The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

TUTOR PERINI CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED

(1) Basis of Presentation

The Condensed Consolidated Financial Statements do not include footnotes and certain financial information normally presented annually under generally accepted accounting principles ~~generally accepted~~ in the United States (“GAAP”). Therefore, they should be read in conjunction with the audited consolidated financial statements and the related notes included in ~~the Company’s~~Tutor Perini Corporation’s (the “Company”) Annual Report on Form 10-K for the year ended December 31, ~~2016.~~ 2017. The results of operations for the three and six months ended June 30, ~~2017~~2018 may not be indicative of the results that will be achieved for the full year ending December 31, ~~2017.~~2018.

In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements reflect all adjustments, including those of a normal recurring nature, necessary to present fairly the Company’s consolidated financial position as ofJune 30, ~~2017~~2018 and its consolidated ~~results~~statements of ~~operations~~income and cash flows for the interim periods presented. All significant intercompany transactions of consolidated subsidiaries have been eliminated. ~~Management has evaluated all material events occurring subsequent to the date of the financial statements up to the filing of this Form 10-Q.~~

(2) Recent Accounting Pronouncements

New accounting pronouncements implemented by the Company during the six months ended June 30, 2018 are discussed below.

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606), as amended by subsequent ASUs (collectively, ~~“ASU 2014-09”~~“ASC 606”). ~~ASU 2014-09~~ASC 606 amends the existing accounting standards for revenue recognition and establishes principles for recognizing revenue upon the transfer of promised goods or services to customers based on the expected consideration to be received in exchange for those goods or services. The ~~guidance will be~~Company adopted this ASU effective ~~for~~January 1, 2018 using the modified retrospective transition method. The Company recognized the cumulative effect of initially applying the new revenue standard to all contracts not yet completed or substantially completed as of January 1, ~~2018.~~2018 as an immaterial reduction to beginning retained earnings. The ~~amendments may~~impact of adoption on the Company’s opening balance sheet was primarily related to the deferral of costs incurred to fulfill certain contracts that were previously recorded in income in the period incurred, but under the new standard will be ~~applied retrospectively~~capitalized and amortized over the period of contract performance. The prior year comparative information has not been restated and continues to ~~each prior period presented or with~~be reported under the ~~cumulative~~accounting standards in effect ~~recognized as~~for those periods; however, certain balances have been reclassified to conform to the current year presentation.

The effect of the ~~date of initial application (modified retrospective method). The Company expects~~changes made to ~~adopt this new standard using~~ the ~~modified retrospective method. The Company is currently reviewing contracts in order to determine the impact, if any, that~~Company’s consolidated January 1, 2018 balance sheet for the adoption of ASC 606 were as follows:



			Adjustments
BALANCE SHEET	Balance as of		due to		Balance as of
(in thousands)	December 31, 2017(a)		ASC 606		January 1, 2018
ASSETS
Accounts receivable(b)	$	1,801,656	$	(535,939)	$	1,265,717
Retainage receivable(b)		—		535,939		535,939
Other current assets		89,316		32,773		122,089

LIABILITIES
Accounts payable(b)		961,791		(261,820)		699,971
Retainage payable(b)		—		261,820		261,820
Billings in excess of costs and estimated earnings		456,869		39,785		496,654
Deferred income taxes		108,504		(1,537)		106,967

EQUITY
Retained earnings		622,007		(3,762)		618,245
Noncontrolling interests		(8,495)		(1,714)		(10,209)

(a)

Balances as previously reported on the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.

(b)

Prior to the adoption of ASC 606, retainage receivable and payable balances were included within accounts receivable and accounts payable, respectively.

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UNAUDITED

In accordance with the new revenue standard requirements, the disclosure of the impacts of adoption on the Condensed Consolidated Statement of Income and Condensed Consolidated Balance Sheet were as follows:



	Three Months Ended June 30, 2018
			Balance Without
STATEMENT OF INCOME			Adoption of		Effect of
(in thousands)	As Reported		ASC 606		Change
REVENUE	$	1,120,085	$	1,126,925	$	(6,840)
COST OF OPERATIONS		(1,001,445)		(1,007,258)		5,813
GROSS PROFIT		118,640		119,667		(1,027)
General and administrative expenses		(63,825)		(63,825)		—
INCOME FROM CONSTRUCTION OPERATIONS		54,815		55,842		(1,027)
Other income, net		1,050		1,050		—
Interest expense		(15,998)		(15,998)		—
INCOME BEFORE INCOME TAXES		39,867		40,894		(1,027)
Provision for income taxes		(11,971)		(12,211)		240
NET INCOME		27,896		28,683		(787)
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS		3,013		3,213		(200)
NET INCOME ATTRIBUTABLE TO TUTOR PERINI CORPORATION	$	24,883	$	25,470	$	(587)



	Six Months Ended June 30, 2018
			Balance Without
STATEMENT OF INCOME			Adoption of		Effect of
(in thousands)	As Reported		ASC 606		Change
REVENUE	$	2,148,241	$	2,157,193	$	(8,952)
COST OF OPERATIONS		(1,962,533)		(1,970,113)		7,580
GROSS PROFIT		185,708		187,080		(1,372)
General and administrative expenses		(131,818)		(131,818)		—
INCOME FROM CONSTRUCTION OPERATIONS		53,890		55,262		(1,372)
Other income, net		1,830		1,830		—
Interest expense		(31,063)		(31,063)		—
INCOME BEFORE INCOME TAXES		24,657		26,029		(1,372)
Provision for income taxes		(7,703)		(8,055)		352
NET INCOME		16,954		17,974		(1,020)
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS		4,195		4,355		(160)
NET INCOME ATTRIBUTABLE TO TUTOR PERINI CORPORATION	$	12,759	$	13,619	$	(860)

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UNAUDITED



	As of June 30, 2018
			Balance Without
BALANCE SHEET			Adoption of		Effect of
(in thousands)	As Reported		ASC 606		Change
ASSETS
Accounts receivable(a)	$	1,272,932	$	1,762,442	$	(489,510)
Retainage receivable(a)		490,751		—		490,751
Costs and estimated earnings in excess of billings		1,044,233		1,044,395		(162)
Other current assets		141,472		101,119		40,353

LIABILITIES
Accounts payable(a)	$	625,436	$	861,981	$	(236,545)
Retainage payable(a)		236,545		—		236,545
Billings in excess of costs and estimated earnings		574,392		524,576		49,816
Accrued expenses and other current liabilities		134,264		134,896		(632)
Deferred income taxes		106,284		107,540		(1,256)

EQUITY
Retained earnings	$	631,004	$	635,626	$	(4,622)
Noncontrolling interests		(17,618)		(15,744)		(1,874)

(a)

Prior to the adoption of ASC 606, retainage receivable and payable balances were included within accounts receivable and payable, respectively.

The adoption of ASC 606 had no impact on the cash flows used in operating activities in the Company’s Condensed Consolidated Statement of Cash Flows.

In November 2016, the FASB issued ASU ~~2014-09 will have on its consolidated financial statements.~~2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which requires restricted cash to be included with cash and cash equivalent balances in the statement of cash flows. The Company ~~is also identifying and implementing changes to the Company’s business processes, systems and internal controls to support the~~retrospectively adopted this ASU effective January 1, 2018. The adoption of this ~~new standard and~~ASU resulted in a decrease of net cash used in investing activities of $1.5 million for the related disclosure requirements. A number of industry-specific implementation issues are still unresolved, and the final resolution of certain of these issues could impact the Company’s current accounting policies and/or revenue recognition patterns. The Company will continue its evaluation of ASU 2014-09 (including how it may impact future contracts, as well as any new or emerging interpretations of the standard) through the date of adoption.six months ended June 30, 2017.

In May 2017, the FASB issued ASU 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting. This ASU clarifies the scope of modification accounting under Topic 718 with respect to changes to the terms or conditions of a share-based payments award. Under this new guidance, modification accounting would not apply if a change to an award does not affect the total current fair value, vesting conditions or the classification of the award. The Company adopted this ASU effective January 1, 2018. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

In March 2018, the FASB issued ASU 2018-05, Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118. This ASU provides guidance for companies that may not have completed their accounting for the income tax effects of the Tax Cut and Jobs Act of 2017 (the “Tax Act”) in the period of enactment. Staff Accounting Bulletin (“SAB”) No. 118 provides for a provisional one year measurement period to finalize the accounting for certain income tax effects related to the Tax Act and requires disclosure of the reasons for incomplete accounting. The Company applied the guidance provided in SAB No. 118 in 2017 and adopted this ASU effective January 1, 2018. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

New accounting pronouncements requiring implementation in future periods are discussed below.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), as amended and supplemented by subsequent ASUs (collectively, “ASU 2016-02”). ASU 2016-02 amends the existing guidance in Accounting Standards Codification (“ASC”) 840, Leases. This ASU requires, among other things, the recognition of lease right-of-use assets and lease liabilities by lessees for those leases currently classified as operating leases. ASU 2016-02 allows companies to adopt the new standard by either applying a modified retrospective method to the beginning of the earliest period presented in the financial statements or an optional transition method to initially apply the standard on January 1, 2019 and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company expects to adopt the standard using the optional transition method. The

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Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements but expects the adoption to result in a material increase to its assets and liabilities. The Company does not expect this ASU to have a material impact on its consolidated statements of income or cash flows.

In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). This ASU simplifies the calculation of goodwill impairment by eliminating Step 2 of the impairment test prescribed by ASC 350, Intangibles—Goodwill and Other. Step 2 requires companies to calculate the implied fair value of their goodwill by estimating the fair value of their assets, other than goodwill, and liabilities, including unrecognized assets and liabilities, following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. The calculated net fair value of the assets would then be compared to the fair value of the reporting unit to determine the implied fair value of goodwill, and to the extent that the carrying value of goodwill was less than the implied fair value, a loss would be recognized. Under ASU 2017-04, however, goodwill is impaired when the calculated fair value of a reporting unit is less than its carrying value, and the impairment charge will equal that difference (i.e., impairment will be calculated at the reporting unit level and there will be no need to estimate the fair value of individual assets and liabilities). This guidance will be effective for ~~the Company as of~~any goodwill impairment tests performed in fiscal years beginning after December 15, 2019; however, early adoption is permitted for tests performed on testing dates after January 1, ~~2018, with early adoption permitted.~~2017. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements.

In February 2018, the FASB issued ASU 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from the Accumulated Other Comprehensive Income. This ASU gives entities the option to reclassify to retained earnings tax effects related to items in accumulated other comprehensive income that the FASB refers to as having been stranded in accumulated other comprehensive income as a result of the Tax Act. Entities can apply the provisions of this ASU either in the period of adoption or retrospectively. The guidance is effective for interim and annual reporting periods beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the effect that the adoption of this ASU will have on its consolidated financial statements.

(3) Revenue

Revenue Recognition

The Company derives revenue from long-term construction contracts with public and private customers primarily in the United States and its territories and in certain other international locations. The Company’s construction contracts are generally each accounted for as a single unit of account (i.e., as a single performance obligation).

Throughout the execution of construction contracts, the Company and its affiliated entities recognize revenue with the continuous transfer of control to the customer. The customer typically controls the asset under construction by either contractual termination clauses or by the Company’s rights to payment for work already performed on the asset under construction that does not have an alternative use for the Company.

