) per share

Weighted average shares outstanding:

GRANITE CONSTRUCTION INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited - in thousands, except per share data)

Three months ended March 31, 2022

As Previously Reported

Restatement Impacts

Discontinued Operations Reclassification Impacts

As Restated and Recast

Total revenue

Cost of revenue

Total cost of revenue

Selling, general and administrative expenses

Other costs, net

Gain on sales of property and equipment, net

Operating loss

Other (income) expense

Interest income

Interest expense

Equity in income (loss) of affiliates

Other income, net

Total other expense, net

Loss from continuing operations before income taxes

Provision for (benefit from) income taxes on continuing operations

Net loss from continuing operations

Net Income (loss) from discontinued operations

Amount attributable to non-controlling interests

Net loss attributable to Granite Construction Incorporated from continuing operations

Net income (loss) attributable to Granite Construction Incorporated from discontinued operations

Net loss attributable to Granite Construction Incorporated

Net income (loss) per share attributable to common shareholders

Basic continuing operations per share

Basic discontinued operations per share

Basic loss per share

Diluted continuing operations per share

Diluted discontinued operations per share

Diluted loss per share

Weighted average shares outstanding:

GRANITE CONSTRUCTION INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited - in thousands, except share and per share data)

September 30, 2022

As Previously Reported

Restatement Impacts

Current assets

Cash and cash equivalents

$ 255,084  

Short-term marketable securities

39,873  

Net income (loss) attributable to Granite from continuing operations

39,873  

Receivables, net

618,144  

Net income (loss) attributable to Granite

Contract asset

241,238  

1 unchanged sentence

237,407  

Per share data:

Continuing operations

81,296  

Equity in construction joint ventures

186,824  

Discontinued operations

( 1,481 )  

185,343  

Net income (loss) per share

Other current assets

157,231  

Total current assets

1,579,690  

Continuing operations

( 5,312 )  

1,574,378  

Property and equipment, net

500,827  

Discontinued operations

500,827  

Long-term marketable securities

21,575  

Net income (loss) per share

21,575  

Investment in affiliates

78,663  

73,704  

Right of use assets

49,590  

Deferred income taxes, net

45,650  

Other noncurrent assets

58,265  

$ 2,407,964  

$ ( 5,312 )  

$ 2,402,652  

LIABILITIES AND EQUITY

Current liabilities

Current maturities of long-term debt

$ 1,438  

Accounts payable

398,285  

Contract liabilities

191,037  

Accrued Expenses and other current liabilities

450,223  

11,043  

461,266  

Total current liabilities

1,040,983  

11,043  

1,052,026  

Long-term debt

286,872  

Lease liabilities

32,701  

Other long-term liabilities

60,664  

Commitments and contingencies

Preferred stock, $ 0.01 par value, authorized 3,000,000 shares, none outstanding

Common stock, $ 0.01 par value, authorized 150,000,000 shares;

issued and outstanding:

43,723,658 shares as of September 30, 2022

Additional Paid In Capital

468,662  

Accumulated other comprehensive income

Retained Earnings

481,489  

( 16,355 )  

465,134  

Total Granite Construction Incorporated shareholders’

951,123  

( 16,355 )  

934,768  

Non-controlling interest

35,621  

986,744  

( 16,355 )  

970,389  

Total liabilities and equity

$ 2,407,964  

$ ( 5,312 )  

$ 2,402,652  

GRANITE CONSTRUCTION INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited - in thousands, except share and per share data)

June 30, 2022

As Previously Reported

Restatement Impacts

Current assets

Cash and cash equivalents

$ 175,022  

Short-term marketable securities

45,000  

Receivables, net

527,277  

Contract asset

190,187  

78,634  

Equity in construction joint ventures

187,028  

Other current assets

167,349  

( 6,426 )  

160,923  

Current assets held for sale

222,779  

Total current assets

1,593,276  

( 6,426 )  

1,586,850  

Property and equipment, net

464,593  

Long-term marketable securities

21,675  

Investment in affiliates

23,203  

53,715  

Right of use assets

45,404  

Deferred income taxes, net

25,458  

Other noncurrent assets

64,008  

$ 2,291,332  

$ ( 6,426 )  

$ 2,284,906  

LIABILITIES AND EQUITY

Current liabilities

Current maturities of long-term debt

$ 1,429  

Accounts payable

331,728  

Contract liabilities

179,322  

Accrued Expenses and other current liabilities

435,061  

440,899  

Current liabilities held for sale

46,706  

Total current liabilities

994,246  

1,000,084  

Long-term debt

286,801  

Lease liabilities

31,182  

Other long-term liabilities

61,868  

Commitments and contingencies

Preferred stock, $ 0.01 par value, authorized 3,000,000 shares, none outstanding

Common stock, $ 0.01 par value, authorized 150,000,000 shares;

issued and outstanding:

44,078,469 shares as of June 30, 2022

Additional Paid In Capital

467,159  

Accumulated other comprehensive income

Retained Earnings

413,931  

( 12,264 )  

401,667  

Total Granite Construction Incorporated shareholders’

883,919  

( 12,264 )  

871,655  

Non-controlling interest

33,316  

917,235  

( 12,264 )  

904,971  

Total liabilities and equity

$ 2,291,332  

$ ( 6,426 )  

$ 2,284,906  

GRANITE CONSTRUCTION INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited - in thousands, except share and per share data)

March 31, 2022

As Previously Reported

Restatement Impacts

Current assets

Cash and cash equivalents

$ 360,911  

Short-term marketable securities

14,953  

Receivables, net

380,502  

Contract asset

180,023  

( 7,382 )  

172,641  

74,356  

Equity in construction joint ventures

191,183  

Other current assets

179,024  

( 11,345 )  

167,679  

Current assets held for sale

211,774  

(135 )  

211,639  

Total current assets

1,592,726  

( 18,862 )  

1,573,864  

Property and equipment, net

450,250  

Long-term marketable securities

21,775  

Investment in affiliates

22,987  

53,715  

Right of use assets

48,920  

Deferred income taxes, net

25,880  

Other noncurrent assets

65,888  

$ 2,282,141  

$ ( 18,862 )  

$ 2,263,279  

LIABILITIES AND EQUITY

Current liabilities

Current maturities of long-term debt

$ 8,735  

Accounts payable

285,390  

Contract liabilities

165,358  

( 4,364 )  

160,994  

Accrued Expenses and other current liabilities

439,525  

( 1,084 )  

438,441  

Current liabilities held for sale

40,246  

42,106  

Total current liabilities

939,254  

( 3,588 )  

935,666  

Long-term debt

290,549  

Lease liabilities

32,682  

Other long-term liabilities

62,493  

Commitments and contingencies

Preferred stock, $ 0.01 par value, authorized 3,000,000 shares, none outstanding

Common stock, $ 0.01 par value, authorized 150,000,000 shares;

issued and outstanding:

45,364,137 shares as of March 31, 2022

Additional Paid In Capital

515,262  

Accumulated other comprehensive income

Retained Earnings

402,550  

( 13,794 )  

388,756  

Total Granite Construction Incorporated shareholders’

919,839  

( 13,794 )  

906,045  

Non-controlling interest

37,324  

( 1,480 )  

35,844  

957,163  

( 15,274 )  

941,889  

Total liabilities and equity

$ 2,282,141  

$ ( 18,862 )  

$ 2,263,279  

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 9A. Controls and Procedures