Because control transfers over time, revenue is recognized to the extent of progress towards completion of the performance obligations. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the products or services provided. The Company generally uses the cost-to-cost method for its contracts, which measures progress towards completion for each performance obligation based on the ratio of costs incurred to date to the total estimated costs at completion for the respective performance obligation. Incurred cost represents work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer. Revenue, including estimated fees or profits, is recorded proportionately as costs are incurred. Cost of operations includes labor, materials, subcontractor costs, and other direct and indirect costs, including depreciation and amortization.

Due to the nature of the work required to be performed on many of the Company’s performance obligations, estimating total revenue and cost at completion is complex, subject to many variables and requires significant judgment. The estimates used during the contract performance period require judgment and making assumptions as to the occurrence of future events and the likelihood of variable consideration, including the impact of change orders, claims, contract disputes and the achievement of contractual performance criteria, and award or other incentive fees. The Company estimates variable consideration at the most likely amount it expects to receive. The Company includes estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an

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UNAUDITED

assessment of anticipated performance and all information (historical, current and forecasted) that is reasonably available to management.

Disaggregation of Revenue

The following tables disaggregate revenue by end market, customer type and contract type, which the Company believes best depicts how the nature, amount, timing and uncertainty of its revenue and cash flows are affected by economic factors.



	Three Months		Six Months
	Ended June 30,		Ended June 30,
(in thousands)	2018		2018
Civil segment revenue by end market:
Mass transit	$	158,096	$	308,222
Bridges		120,929		183,739
Highways		65,809		83,066
Tunneling		23,931		32,632
Other		33,708		57,928
Total Civil segment revenue	$	402,473	$	665,587



	Three Months		Six Months
	Ended June 30,		Ended June 30,
(in thousands)	2018		2018
Building segment revenue by end market:
Health care facilities	$	118,116	$	193,197
Office		39,237		186,559
Hospitality and gaming		79,490		161,255
Municipal and government		70,528		120,981
Mixed use		38,814		80,590
Education facilities		32,876		65,358
Industrial and commercial		20,081		46,507
Other		47,837		82,773
Total Building segment revenue	$	446,979	$	937,220



	Three Months		Six Months
	Ended June 30,		Ended June 30,
(in thousands)	2018		2018
Specialty Contractors segment revenue by end market:
Mass transit	$	78,169	$	153,351
Mixed use		51,976		99,833
Industrial and commercial		36,540		75,878
Transportation		22,019		56,004
Education facilities		26,298		51,602
Condominiums		22,761		45,850
Health care facilities		14,623		30,988
Other		18,247		31,928
Total Specialty Contractors segment revenue	$	270,633	$	545,434

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UNAUDITED



	Three Months Ended June 30, 2018
					Specialty
(in thousands)	Civil		Building		Contractors		Total
Revenue by customer type:
State and local agencies	$	327,195	$	159,556	$	106,308	$	593,059
Federal agencies		30,772		52,263		14,988		98,023
Private owners		44,506		235,160		149,337		429,003
Total revenue	$	402,473	$	446,979	$	270,633	$	1,120,085



	Six Months Ended June 30, 2018
					Specialty
(in thousands)	Civil		Building		Contractors		Total
Revenue by customer type:
State and local agencies	$	553,546	$	275,541	$	212,628	$	1,041,715
Federal agencies		40,627		96,574		33,712		170,913
Private owners		71,414		565,105		299,094		935,613
Total revenue	$	665,587	$	937,220	$	545,434	$	2,148,241

State and local agencies. The Company’s state and local government customers include state transportation departments, metropolitan authorities, cities, municipal agencies, school districts and public universities. Services provided to state and local customers are primarily pursuant to contracts awarded through competitive bidding processes. Construction services for state and local government customers have included mass-transit systems, bridges, highways, judicial and correctional facilities, schools and dormitories, health care facilities, convention centers, parking structures and other municipal buildings. The vast majority of the Company’s civil contracting and building construction services are provided in locations throughout the United States and its territories.

Federal agencies. The Company’s federal government customers include the U.S. State Department, the U.S. Navy, the U.S. Army Corps of Engineers, the U.S. Air Force and the National Park Service. Services provided to federal agencies are typically pursuant to competitively bid contracts for specific or multi-year assignments that involve new construction or infrastructure repairs or improvements. A portion of revenue from federal agencies is derived from projects in overseas locations.

Private owners. The Company’s private customers include real estate developers, health care companies, technology companies, hospitality and gaming resort owners, Native American sovereign nations, public corporations and private universities. Services are provided to private customers through negotiated contract arrangements, as well as through competitive bids.

Most federal, state and local government contracts contain provisions that permit the termination of contracts, in whole or in part, for the convenience of the government, among other reasons.



	Three Months Ended June 30, 2018
					Specialty
(in thousands)	Civil		Building		Contractors		Total
Revenue by contract type:
Fixed price	$	259,927	$	96,657	$	234,495	$	591,079
Guaranteed maximum price		3,103		270,440		17,462		291,005
Unit price		121,447		10,771		7,233		139,451
Cost plus fee and other		17,996		69,111		11,443		98,550
Total revenue	$	402,473	$	446,979	$	270,633	$	1,120,085

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UNAUDITED



	Six Months Ended June 30, 2018
					Specialty
(in thousands)	Civil		Building		Contractors		Total
Revenue by contract type:
Fixed price	$	443,830	$	175,658	$	481,919	$	1,101,407
Guaranteed maximum price		8,175		532,468		33,042		573,685
Unit price		190,201		19,588		13,890		223,679
Cost plus fee and other		23,381		209,506		16,583		249,470
Total revenue	$	665,587	$	937,220	$	545,434	$	2,148,241

Fixed price. Fixed price or lump sum contracts are most commonly used for projects in the Civil and Specialty Contractors segments and generally commit the Company to provide all of the resources required to complete a project for a fixed sum. Usually, fixed price contracts transfer more risk to the Company, but offer the opportunity for greater profits. Billings on fixed price contracts are typically based on estimated progress against predetermined contractual milestones.

Guaranteed maximum price (“GMP”). GMP contracts provide for a cost plus fee arrangement up to a maximum agreed upon price. These contracts place risks on the Company for amounts in excess of the GMP, but may permit an opportunity for greater profits than under cost plus fee contracts through sharing agreements with the owner on any cost savings that may be realized. Services provided by our Building segment to various private customers are often performed under GMP contracts. Billings on GMP contracts typically occur on a monthly basis and are based on actual costs incurred plus a negotiated margin.

Unit price. Unit price contracts are most prevalent for projects in the Civil and Specialty Contractors segments and generally commit the Company to provide an estimated or undetermined number of units or components that comprise a project at a fixed price per unit. This approach shifts the risk of estimating the quantity of units required to the project owner, but the risk of increased cost per unit is borne by the Company, unless otherwise allowed for in the contract. Billings on unit price contracts typically occur on a monthly basis and are based on actual quantity of work performed or completed during the billing period.

Cost plus fee. Cost plus fee contracts are used for many projects in the Building and Specialty Contractors segments. Cost plus fee contracts include cost plus fixed fee contracts and cost plus award fee contracts. Cost plus fixed fee contracts provide for reimbursement of approved project costs plus a fixed fee. Cost plus award fee contracts provide for reimbursement of the project costs plus a base fee, as well as an incentive fee based on cost and/or schedule performance. Cost plus fee contracts serve to minimize the Company’s financial risk, but may also limit profits. Billings on cost plus fee contracts typically occur on a monthly basis based on actual costs incurred plus a negotiated margin.

Changes in Contract Estimates that Impact Revenue

Changes to the total estimated contract revenue or cost, either due to unexpected events or revisions to management’s initial estimates, for a given project are recognized in the period in which they are determined. Net revenue recognized during the three and six months ended June 30, 2018 related to performance obligations satisfied (or partially satisfied) in prior periods was immaterial.

Remaining Performance Obligations

Remaining performance obligations represent the transaction price of firm orders for which work has not been performed and excludes unexercised contract options. As of June 30, 2018, the aggregate amounts of the transaction prices allocated to the remaining performance obligations of the Company’s construction contracts are $4.3 billion, $2.0 billion and $1.6 billion, for the Civil, Building and Specialty Contractors segments, respectively. The Company typically recognizes revenue on Civil segment projects over a period of three to five years, whereas for projects in the Building and Specialty Contractors segments, the Company typically recognizes revenue over a period of one to three years.

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(4) Contract Assets and Liabilities

Contract assets include amounts due under retainage provisions, costs and estimated earnings in excess of billings and capitalized contract costs. The amounts as included on the Condensed Consolidated Balance Sheets consist of the following:



	As of June 30,		As of January 1,
(in thousands)	2018		2018
Retainage receivable	$	490,751	$	535,939
Costs and estimated earnings in excess of billings:
Claims		646,262		549,849
Unapproved change orders		334,777		296,591
Other unbilled costs and profits		63,194		86,318
Total costs and estimated earnings in excess of billings		1,044,233		932,758
Capitalized contract costs		41,434		32,773
Total contract assets	$	1,576,418	$	1,501,470

Retainage receivables represent amounts invoiced to customers where payments have been partially withheld pending the completion of certain milestones, other contractual conditions or upon the completion of the project. Retainage agreements vary from project to project and balances could be outstanding for several months or years depending on a number of circumstances such as contract-specific terms, project performance and other variables that may arise as the Company makes progress towards completion.

Costs and estimated earnings in excess of billings represent the excess of contract costs and profits (or contract revenue) over the amount of contract billings to date and are classified as a current asset. Costs and estimated earnings in excess of billings result when either: 1) the appropriate contract revenue amount has been recognized over time in accordance with ASC 606, but a portion of the revenue recorded cannot be billed currently due to the billing terms defined in the contract, or 2) costs are incurred related to certain claims and unapproved change orders. Claims occur when there is a dispute regarding both a change in the scope of work and the price associated with that change. Unapproved change orders occur when a change in the scope of work results in additional work being performed before the parties have agreed on the corresponding change in the contract price. The Company routinely estimates recovery related to claims and unapproved change orders as a form of variable consideration at the most likely amount it expects to receive and to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Claims and unapproved change orders are billable upon the agreement and resolution between the contractual parties and after the execution of contractual amendments. Increases in claims and unapproved change orders typically result from costs being incurred against existing or new positions; decreases normally result from resolutions and subsequent billings. As discussed in Note 9, Commitments and Contingencies, the resolution of these claims and unapproved change orders may require litigation or other forms of dispute resolution proceedings. Other unbilled costs and profits are billable in accordance with the billing terms of each of the existing contractual arrangements and, as such, the timing of contract billing cycles can cause fluctuations in the balance of unbilled costs and profits. Ultimate resolution of other unbilled costs and profits typically involves incremental progress toward contractual requirements or milestones.

Capitalized contract costs primarily represent costs to fulfill a contract that (1) directly relate to an existing or anticipated contract, (2) generate or enhance resources that will be used in satisfying performance obligations in the future and (3) are expected to be recovered through the contract, and are included in other current assets. Capitalized contract costs are generally expensed to the associated contract over the period of anticipated use on the project. During the three and six months ended June 30, 2018, $4.1 million and $8.2 million of previously capitalized contract costs were amortized and recognized as expense on the related contracts, respectively.

Contract liabilities include amounts owed under retainage provisions and billings in excess of costs and estimated earnings. The amount as reported on the Condensed Consolidated Balance Sheets consist of the following:



	As of June 30,		As of January 1,
(in thousands)	2018		2018
Retainage payable	$	236,545	$	261,820
Billings in excess of costs and estimated earnings		574,392		496,654
Total contract liabilities	$	810,937	$	758,474

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Retainage payables represent amounts invoiced to the Company by subcontractors where payments have been partially withheld pending the completion of certain milestones, other contractual conditions or upon the completion of the project. Generally, retainage payables are not remitted to subcontractors until the associated retainage receivables from customers are collected.

Billings in excess of costs and estimated earnings represent the excess of contract billings to date over the amount of contract costs and profits (or contract revenue) recognized to date. The balance may fluctuate depending on the timing of contract billings and the recognition of contract revenue. Revenue recognized during the three and six months ended June 30, 2018 and included in the opening billings in excess of costs and estimated earnings balances for each period totaled $262.3 million and $303.4 million, respectively.

(5) Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Condensed Consolidated Balance Sheets to the amounts shown in the Condensed Consolidated Statements of Cash Flows:



	As of June 30,		As of December 31,
(in thousands)	2018		2017
Cash and cash equivalents available for general corporate purposes	$	51,379	$	94,713
Joint venture cash and cash equivalents		87,190		98,155
Cash and cash equivalents		138,569		192,868
Restricted cash		3,434		4,780
Total cash, cash equivalents and restricted cash	$	142,003	$	197,648

Cash equivalents include short-term, highly liquid investments with maturities of three months or less when acquired. Cash and cash equivalents consist of amounts available for the Company’s general purposes, the Company’s proportionate share of cash held by the Company’s unconsolidated joint ventures and 100% of amounts held by the Company’s consolidated joint ventures. In both cases, cash held by joint ventures is available only for joint venture-related uses, including future distributions to joint venture partners.

Amounts included in restricted cash are primarily held as collateral to secure insurance-related contingent obligations, such as insurance claim deductibles, in lieu of letters of credit.

(6) Earnings Per Common Share (EPS)

Basic EPS and diluted EPS are calculated by dividing net income attributable to Tutor Perini Corporation by the following: for basic EPS, the weighted-average number of common shares outstanding during the period; and for diluted EPS, the sum of the weighted-average number of both outstanding common shares and potentially dilutive securities, which for the Company can include restricted stock units, unexercised stock options and the Convertible Notes, as defined in Note 6.8, Financial Commitments. The Company calculates the effect of these potentially dilutive securities using the treasury stock ~~method.~~method for restricted stock units and stock options.

Three Months Ended June 30,

Six Months Ended June 30,
(in thousands, except per common share amounts)
2017

2016

2017

2016
Net income attributable to Tutor Perini Corporation
$
30,096

$
21,361

$
43,860

$
36,760

Weighted-average common shares outstanding, basic

49,735

49,131

49,510

49,105
Effect of dilutive restricted stock units and stock options

1,020

430

1,343

318
Weighted-average common shares outstanding, diluted

50,755

49,561

50,853

49,423

Earnings per common share:

Basic earnings per common share
$
0.61

$
0.43

$
0.89

$
0.75
Diluted earnings per common share
$
0.59

$
0.43

$
0.86

$
0.74

Anti-dilutive shares not included above

353

1,704

672

1,704



	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands, except per common share data)	2018		2017		2018		2017
Net income attributable to Tutor Perini Corporation	$	24,883	$	30,096	$	12,759	$	43,860

Weighted-average common shares outstanding, basic		49,946		49,735		49,880		49,510
Effect of dilutive restricted stock units and stock options		494		1,020		247		1,343
Weighted-average common shares outstanding, diluted		50,440		50,755		50,127		50,853

Net income attributable to Tutor Perini Corporation per common share:
Basic	$	0.50	$	0.61	$	0.26	$	0.89
Diluted	$	0.49	$	0.59	$	0.25	$	0.86

Anti-dilutive securities not included above		1,682		353		3,095		672

Table of Contents

TUTOR PERINI CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

UNAUDITED

With regard to diluted EPS and the impact of the Convertible Notes on the diluted EPS calculation, because the Company has the intent and ability to settle the principal amount of the Convertible Notes in cash, per ~~Accounting Standards Codification (“ASC”)~~ASC 260, Earnings Per Share, the settlement of the principal amount has no impact on diluted EPS.

~~(4)~~(7) Income Taxes

The Company’s effective income tax rate for the three and six months ended June 30, ~~2017~~2018 was ~~37.9%~~30.0% and ~~37.6%~~31.2%, respectively, compared to ~~40.3%~~37.9% and ~~41.2%~~37.6% for the three and six months ended June 30, ~~2016,~~2017, respectively. The effective tax ~~rate~~rates for the ~~three months ended June 30, 2017 was~~2018 periods reflect the reduction in the federal statutory income tax rate from 35% to 21% effective January 1, 2018 as a result of the Tax Act and were favorably impacted by earnings attributable to noncontrolling interests for which income taxes are not the responsibility of the ~~Company.~~Company, partially offset by non-deductible expenses and a change in the New York State tax law related to the treatment of foreign income under the Tax Act. The effective tax ~~rate~~rates for the three and six months ended June 30, 2017 ~~was~~were favorably impacted by earnings attributable to noncontrolling interests, while the effective rate for the six-month period was also favorably impacted by reductions in estimated non-deductible expenses and tax benefits associated with share-based compensation. ~~During~~For the ~~first quarter of~~three and six months ended June 30, 2018 and 2017, the Company recognized tax benefits associated with share-based compensation under the provisions of ASU 2016-09, as discussed in Note 9. This tax benefit is the result of a greater tax deduction for share-based compensation expense for awards that vested in the first quarter of 2017 relative to the share-based compensation expense recognized under GAAP for these same awards. ~~The~~ effective tax ~~rate for~~rates were higher than the ~~second quarter of 2016 was favorably impacted by adjustments related~~federal statutory rates primarily due to uncertain tax benefits. The effective rate for the first half of 2016 reflects the favorable impact of the uncertain tax benefit adjustments, as well as the unfavorable impact of various discrete items, including certain state ~~tax rate changes on deferred~~income taxes.

~~(5)~~ ~~Costs and Estimated Earnings in Excess of Billings~~

~~Costs and estimated earnings in excess of billings, as reported on the Condensed Consolidated Balance Sheets, consist of the following:~~

As of June 30,

As of December 31,
(in thousands)
2017

2016
Claims
$
486,067

$
477,425
Unapproved change orders

263,130

207,475
Other unbilled costs and profits

101,437

146,926
Total costs and estimated earnings in excess of billings
$
850,634

$
831,826

Claims and unapproved change orders are billable upon the agreement and resolution between the contractual parties and after the execution of contractual amendments. Increases in claims and unapproved change orders typically result from costs being incurred

~~Table of Contents~~

~~TUTOR PERINI CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)~~

~~UNAUDITED~~

against existing or new positions where recovery is concluded to be both probable and reliably estimable; decreases normally result from resolutions and subsequent billings. Other unbilled costs and profits are billable in accordance with the billing terms of each of the existing contractual arrangements and, as such, the timing of contract billing cycles can cause fluctuations in the balance of unbilled costs and profits. Ultimate resolution of other unbilled costs and profits typically involves the passage of time and, often, incremental progress toward contractual requirements or milestones.

~~(6)~~(8) Financial Commitments

Long-Term Debt

Long-term debt consisted of the following as of the dates of the Condensed Consolidated Balance Sheets presented:



	As of June 30,		As of December 31,		As of June 30,		As of December 31,
(in thousands)	2017		2016		2018		2017
2017 Senior Notes	$	492,360	$	—	$	493,121	$	492,734
Convertible Notes						166,442		161,635
2017 Credit Facility		118,160		—		92,000		—
2010 Senior Notes		—		298,120
2014 Revolver		—		147,990
Term Loan		—		54,650
Convertible Notes		157,046		152,668
Equipment financing, mortgages and acquisition-related notes		89,311		101,558
Equipment financing and mortgages						64,434		76,820
Other indebtedness		5,783		4,533		6,617		5,087
Total debt		862,660		759,519		822,614		736,276
Less – current maturities		(30,333)		(85,890)
Less: Current maturities						28,105		30,748
Long-term debt, net	$	832,327	$	673,629	$	794,509	$	705,528

The following table reconciles the outstanding debt balance to the reported debt balances as of June 30, ~~2017~~2018 and December 31, ~~2016:~~2017:

~~Debt Transactions~~The unamortized issuance costs related to the 2017 Credit Facility were $5.5 million and $6.2 million as of June 30, 2018 and December 31, 2017, respectively, and are included in other assets in the Condensed Consolidated Balance Sheets.

On April 20, 2017, the Company issued $500 million in aggregate principal amount of 6.875% Senior Notes due 2025 (the “2017 Senior Notes”) in a private ~~placement offering.~~placement. Interest on the 2017 Senior Notes is payable in arrears semi-annually onin May 1 and November 1 of each year, beginning onin November 1, 2017.

Prior to May 1, 2020, the Company may redeem the 2017 Senior Notes at a redemption price equal to 100% of their principal amount plus a ~~“make whole”~~“make-whole” premium described in the indenture. In addition, prior to May 1, 2020, the Company may redeem up to 40% of the original aggregate principal amount of the notes at a redemption price of 106.875% of their principal amount with the proceeds

received by the Company from any ~~equity offering.~~offering of the Company’s equity. After May 1, 2020, the Company may redeem the 2017 Senior Notes at specified redemption prices described in the indenture. Upon a change of control, holders of the 2017 Senior Notes may require the Company to repurchase all or part of the 2017 Senior Notes at 101% of the principal amount thereof, plus accrued and unpaid interest ~~if any,~~ to ~~but excluding,~~ the redemption date.

The 2017 Senior Notes are senior unsecured obligations of the Company and are guaranteed by substantially all of the Company’s existing and future subsidiaries that also guarantee obligations under the Company’s 2017 Credit Facility, as defined below. In addition, the indenture for the 2017 Senior Notes provides for customary covenants, including events of default and restrictions on the payment of dividends and share ~~repurchases, and events of default.~~repurchases.

On April 20, 2017, the Company entered into a credit agreement (the “2017 Credit Facility”) with SunTrust Bank as Administrative Agent, Swing Line Lender and L/C Issuer and a syndicate of other lenders. The 2017 Credit Facility provides for a $350 million revolving credit facility (the “2017 Revolver”) and a sublimit for the issuance of letters of credit and swingline loans up to the aggregate amount of $150 million and $10 million, respectively, both maturing on April 20, 2022, unless any of the Convertible Notes, as defined below, are outstanding on December 17, 2020, in which case all such borrowings will mature on December 17, 2020 (subject to certain further exceptions). In addition, the 2017 Credit Facility permits additional borrowings in an aggregate amount of $150 million, which can be in the form of increased capacity on the 2017 Revolver or the establishment of one or more term loans.

Borrowings under the 2017 Revolver bear interest, at the Company’s option, at a rate equal to a margin over (a) the London Interbank Offered Rate (“LIBOR”) plus a margin of between 1.50% and 3.00% ~~(which is initially 2.50%)~~ or (b) a base rate (determined by reference to the highest of (i) the administrative agent’s prime lending rate, (ii) the federal funds effective rate plus 50 basis points, (iii) the LIBOR rate for a one-month interest period plus 100 basis points and (iv) 0%), plus a margin of between 0.50% and 2.00% ~~(which is initially 1.50%)~~, in each case based on the Consolidated Leverage Ratio (as defined in the 2017 Credit Facility). In addition to paying interest on outstanding principal under the 2017 Credit ~~Agreement,~~Facility, the Company will pay a commitment fee to the lenders under the 2017 Revolver in respect of the unutilized commitments thereunder. The Company will pay customary letter of credit fees. If an event of default occurs and is continuing, the otherwise applicable margin and letter of credit fees will be increased by 2% per annum. ~~For the three months ended June 30, 2017 the~~The weighted-average annual interest rate on borrowings under the 2017 Revolver was approximately ~~3.7%.~~ 4.55% during the six months ended June 30, 2018.

The 2017 Credit Facility contains customary covenants for credit facilities of this type, including maximum consolidated leverage ratios ranging from 4.00:1.00 to 3.25:1.00 over the life of the facility and a minimum consolidated fixed charge coverage ratio of 1.25:1.00. Substantially all of the Company’s subsidiaries unconditionally guarantee the obligations of the Company under the 2017 Credit Facility; additionally, the obligations are secured by a lien on all personal property of the Company and its subsidiaries guaranteeing these obligations.

As of June 30, ~~2017,~~2018, there was ~~$225~~$258 million available under the 2017 Revolver, and the Company had not utilized the 2017 Credit Facility for letters of credit. The Company was in compliance with the financial covenants under the 2017 Credit Facility ~~for the period ended~~as of June 30, ~~2017.~~2018.

Repurchase and Redemption of 2010 Senior Notes and Termination of 2014 Credit Facility

On April 20, 2017, the Company used proceeds from the 2017 Senior Notes and 2017 Revolver to repurchase or redeem its 2010 Senior Notes ($300 million of 7.625% Senior Notes due November 1, 2018), to pay off its ~~Term Loan~~2014 Credit Facility ($300 million revolving credit facility and ~~2014 Revolver,~~a $250 million term loan, both maturing on May 1, 2018), and to pay accrued but unpaid interest and fees. In addition, the indenture governing the 2010 Senior Notes was satisfied and discharged, and the Company terminated the 2014 Credit Facility.

In October 2010, the Company issued $300 million of 7.625% Senior Notes due November 1, 2018 (the “2010 Senior Notes”) in a private placement offering. As discussed above, on April 20, 2017, the Company repurchased or redeemed the 2010 Senior Notes in full and the related indenture was satisfied and discharged.

On June 5, 2014, the Company entered into a Sixth Amended and Restated Credit Agreement, as amended (the “2014 Credit Facility”), with Bank of America, N.A. as Administrative Agent, Swing Line Lender and L/C Issuer and a syndicate of other lenders. The 2014 Credit Facility provides for a $300 million revolving credit facility (the “2014 Revolver”), a $250 million term loan (the “Term Loan”) and a sublimit for the issuance of letters of credit up to the aggregate amount of $150 million, all maturing on May 1, 2018. Borrowings under both the 2014 Revolver and the Term Loan bear interest based either on Bank of America’s prime lending

~~rate or the London Interbank Offered Rate (“LIBOR”), each plus an applicable margin ranging from 1.25% to 3.00%, contingent upon the latest Consolidated Leverage Ratio.~~

~~As discussed above, on April 20, 2017, the Company repaid all borrowings under the 2014 Credit Facility and concurrently terminated the facility.~~

On June 15, 2016, the Company issued $200 million of 2.875% Convertible Senior Notes due June 15, 2021 (the “Convertible Notes”) in a private placement offering. The Convertible Notes are unsecured obligations and do not contain any financial covenants or restrictions on the payments of dividends, the incurrence of indebtedness or the issuance or repurchase of securities by the Company. The Convertible Notes bear interest at a rate of 2.875% per year, payable in cash semi-annually in June and December.

Prior to January 15, 2021, the Convertible Notes will be convertible only under the following circumstances: (1) during the five business day period after any ten consecutive trading day period in which the trading price per $1,000 principal amount of Convertible

Notes for such trading day was less than 98% of the product of the last reported sale price of ~~our~~the Company’s common stock and the conversion rate on each such trading day; (2) if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion rate of 33.0579 (or $39.32), on each applicable trading day; or (3) upon the occurrence of specified corporate events. On or after January 15, 2021 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their notes, in multiples of $1,000 principal amount, at the option of the holder regardless of the foregoing circumstances.

The Convertible Notes will be convertible at an initial conversion rate of 33.0579 shares of the Company’s common stock per $1,000 principal amount of the Convertible Notes, which is equivalent to an initial conversion price of approximately $30.25. The conversion rate will be subject to adjustment for some events but will not be adjusted for any accrued and unpaid interest. In addition, following certain corporate events that occur prior to the maturity date, the Company is required to increase, in certain circumstances, the conversion rate for a holder who elects to convert their Convertible Notes in connection with such a corporate event including customary conversion rate adjustments in connection with a “make-whole fundamental change” described in the indenture. Upon conversion, and at the Company’s election, the Company may satisfy its conversion obligation by paying or delivering, as applicable, cash, shares of its common stock or a combination of cash and shares of its common stock. As of June 30, ~~2017, none of~~2018, the conversion provisions of the Convertible Notes ~~has~~have not been triggered.

Interest expense as reported in the Condensed Consolidated Statements of Income consists of the following:

~~Interest expense as reported in the Condensed Consolidated Statements of Operations consists of the following:~~

~~(a)~~(9) ~~The combination of cash~~Commitments and non-cash interest expense produces effective interest rates that are higher than contractual rates. Accordingly, the effective interest rates for the period ended June 30, 2017 were 7.13%; and 9.39% for the 2017 Senior Notes and the Convertible Notes, respectively.Contingencies

The Company and certain of its subsidiaries are involved in litigation and various forms of dispute resolution, and are contingently liable for commitments and performance guarantees arising in the ordinary course of business. ~~The Company and certain of its customers have made claims arising from~~In addition, other activities inherent to the ~~performance under their contracts. The Company recognizes certain significant claims for recovery of incurred cost when it is probable that the claim will~~Company’s business may result in ~~additional contract revenue~~litigation or dispute resolution proceedings when there is a disagreement regarding a change in the scope of work and/or the price associated with that change. In accordance with ASC 606, the Company makes assessments of these types of disputes on a routine basis and ~~when~~estimates and records recovery related to these disputes at the most likely amount ~~of the claim can be reliably estimated.~~ it expects to receive, as discussed further in Note 3, Revenue, and Note 4, Contract Assets and Liabilities. These assessments require judgments concerning matters such as litigation developments and outcomes, the anticipated outcome of negotiations ~~the number of future claims~~ and the estimated cost of ~~both pending and future claims.~~resolving such disputes. In addition, because most contingencies are resolved over long periods of time, assets and liabilities may change in the future due to various factors. Management believes that, based on current information and discussions with the Company’s legal counsel, the ultimate resolution of these matters is not expected to have a material adverse effect on the Company’s financial position, results of operations or cash flows.

Several matters are in the litigation and dispute resolution ~~process.~~processes that include characteristics which management consider to be other than ordinary routine contract performance related issues. The following discussion provides a background and current status of ~~the more significant~~such material matters.

The Company reconstructed the Long Island Expressway/Cross Island Parkway Interchange ~~project~~(“LIE Project”) for the New York State Department of Transportation ~~(the “NYSDOT”~~(“NYSDOT”). The $130 million project was substantially completed in January 2004 and was accepted by ~~the~~ NYSDOT as complete in February 2006. The Company incurred significant added costs in completing its work and suffered extended schedule costs due to numerous design errors, undisclosed utility conflicts, lack of coordination with local agencies and other interferences for which the Company believes ~~the~~ NYSDOT is responsible.

In March 2011, the Company ~~filed its claim and complaint~~opened a case with the New York State Court of Claims ~~and served~~against NYSDOT related to the ~~New York State Attorney General’s Office, seeking damages in the amount of $53.8 million.~~LIE Project. In May 2011, ~~the~~ NYSDOT filed a motion to dismiss the Company’s claim on the grounds that the Company had not provided required documentation for project closeout and filing of a claim. In September 2011, the Company reached agreement on final payment with the Comptroller’s Office on behalf of ~~the~~ NYSDOT, which resulted in an amount of $0.5 million payable to the Company and formally closed out the project allowing the Company to re-file its claim. ~~The~~In March 2012, the Company ~~re-filed~~filed its ~~claim~~formal Verified Claim seeking $50.7 million in ~~the amount of $53.8 million with the NYSDOT in February 2012 and with the Court of Claims in March 2012.~~damages. In May 2012, ~~the~~ NYSDOT served its answer and asserted counterclaims in the amount of $151 million alleging fraud in the inducement and punitive damages related to alleged violations of the disadvantaged business enterprise (“DBE”) requirements for the project. The Court subsequently ruled that NYSDOT’s counterclaims may only be asserted as a defense and offset to the Company’s claims and not as affirmative claims. In November 2014, the Appellate Division First Department affirmed the dismissal of NYSDOT’s affirmative counterclaims. On June 11, 2018, following additional summary judgment motions, the ~~City’s~~Court granted the Company’s motion to dismiss NYSDOT’s affirmative defenses, ~~and affirmative counterclaims based on DBE fraud. The Company~~which eliminated the use of NYSDOT’s counterclaim of $151 million as a defense to the claims of the Company. NYSDOT is likely to appeal this dismissal; however, an appeal does not ~~expect~~stay the ~~counterclaims~~proceedings from continuing. Discovery was completed during 2017, and the Company is currently awaiting an assignment to ~~have any material effect on its consolidated financial statements.~~a trial judge and the setting of a trial date.

Management has made an estimate of the total anticipated recovery on this project, and such estimate is included in revenue recorded to date. To the extent new facts become known or the final recovery included in the claim settlement varies from the estimate, the impact of the change will be reflected in the consolidated financial statements at that time.

Desert Mechanical, Inc. (“DMI”) and Fisk Electric Company (“Fisk”), wholly owned subsidiaries of the Company, were subcontractors on the Fontainebleau Project in Las Vegas (“Fontainebleau”), a hotel/casino complex with approximately 3,800 rooms. In June 2009, Fontainebleau filed for bankruptcy protection, under Chapter 11 of the U.S. Bankruptcy Code, in the Southern District of Florida. ~~Fontainebleau is headquartered in Miami, Florida.~~

DMI and Fisk filed liens in Nevada for approximately $44 million, representing unreimbursed costs to date and lost profits, including anticipated profits. Other unaffiliated subcontractors have also filed liens. In June 2009, DMI filed suit against Turnberry West Construction, Inc., the general contractor, in the 8th Judicial District Court, Clark County, Nevada (the “District Court”), and in May 2010, the court entered an order in favor of DMI for approximately $45 million.

In January 2010, the Bankruptcy Court approved the sale of the property to Icahn Nevada Gaming Acquisition, LLC, and this transaction closed in February 2010. As a result of a July 2010 ruling relating to certain priming liens, there was approximately $125 million set aside from this sale ~~which~~that is available for distribution to satisfy the creditor claims based on seniority. At that time, the total estimated sustainable lien amount was approximately $350 million. The project lender filed suit against the mechanic’s lien claimants, including DMI and Fisk, alleging that certain mechanic’s liens are invalid and that all mechanic’s liens are subordinate to the lender’s claims against the property. The Nevada Supreme Court ruled in October 2012 in an advisory opinion at the request of the Bankruptcy Court that lien priorities would be determined in favor of the mechanic lien holders under Nevada law.

In October 2013, a settlement was reached by and among the Statutory Lienholders and the other interested parties. The Bankruptcy Court appointed a mediator to facilitate the execution of that settlement ~~agreement. Settlement discussions are ongoing.~~agreement, but the parties were unable to settle. During the third quarter of 2017, DMI filed a motion seeking permission to file an action in Nevada to enforce the Company’s lien rights; the motion was granted by the Bankruptcy Court.

In 1999, the Company was awarded a contract for reconstruction of the Honeywell Street/Queens Boulevard Bridges project for the City of New York (the “City”). In June 2003, after substantial completion of the project, the Company initiated an action to recover $8.8 million in claims against the City on behalf of itself and its subcontractors. In March 2010, the City filed counterclaims for $74.6 million and other relief, alleging fraud in connection with the DBE requirements for the project. In May 2010, the Company served the City with its response to the City’s counterclaims and affirmative defenses. In August 2013, the Court granted the Company’s motion to dismiss the City’s affirmative defenses and counterclaims relating to fraud.

In January 2017, the Court granted the City’s motion for summary judgment and dismissed the Company’s claim against the City of New York. The Company has filed a notice of appeal. The Court also granted the Company’s motion for summary judgment for release of retention plus interest from 2010 for an aggregate amount of approximately $1.1 million.

~~The Company does not expect ultimate resolution of this matter to have any material effect on its consolidated financial statements.~~

Tutor-Saliba Corporation (“TSC”), a wholly owned subsidiary of the Company, was contracted to construct a timeshare development project in Las Vegas, which was substantially completed in December 2009. The Company’s claims against the owner, Westgate Planet Hollywood Las Vegas, LLC (“WPH”), relate to unresolved owner change orders and other claims. The Company filed a lien on the project in the amount of $23.2 million and filed its complaint with the District Court, Clark County, Nevada. Several subcontractors have also recorded liens, some of which have been released by bonds and some of which have been released as a result of subsequent payment. WPH has posted a mechanic’s lien release bond for $22.3 million.

WPH filed a cross-complaint alleging non-conforming and defective work for approximately $51 million, primarily related to alleged defects, misallocated costs and liquidated damages. WPH revised the amount of their counterclaims to approximately $45 million.

Following multiple post-trial motions, final judgment was entered in this matter on March 20, 2014. TSC was awarded total judgment in the amount of $19.7 million on its breach of contract claim, which includes an award of interest up through the date of judgment, plus attorney’s fees and costs. WPH ~~has paid $0.6 million of that judgment. WPH~~ was awarded total judgment in the amount of $3.1 million on its construction defect claims, which includes interest up through the date of judgment. WPH and its Sureties have filed a notice of appeal. TSC has filed a notice of appeal on the defect award. In July 2014, the Court ordered WPH to post an additional supersedeas bond on appeal, in the amount of $1.7 million, in addition to the lien release bond of $22.3 million, which increases the security up to $24.0 million. In May 2017, the Nevada Supreme Court issued its ruling on the appeal by WPH and its Sureties. With only minor adjustments, the Nevada Supreme Court affirmed the lower district court’s judgment, and following further proceedings in the lower district court, the anticipated final recovery to the Company is estimated to exceed $20 million, including interest and recovery of certain attorneys’ fees and ~~costs. A hearing~~costs of which the Company collected more than $16 million in 2017. In December 2017 and in January 2018, the Court issued several post-appeal orders confirming its previous rulings. Some of those matters are subject to ~~account for~~a current further appeal. Once resolved, TSC will seek an order from the ~~offset of~~Court seeking a remaining $4 million in interest and fees associated with the ~~defect award is scheduled to be held in the third quarter of 2017.~~matter.

The Company does not expect the ultimate resolution of this matter to have ~~any~~a material effect on its consolidated financial statements. Management has made an estimate of the total anticipated recovery on this project and such estimate is included in revenue recorded to date. To the extent new facts become known or the final recovery included in the claim settlement varies from the estimate, the impact of the change will be reflected in the consolidated financial statements at that time.

~~U.S. Department of Commerce, National Oceanic and Atmospheric Administration~~Five Star Electric Matter

~~Rudolph and Sletten, Inc.~~In the third quarter of 2015, Five Star Electric Corp. (“~~R&S”~~Five Star”), a wholly owned subsidiary of the Company that was acquired in 2011, entered into a ~~contract with~~tolling agreement (which has since expired) related to an ongoing investigation being conducted by the United States ~~Department of Commerce, National Oceanic and Atmospheric Administration (“NOAA”)~~Attorney’s Office for the ~~construction~~Eastern District of ~~a 287,000 square-foot facility for NOAA’s Southwest Fisheries Science Center Replacement Headquarters~~New York (“USAO EDNY”). Five Star has been cooperating with the USAO EDNY since late June 2014, when it was first made aware of the investigation, and Laboratory in La Jolla, California. The contract work began on May 24, 2010, and was substantially completed in September 2012. R&S incurred significant additional costs as a result of a design that contained errors and omissions, NOAA’s unwillingness to correct design flaws in a timely fashion and a refusal to negotiatehas provided information requested by the ~~time and pricing associated with change order work.~~

~~R&S filed three certified claims against NOAA for contract adjustments~~government related to ~~the unresolved owner change orders, delays, design deficiencies~~its use of certain minority-owned, women-owned, small and ~~other claims. The First Certified Claim was submitted on August 20, 2013, in the amount~~disadvantaged business enterprises and certain of ~~$26.8 million ("First Certified Claim")~~Five Star’s employee compensation, benefit and the Second Certified Claim was submitted on October 30, 2013, in the amount of $2.6 million ("Second Certified Claim") and the Third Certified Claim was submitted on October 1, 2014 in the amount of $0.7 million (“Third Certified Claim”).tax practices.

On January 6, 2014, R&S filed suit in the United States Federal Court of Claims on the Second Certified Claim plus interest and attorney's fees and costs. This was followed by a submission of a lawsuit on the First Certified Claim on July 31, 2014. In February 2015, the court denied NOAA’s motion to dismiss the Second Certified Claim. In March 2015, the Contracting Officer issued decisions on all Claims accepting a total of approximately $1.0 million of claims and denying approximately $29.5 million of claims. On April 14, 2015, the court consolidated the cases. In March 2017, the parties agreed to a proposed settlement. In July 2017, the government approved the settlement and payment is pending.

Management has made an estimate of the total anticipated recovery for the Claims, and such estimate is included in revenue recorded to date. The settlement did not have a material impact on the Company’s financial results for the three and six months ended June 30, 2017. To the extent new facts become known or the final recovery varies from the estimate, the impact of the change will be reflected in the consolidated financial statements at that time.

In the third quarter of 2015, Five Star Electric Corp. ("Five Star"), a subsidiary of the Company that was acquired in 2011, entered into a tolling agreement related to an ongoing investigation being conducted by the United States Attorney for the Eastern District of New York (“USAO EDNY”). The tolling agreement extended the statute of limitations to avoid the expiration of any unexpired statute of limitations while the investigation is pending. Five Star has been cooperating with the USAO EDNY since late June 2014, when it was first made aware of the investigation, and has been providing information related to its use of certain minority-owned, women-owned, small and disadvantaged business enterprises and, in addition, most recently, information regarding certain of Five Star’s employee compensation, benefit and tax practices. The investigation covers the period of 2005-2014.

As of June 30, ~~2017,~~2018, the Company cannot predict the ultimate outcome of the investigation and cannot reasonably estimate the potential loss or range of loss that Five Star or the Company may incur or the impact of the results of the investigation on Five Star or the Company.

In January 2011, Seattle Tunnel Partners (“STP”), a joint venture between Dragados USA, Inc. and the Company, entered into a design-build contract with the Washington State Department of Transportation (“WSDOT”) for the construction of a large diameter bored tunnel in downtown Seattle, King County, Washington to replace the Alaskan Way Viaduct, also known as State Route 99.

The construction of the large diameter bored tunnel ~~requires~~required the use of a tunnel boring machine (“TBM”). In December 2013, the TBM struck a steel pipe, installed by WSDOT as a well casing for an exploratory well. The TBM was damaged and was required to be shut down for repair. STP has asserted that the steel pipe casing was a differing site condition that WSDOT failed to properly disclose. The Disputes Review Board mandated by the contract to hear disputes issued a decision finding the steel casing was a Type I differing site condition. WSDOT has not accepted that finding.

The TBM iswas insured under a Builder’s Risk Insurance Policy ~~(“the Policy”~~(the “Policy”) with Great Lakes Reinsurance (UK) PLC and a consortium of other insurers (the “Insurers”). STP submitted the claims to the Insurers and requested interim payments under the Policy. The Insurers refused to pay and denied coverage. In June 2015, STP filed a lawsuit in the King County Superior Court, State of Washington (“Washington Superior Court”) seeking declaratory relief concerning contract interpretation, as well as damages as a result of the Insurers’ breach of their obligations under the terms of the Policy. WSDOT is deemed a plaintiff since WSDOT is an insured under the Policy and had filed its own claim for damages. Hitachi Zosen (“Hitachi”), the manufacturer of the TBM, has also joined the case as a plaintiff for costs incurred to repair the damages to the TBM. Trial is scheduled for ~~May~~October 2018. Discovery is ongoing.

In March 2016, WSDOT filed a complaint against STP in Thurston County Superior Court for breach of contract alleging STP’s delays and failure to perform and declaratory relief concerning contract interpretation. STP filed its answer to WSDOT’s complaint and filed a counterclaim against WSDOT and ~~against the manufacturer of the TBM.~~Hitachi. Trial is set for ~~June 2018. Discovery is ongoing.~~April 2019.

As of June 30, ~~2017,~~2018, the Company has concluded that the potential for a material adverse financial impact due to the Insurers’ denial of coverage and WSDOT’s legal actions is neither probable nor remote, and the potential loss or range of loss is not reasonably estimable. With respect to STP’s claims against the Insurers, WSDOT and Hitachi, management has included an estimate of the total anticipated recovery, concluded to be both probable and reliably estimable, in receivables or costs and estimated earnings in excess of billings recorded to date. To the extent new facts become known or the final ~~recovery included in the claim settlement varies~~recoveries vary from the estimate, the impact of the change will be reflected in the financial statements at that time.

During the second quarter of 2018, the Company adopted the Tutor Perini Corporation Omnibus Incentive Plan (the “Plan”), which effected the merger of the Company’s previous incentive compensation plans. Similar to its previous plans, the Plan provides for various types of share-based grants, including restricted and unrestricted stock units and stock options. As of June 30, 2018, there were 684,598 shares of common stock available for grant under the Company’s Plan. During the first six months of 2018 and 2017, the Company issued the following share-based instruments: (1) restricted stock units of 614,000 and 665,000 with weighted-average fair values per share of $25.19 and $30.48, respectively; (2) stock options of 579,000 and 265,000 with weighted-average fair values per share of $11.45 and $13.70, respectively, and weighted-average per share exercise prices of $23.73 and $23.47, respectively. In addition, during the six months ended June 30, 2018 and 2017, the Company issued 115,420 and 99,155 unrestricted stock units with a weighted-average fair value per share of $21.26 and $26.26, respectively.

The fair value of restricted and unrestricted stock units is based on the closing price of the Company’s common stock on the New York Stock Exchange on the date of the grant and the fair value of stock options is based on the Black-Scholes model. The fair value of certain performance-based awards are estimated taking into account the features of such awards. The fair value of stock options granted during the first six months of 2018 was determined using the Black-Scholes model based on the following weighted-average assumptions: (i) expected life of 5.1 years, (ii) expected volatility of 42.31%, (iii) risk-free rate of 2.57%, and (iv) no quarterly dividends.

For the three and six months ended June 30, 2018, the Company recognized, as part of general and administrative expenses, costs for share-based payment arrangements totaling $6.0 million and $12.1 million, respectively, and $6.1 million and $10.4 million for the

On May 31, 2017, the Company entered into a settlement agreement with Merrill Lynch, Pierce, Fenner & Smith Incorporated (“Merrill Lynch”), as successor in interest to Banc of America Securities LLCthree and Bank of America, N.A. (collectively “BofA”), to resolve the pending litigation between the Company and Merrill Lynch. The litigation, which was filed by the Company in 2011, related to the purchase by the Company of certain auction-rate securities from BofA.

On June 6, 2017, the Company received the $37.0 million cash settlement payment agreed to in the settlement agreement, and the pending litigation was dismissed with prejudice. Neither party made any admission of liability or wrongdoing, and the settlement agreement includes mutual releases of all claims and liabilities related to the subject matter of the pending litigation.

~~The Company recognized the settlement as a gain during the second quarter of 2017 and reported it as a component of other income, net in its Condensed Consolidated Statement of Operations.~~

On April 3, 2017, the Company adopted the Tutor Perini Corporation Incentive Compensation Plan (“Compensation Plan”), which was approved by the Company’s shareholders on May 24, 2017. The Compensation Plan provides for various types of share-based grants, including restricted and unrestricted stock units and stock options. Restricted and unrestricted stock units give the holder the right to exchange their stock units for shares of the Company’s common stock on a one-for-one basis. Stock options give the holder the right to purchase shares of the Company’s common stock at an exercise price equal to the fair value of the Company’s common stock on the date of the stock option’s award. Restricted stock units and stock options are usually subject to certain service and performance conditions and may not be sold or otherwise transferred until those restrictions have been satisfied; however, unrestricted stock units have no such restrictions. The term for stock options is limited to 10 years from the date of grant. The Compensation Plan allows for 2,335,000 shares of the Company’s common stock to be issued. As of June 30, 2017 there were 2,237,201 shares available to be granted under this plan.

The Company’s Amended and Restated Tutor Perini Corporation Long-Term Incentive Plan (“Incentive Plan”) is still active. The Incentive Plan is described, and informational disclosures are provided, in the Notes to Consolidated Financial Statements included in the Form 10-K for the year ended December 31, 2016. As of June 30, 2017, there were 405,529 shares authorized to be issued under the Incentive Plan; however, as discussed in the Company’s Definitive Proxy Statement (Schedule 14A) filed on April 13, 2017, the Company will not issue these shares. As of June 30, 2017, the Incentive Plan had an aggregate of 3,665,018 of restricted stock units and stock options from outstanding, historical awards that either have not vested or have vested but have not been exercised.

During the first six months of 2017 and 2016, the Company issued, in total from both the Compensation Plan and the Incentive Plan, the following share-based instruments: (1) restricted stock units of 665,000 and 483,387 at weighted-average per share prices of $30.48 and $19.14, respectively; (2) stock options of 265,000 and 274,000 at weighted-average per share exercise prices of $23.47 and $16.20, respectively; (3) unrestricted stock units of 99,155 and 64,603 at weighted-average per share prices of $26.26 and $21.67, respectively.

~~Effective January 1, 2017, the Company prospectively adopted ASU 2016-09,~~ ~~Improvements to Employee Share-Based Payment Accounting (Topic 718)~~, which simplifies several aspects of the accounting for share-based payment transactions, including the accounting for the income tax effect of share-based transactions and the forfeiture of share-based instruments. Upon this adoption, the Company elected an accounting policy requiring forfeitures of share-based instruments to be accounted for upon occurrence. As a result, the Company will recognize the full grant-date fair value of share-based awards throughout the requisite service and/or performance period, with any adjustments for forfeitures recognized only if and when a forfeiture occurs. During the six months ended June 30, 2017, ~~20,985 performance-based restricted stock units, with~~respectively. As of June 30, 2018, the balance of unamortized share-based compensation expense was $36.4 million, which will be recognized over a weighted-average ~~per share price~~period of $23.91, and 19,466 performance-based stock options, with a weighted-average per share exercise price of $26.56, were forfeited; however, the impact of these forfeitures was not recognized during this period because it was previously recognized in the fourth quarter of 2016 in accordance with the provisions of ASC 718 before the adoption of ASU 2016-09.2.2 years.

The Company has a defined benefit pension plan and an unfunded supplemental retirement plan. Effective September 1, 2004, all benefit accruals under these plans were frozen; however, the current vested benefit was preserved. The pension disclosure presented below includes aggregated amounts for both of the Company’s plans.

The following table sets forth the net periodic benefit cost for the three and six months ended June 30, ~~2017~~2018 and ~~2016:~~2017:

The Company contributed $1.4 ~~million and $0.8~~ million to its defined benefit pension plan during each of the ~~six months~~six-month periods ended June 30, ~~2017~~2018 and ~~2016, respectively,~~2017, and expects to contribute an additional ~~$1.2~~$1.3 million ~~later in 2017.~~by the end of 2018.

The fair value hierarchy established by ASC 820, Fair Value Measurement, prioritizes the use of inputs used in valuation techniques into the following three levels:

The following ~~table presents, by~~ fair value hierarchy ~~level,~~table presents the Company’s assets that are measured at fair value on a recurring basis as of June 30, ~~2017~~2018 and December 31, ~~2016:~~2017:

The Company did not have material transfers between Levels 1 and 2 during the six months ended June 30, ~~2017~~2018 or ~~2016.~~2017.

The carrying values of receivables, payables and other amounts arising out of normal contract activities, including retainage, which may be settled beyond one year, are estimated to approximate fair value. Of the Company’s long-term debt, the fair value of the 2017 Senior Notes was $500.7 million and $537.5 million as of June 30, ~~2017 was $526.3 million. The fair value of the 2010 Senior Notes as of~~2018 and December 31, ~~2016 was~~

~~$302.6 million; the 2010 Senior Notes were redeemed in the second quarter of~~ 2017, ~~as discussed in Note 6.~~respectively. The fair value of the Convertible Notes was ~~$238.4~~$202.2 million and ~~$228.4~~$222.2 million as of June 30, ~~2017~~2018 and December 31, ~~2016,~~2017, respectively. The fair values of the 2017 ~~Senior Notes, 2010~~ Senior Notes and Convertible Notes were determined using Level 1 inputs, specifically current observable market prices. The reported value of the Company’s remaining ~~long-term debt at~~borrowings as of June 30, ~~2017~~2018 and December 31, ~~2016~~2017 approximates fair value.

~~From time to time the~~The Company may form joint ventures or partnerships with third parties for the execution of single contracts or projects. In accordance with ASC 810, Consolidation(“ASC 810”), the Company assesses its partnerships and joint ventures at inception to determine if any meet the qualifications of a ~~variable~~VIE. The Company considers a joint venture a VIE if either (a) the total equity investment is not sufficient to permit the entity to finance its activities without additional subordinated financial support, (b) characteristics of a controlling financial interest are missing (either the ability to make decisions through voting or other rights, the obligation to absorb the expected losses of the entity ~~(“VIE”).~~ or the right to receive the expected residual returns of the entity), or (c) the voting rights of the equity holders are not proportional to their obligations to absorb the expected losses of the entity and/or their rights to receive the expected residual returns of the entity, and substantially all of the entity’s activities either involve or are conducted on behalf of an investor that has disproportionately few voting rights. Upon the occurrence of certain events outlined in ASC 810, the company reassesses its initial determination of whether the joint venture is a VIE.

ASC 810 also requires the Company to determine whether it is the primary beneficiary of the VIE. The Company concludes that it is the primary beneficiary and consolidates the VIE if the Company has both (a) the power to direct the economically significant activities of the ~~entity~~VIE and (b) the obligation to absorb losses of, or the right to receive benefits from, the ~~entity~~VIE that could potentially be significant to the ~~VIE as part of its evaluation methodology.~~VIE. The Company considers the contractual agreements that define the ownership structure, distribution of profits and losses, risks, responsibilities, indebtedness, voting rights and board representation of the respective parties in determining if the Company is the primary beneficiary. The Company also considers all parties that have direct or implicit variable interests when determining whether it is the primary beneficiary. ~~As required by~~In accordance with ASC 810, management’s assessment of whether the Company is the primary beneficiary of a VIE is ~~continuously performed.~~performed continuously.

As of June 30, ~~2017,~~2018, the Company had ~~consolidated~~unconsolidated VIE-related current assets ~~of $94.4 million~~ and liabilities of ~~$88.2~~$2.9 million ~~all of which are classified as current~~ and ~~are~~$2.8 million, respectively, included in the Company’s Condensed Consolidated Balance Sheet. As of December 31, 2017, the Company had unconsolidated VIE-related current assets and liabilities of $0.8 million and $0.8 million, respectively, included in the Company’s Condensed Consolidated Balance Sheet. The Company’s maximum exposure to loss as a result of its investments in unconsolidated VIEs is typically limited to the aggregate of the carrying value of the investment and future funding commitments. There were no future funding requirements for the unconsolidated VIEs as of June 30, 2018.

As of June 30, 2018, the Company’s Condensed Consolidated Balance Sheet included current and noncurrent assets of $170.5 million and $41.1 million, respectively, as well as current liabilities of $288.3 million, related to the operations of its consolidated VIEs. As of December 31, 2017, the Company’s Condensed Consolidated Balance Sheet included current and noncurrent assets of $95.5 million and $11.6 million, respectively, as well as current liabilities of $140.7 million related to the operations of its consolidated VIEs.

Below is a discussion of some of the Company’s more significant or unique VIEs.

One large joint venture that the Company is consolidating was established to construct the Purple Line Segment 2 ~~Expansion~~Extension project, a $1.4 billion mass-transit project in Los Angeles, California. The Company has a 75% interest in the joint venture with the remaining

25% held by O&G Industries, Inc. The joint venture was initially financed with contributions from the partners and, per the ~~term~~terms of the joint venture agreement, the partners may be required to provide additional capital contributions in the future. The Company has determined that this joint venture is a VIE for which the Company is the primary beneficiary.

The Company also established a joint venture with Parsons Corporation (“Parsons”) to construct the Newark Airport Terminal One Design-Build project, a $1.4 billion transportation infrastructure project in Newark, New Jersey. The Company has an 80% interest in the joint venture with the remaining 20% held by Parsons. The joint venture was initially financed with contributions from the partners and, per the terms of the joint venture agreement, the partners may be required to provide additional capital contributions in the future. The Company has determined that this joint venture is a VIE for which the Company is the primary beneficiary.

ASC 220, Comprehensive Income, establishes standards for reporting and displaying comprehensive income and its components in the consolidated financial statements. The Company reports the change in pension benefit ~~plans~~plan assets/liabilities, cumulative foreign currency translation and change in fair value of investments ~~and change in fair value of an interest rate swap~~ as components of accumulated other comprehensive ~~loss~~income (loss) (“AOCI”).

The tax effects of the components of other comprehensive income (loss) for the three months ended June 30, ~~2017~~2018 and ~~2016~~2017 are as follows:

The tax effects of the components of other comprehensive income (loss) for the six months ended June 30, ~~2017~~2018 and ~~2016 are as follows:~~

~~The changes in AOCI balances by component (after tax) during the three and six months ended June 30,~~ 2017 are as follows:

The changes in AOCI balances by component (after tax) during the three and six months ended June 30, 2018 are as follows:

The changes in AOCI balance by component (after tax) for the three and six months ended June 30, ~~2016~~2017 are as follows:

~~The significant items reclassified out of AOCI and the corresponding location and impact on the Condensed Consolidated Statement of Operations are as follows:~~

~~(a)Defined benefit pension plan adjustments were reclassified primarily to cost of operations and general and administrative expenses.~~

The Company offers general contracting, pre-construction planning and comprehensive project management services, including planning and scheduling of manpower, equipment, materials and subcontractors required for the timely completion of a project in accordance with the terms and specifications contained in a construction contract. The Company also offers self-performed construction services: site work; concrete forming and placement; steel erection; electrical; mechanical; plumbing; and heating, ventilation and air conditioning (HVAC). As described below, ~~our~~the Company’s business is conducted through three segments: Civil, Building and Specialty Contractors. These segments are determined based on how the Company’s Chairman and Chief Executive Officer (chief operating decision maker) aggregates business units when evaluating performance and allocating resources.

The Civil segment specializes in public works construction and the replacement and reconstruction of infrastructure. The civil contracting services include construction and rehabilitation of highways, bridges, tunnels, mass-transit systems, and water management and wastewater treatment facilities.

The Building segment has significant experience providing services for private and public works customers in a number of specialized building markets, including: high-rise residential, hospitality and gaming, transportation, health care, commercial and government offices, sports and entertainment, education, correctional facilities, biotech, pharmaceutical, industrial and high-tech.

The Specialty Contractors segment specializes in electrical, mechanical, plumbing, HVAC, fire protection systems and pneumatically placed concrete for a full range of civil and building construction projects in the industrial, commercial, hospitality and gaming, and mass-transit end markets. This segment provides the Company with unique strengths and capabilities that allow the Company to position itself as a full-service contractor with greater control over scheduled work, project delivery and risk management.

The following tables set forth certain reportable segment information relating to the Company’s operations for the three and six months ended June 30, ~~2017~~2018 and ~~2016:~~2017:



	Reportable Segments													Reportable Segments
					Specialty							Consolidated						Specialty							Consolidated
(in thousands)	Civil			Building	Contractors		Total		Corporate			Total		Civil			Building	Contractors		Total		Corporate			Total
Six Months Ended June 30, 2018
Total revenue														$	787,014	$	938,592	$	545,434	$	2,271,040	$	—		$	2,271,040
Elimination of intersegment revenue															(121,427)		(1,372)		—		(122,799)		—			(122,799)
Revenue from external customers														$	665,587	$	937,220	$	545,434	$	2,148,241	$	—		$	2,148,241
Income from construction operations														$	52,278	$	18,961	$	14,689	$	85,928	$	(32,038)	(a)	$	53,890
Capital expenditures														$	46,548	$	870	$	634	$	48,052	$	251		$	48,303
Depreciation and amortization(b)														$	12,325	$	970	$	2,218	$	15,513	$	5,651		$	21,164

Six Months Ended June 30, 2017
Total revenue	$	905,363	$	1,019,936	$	597,553	$	2,522,852	$	—		$	2,522,852	$	905,363	$	1,019,936	$	597,553	$	2,522,852	$	—		$	2,522,852
Elimination of intersegment revenue		(128,206)		(30,011)		—		(158,217)		—			(158,217)		(128,206)		(30,011)		—		(158,217)		—			(158,217)
Revenue from external customers	$	777,157	$	989,925	$	597,553	$	2,364,635	$	—		$	2,364,635	$	777,157	$	989,925	$	597,553	$	2,364,635	$	—		$	2,364,635
Income from construction operations	$	90,032	$	10,977	$	755	$	101,764	$	(30,702)	(a)	$	71,062	$	90,032	$	10,977	$	755	$	101,764	$	(30,702)	(a)	$	71,062
Capital expenditures	$	7,417	$	148	$	293	$	7,858	$	325		$	8,183	$	7,417	$	148	$	293	$	7,858	$	325		$	8,183
Depreciation and amortization (b)	$	21,554	$	1,031	$	2,385	$	24,970	$	5,788		$	30,758	$	21,554	$	1,031	$	2,385	$	24,970	$	5,788		$	30,758

Six Months Ended June 30, 2016
Total revenue	$	872,431	$	1,034,151	$	600,675	$	2,507,257	$	—		$	2,507,257
Elimination of intersegment revenue		(70,866)		(42,892)		—		(113,758)		—			(113,758)
Revenue from external customers	$	801,565	$	991,259	$	600,675	$	2,393,499	$	—		$	2,393,499
Income from construction operations	$	78,721	$	25,673	$	14,826	$	119,220	$	(30,269)	(a)	$	88,951
Capital expenditures	$	7,157	$	302	$	744	$	8,203	$	478		$	8,681
Depreciation and amortization (b)	$	20,531	$	1,106	$	2,568	$	24,205	$	5,751		$	29,956

During the ~~first half of 2016,~~six months ended June 30, 2018, the Company recorded ~~net favorable adjustments totaling $3.0~~a charge of $17.8 million in income from construction operations ~~($0.04~~(an after-tax impact of $12.7 million, or $0.25 per diluted share) ~~for various Five Star Electric projects~~, which was primarily non-cash, as a result of the unexpected outcome of an arbitration decision related to a subcontract back charge dispute on a Civil segment project in New York in the Specialty Contractors segment. The net impact included material adjustments related to two electrical subcontract projects: a favorable adjustment of $14.0 million for a completed project ($0.17 per diluted share) and an unfavorable adjustment of $13.8 million for a project that was ~~nearly complete ($0.17 per diluted share). These were the only changes~~completed in ~~estimates considered material to the Company’s results of operations during the periods presented herein.~~2013.

A reconciliation of segment results to the consolidated income before income taxes is as follows:

Raymond R. Oneglia, Vice Chairman of O&G Industries, Inc. (“O&G”), is a director of the Company. The Company occasionally forms construction project joint ventures with O~~&G, and for certain joint ventures O&G provides equipment and services for the projects on customary trade terms.~~&G. Currently, the Company has ~~two joint ventures with O&G for infrastructure projects in the northeastern United States that are 99% and 100% complete. In addition, we have~~ a 75% interest in a ~~newly formed~~ joint venture with O&G (as the 25% interest holder) for a project in Los Angeles, California. ~~The~~O&G may provide equipment and services to these joint ventures on customary trade terms; there were no material payments made by the joint ~~ventures~~venture to O&G during the three and six months ended June 30, ~~2017~~2018 and ~~2016 were immaterial.~~ 2017.

The ~~growth~~ outlook for the ~~Company~~Company’s growth over the next several years ~~remains very~~is favorable, particularly ~~for~~in the Civil ~~segment. In addition to the large current backlog, we expect~~and Specialty Contractors segments. We anticipate that additional significant new awards may benefit these segments based on long-term capital spending plans by ~~various~~ state, local and federal customers, ~~and typically~~as well as bipartisan support for infrastructure investments. ~~In November 2016, voters~~Voters in numerous states approved dozens of long-term transportation funding measures in recent elections totaling approximately $200 billion ~~which have yet to have a significant impact on the Company’s bidding activities.~~in long-term funding. The largest of these were in Los Angeles County, where Measure M, a half-cent sales tax increase, was approved and is expected to generate $120 billion of funding over ~~the next~~ 40 years and in Seattle, Washington, where Sound Transit 3 was passed and is expected to generate $54 billion of funding over ~~the next~~ 25 ~~years for regional transportation projects.~~years. In addition, in April 2017 the California legislature passed and Governor Brown signed into law a $52 billion, 10-year transportation bill. This new long-term funding measure should lead to various new civil project opportunities in California beginning in 2018. Furthermore, the Trump ~~administration continues to plan~~Administration has proposed a significant infrastructure investment program and is preparing to present its plan for approval and funding. The $305 billion Fixing America’s Surface Transportation Act (FAST Act), which was approved in late 2015, is also expected to provide state and local agencies with federal funding for numerous highway, bridge and mass-transit projects through 2020. Severalprogram. Furthermore, several large, long-duration civil infrastructure programs with which we are already involved ~~continue~~are progressing, such as California’s High-Speed Rail system and ~~the~~ New York ~~Metropolitan Transportation Authority’s~~City’s East Side Access project. Planning and permitting ~~are also underway related to~~activities continue on Amtrak’s Northeast Corridor Improvements, including the Gateway Program, which is expected to eventually bring new rail tunnels beneath the Hudson River to connect service between New Jersey and New York’s Penn Station. Finally, ~~a continued low~~favorable interest ~~rate environment should~~rates and capital costs are anticipated to sustain ~~high~~strong demand and continued spending by ~~private~~public and ~~public~~private customers on infrastructure projects.

For a more detailed discussion of operating performance of each business segment, corporate general and administrative expense and other items, see Results of Segment Operations, Corporate, Tax and Other Matters and Liquidity and ~~Financial Condition~~Capital Resources below.

The results of our Civil, Building and Specialty Contractors segments are discussed below.

Revenue and income from construction operations for the Civil segment are summarized as follows:

Revenue for the three and six months ended June 30, ~~2017 was consistent with revenue for~~2018 decreased 15% and 14%, respectively, compared to the same periods in ~~2016.~~2017. The decrease for both periods was primarily due to a net reduction in project execution activities on various mass-transit projects in New York and California and a tunnel project in Washington.

Income from construction operations for the three and six months ended June 30, ~~2017 increased 29%~~2018 decreased 15% and ~~14%~~42%, respectively, compared to the same periods ~~last year. The increase for both periods~~in 2017. For the second quarter of 2018, the decrease was ~~predominantly~~primarily due to ~~mass-transit projects in California and New York, partially offset by reduced activity on other projects, including various bridge projects~~the volume changes mentioned above. For the six-month period of 2018, the decrease was principally due to the $17.8 million charge in the ~~Midwest and~~first quarter of 2018 discussed above in the ~~successful completion of a large tunnel~~Executive Overview, as well as reduced project ~~in Canada.~~contributions primarily associated with the lower volume discussed above.

Operating margin was 12.3% and ~~11.6%~~7.9%, respectively, for the three and six months ended June 30, ~~2017~~2018 compared to ~~9.7%~~12.3% and ~~9.8%~~11.6% for the same periods in ~~2016.~~2017. The margin ~~increase~~decrease for ~~both periods~~the six-month period was ~~driven by~~primarily attributable to the ~~projects~~factors mentioned above that ~~contributed to~~drove the ~~increased~~changes in revenue and income from construction operations.

New awards in the Civil segment totaled ~~$847~~$664 million and ~~$2.3~~$1.3 billion for the three and six months ended June 30, ~~2017~~2018 compared to ~~$93~~$847 million and ~~$1.0~~$2.3 billion, respectively, for the ~~three and six months ended June 30, 2016.~~same periods in 2017. New awards in the second quarter of ~~2017~~2018 included a ~~bridge project in Iowa valued at $323~~$410 million a mass-transit project in ~~New York worth $292~~California and a $93 million ~~$97 million of additional scope for a platform project in New York, a~~ bridge project in New ~~York valued at $82 million and a highway project in Maryland worth $78 million.~~York.

Backlog for the Civil segment was ~~$4.2~~$4.7 billion as of June 30, ~~2017,~~2018, up ~~$1.3 billion,~~$497 million, or ~~43%~~12%, compared to the backlog as of June 30, ~~2016. Civil segment backlog may continue to grow in the second half of 2017 based on the volume and anticipated timing of other new awards expected later this year.~~2017. The segment continues to experience ~~elevated~~strong demand reflected in a large pipeline of prospective projects ~~which are supported by~~and substantial anticipated funding from various voter-approved transportation measures; ~~California’s recently enacted $52 billion, 10-year transportation bill;~~ the Trump Administration’s considerable proposed infrastructure investment ~~program expected from the Trump administration; the $305 billion FAST Act;~~program; and public agencies’ long-term spending plans. The Civil segment is ~~well positioned~~well-positioned to capture its share of these prospective projects. The segment, however, ~~faces continued strong~~continues to face considerable competition, including occasional aggressive bids from ~~both foreign and domestic~~ competitors.

Revenue and income from construction operations for the Building segment are as follows:

Revenue for the three months ended June 30, 2017 decreased 6% compared to the same period in 2016. The decrease was primarily driven by reduced project execution activities on a biotechnology project and a courthouse project in California, both of which are nearing completion. This was partially offset by increased activity on various projects, mainly in California, including a hospitality and gaming project and a technology office project. Revenue for the six months ended June 30, 2017 was essentially level with revenue for the same period in 2016.

~~Income from construction operations decreased 57% for both~~ the three and six months ended June 30, ~~2017,~~2018 decreased 9% and 5%, respectively, compared to the same periods in ~~2016. For~~2017. The decrease for both periods was predominantly attributable to reduced project execution activities on certain projects in California and Florida that were recently completed, partially offset by increased activities on certain health care, mixed-use and technology projects in California.

Income from construction operations for the three and six months ended June 30, ~~2017,~~2018 increased 119% and 73%, respectively, compared to the ~~decrease was~~same periods in 2017. The increases were largely due to improved profitability on projects in California and certain higher-margin projects in Texas and New Jersey, as well as contract close-out adjustments in the ~~above-mentioned reduced project execution activities and contract closeout adjustments~~prior year related to a project in California. ~~For~~The increases were partially offset by the ~~six months ended June 30, 2017,~~impact of the ~~decrease was principally due to favorable closeout activities in the prior year first quarter on two projects in New York, as well as the reduced project execution and contract closeout activities~~volume reductions mentioned above.

Operating margin was ~~1.2%~~2.8% and ~~1.1%~~2.0% for the three and six months ended June 30, ~~2017,~~2018, respectively, compared to ~~2.5%~~1.2% and ~~2.6%, respectively,~~1.1% for the ~~three and six months ended June 30, 2016.~~same periods in 2017. The margin ~~decrease~~increases for both periods ~~was primarily due~~were mostly attributable to the ~~reasons discussed above~~above-mentioned factors that drove the ~~decrease~~changes in income from construction operations.

New awards in the Building segment totaled ~~$551~~$296 million and ~~$817 million~~$1.3 billion for the three and six months ended June 30, ~~2017~~2018, respectively, compared to ~~$150~~$551 million and ~~$712~~$817 million ~~respectively,~~ for the ~~three and six months ended June 30, 2016.~~same periods in 2017. New awards in the second quarter of ~~2017~~2018 included ~~two healthcare projects in California collectively worth $154~~a $59 million ~~additional scope of work valued at $97 million for a technology office~~military building project in ~~California~~South Carolina and ~~a mixed-use project in California worth $53 million. New~~various other smaller awards ~~in the second quarter of 2016 included approximately $74 million for a hospitality~~ and ~~gaming project in Maryland.~~contract adjustments.

Backlog for the Building segment was $2.1 billion as of June 30, 2018, up $277 million, or 15%, compared to $1.8 billion as of June 30, ~~2017 compared to $2.5 billion as of June 30, 2016.~~2017. The backlog ~~decline~~growth was primarily due to ~~revenue recognition that outpaced new awards since~~ the ~~end~~award of the ~~second~~Newark Airport Terminal One project in the first quarter of ~~2016.~~2018. The Building segment continues to have a large ~~pipeline~~volume of prospective projects, some of which have already been bid and are expected to be selected and awarded by customers ~~later~~ in ~~2017. Strong~~2018. Elevated demand is expected to continue due to ongoing customer spendingsupported by a ~~low~~favorable interest rate environment. The Building segment is ~~well positioned~~well-positioned to capture its share of prospective projects based on its strong customer relationships and long-term reputation for excellence in delivering high-quality projects on time and within budget.

Revenue and income from construction operations for the Specialty Contractors segment are as follows:

Revenue for the three and six months ended June 30, ~~2017~~2018 decreased ~~12%~~4% and 9%, respectively, compared to the same ~~period~~periods in ~~2016.~~2017. The decrease for both periods was ~~primarily~~predominantly due to reduced project execution activities on various electrical projects in New York, as certain projects have completed or are nearing completion and newer projects have yet to fully ramp up. Revenue for the six months ended June 30, 2017 was flat compared to revenue for the same period last year.York.

Income from construction operations ~~decreased~~increased significantly for the three and six months ended June 30, ~~2017~~2018 compared to the same periods in ~~2016.~~2017. The ~~decrease for both periods was primarily due to the impact~~absence of prior-year unfavorable ~~project~~ adjustments ~~recorded in the second quarter of 2017~~ on ~~certain mechanical~~various projects in New York, none of which were individually ~~material.~~material, more than offset the reduced volume for both periods in 2018.

Operating margin was ~~-5.0%~~2.8% and ~~0.1%~~2.7% for the three and six months ended June 30, ~~2017,~~2018, respectively, compared to ~~1.7%~~-5.0% and ~~2.5%~~0.1% for the ~~three and six months ended June 30, 2016, respectively.~~same periods in 2017. The margin ~~reductions~~increases for both periods were ~~primarily due~~largely attributable to the ~~above-mentioned unfavorable adjustments~~aforementioned reasons that ~~impacted~~caused the changes in income from construction operations.

New awards in the Specialty Contractors segment totaled ~~$239~~$374 million and ~~$535~~$950 million for the three and six months ended June 30, ~~2017~~2018 compared to ~~$175~~$239 million and ~~$454~~$535 million, respectively, for the three and six months ended June 30, ~~2016.~~2017. New awards in the second quarter of ~~2017~~2018 included a ~~$112~~$172 million ~~electrical subcontract for a mass-transit~~mechanical project in New York and ~~approximately $67~~a $53 million ~~for various smaller electrical projects~~tunnel systems installation project, also in ~~the southern United States.~~ New ~~awards in the second quarter of 2016 included approximately $73 million for various smaller electrical projects in the southern United States.~~York.

Backlog for the Specialty Contractors segment was $1.9 billion as of June 30, 2018, up $357 million, or 24%, compared to $1.5 billion as of June 30, ~~2017 compared to $1.8 billion as of June 30, 2016.~~2017. The Specialty Contractors segment ~~has~~continues to have a ~~significant pipeline~~substantial volume of prospective projects with demand ~~for its services supported by continued~~increasing because of strong public and private sector spending on civil and building projects. The Specialty Contractors segment ~~should~~is increasingly focused on servicing the Company’s growing backlog of large Civil and Building segment projects, but remains well-positioned to capture its share of external prospective projects based on the size and scale of ~~its~~our business units that operate in New York, Texas, Florida and California and the strong reputation held by these business units for high-quality work on large, complex projects.

Corporate general and administrative expenses were $14.4 million and $31.8 million during the three and six months ended June 30, 2018 compared to $15.8 million and $30.7 million during the three and six months ended June 30, ~~2017 compared to $14.9 million and $30.3 million during the three and six months ended June 30, 2016.~~ 2017.

Other Income, Net, Interest Expense and ~~Provision for~~ Income ~~Taxes~~Tax Benefit (Provision)

Other income, net ~~increased $38.5~~decreased $39.9 million and ~~$38.2~~$39.6 million for the three and six months ended June 30, ~~2017,~~2018, respectively, compared to the same periods in ~~2016.~~2017. The ~~increases~~decreases were primarily ~~due to~~because the prior-year periods included a $37.0 million gain associated with a cash settlement ~~payment~~ received during the second quarter of 2017 ~~which is discussed further above in Note 8 of the Notes~~for litigation related to the ~~Condensed Consolidated Financial Statements.~~Company’s purchase of auction-rate securities nearly a decade earlier.

Interest expense ~~increased $7.0~~decreased $6.5 million and ~~$8.5~~$7.0 million for the three and six months ended June 30, ~~2017,~~2018, respectively, compared to the same periods in ~~2016.~~2017. The ~~increases were almost entirely non-cash and~~decreases were primarily due to extinguishment costs recorded in the second quarter of 2017 related to our April 2017 debt restructuring ~~transactions in April 2017.~~transactions.

The Company’s effective income tax rate for the three and six months ended June 30, ~~2017~~2018 was ~~37.9%~~30.0% and ~~37.6%~~31.2%, respectively, compared to ~~40.3%~~37.9% and ~~41.2%~~37.6% for the three and six months ended June 30, ~~2016, respectively.~~2017. The ~~favorable~~ effective tax rates for the 2018 periods were favorably impacted by the reduction in the federal statutory income tax rate from 35% to 21% effective January 1, 2018 as a result of the Tax Cut and Jobs Act of 2017 (the “Tax Act”). The effective tax rates for the three ~~months ended June 30, 2017 was primarily due to earnings attributable to noncontrolling interests for which income taxes are not the responsibility of the Company. The effective tax rate for the~~and six months ended June 30, ~~2017 was favorably impacted by earnings attributable~~2018 also reflect an unfavorable change in the New York State tax law in the second quarter related to ~~noncontrolling interests, reductions in estimated non-deductible expenses and tax benefits associated with share-based compensation. During~~ the ~~first quarter~~treatment of ~~2017, the Company recognized tax benefits associated with share-based compensation~~foreign income under the ~~provisions of ASU 2016-09, as discussed in Note 9.~~Tax Act. This ~~tax benefit is the result of~~change had a greater impact on the effective tax ~~deduction for share-based compensation expense for awards that vested~~rate in the six-month period in 2018 compared to the three-month period in 2018 because the six-month period included a pre-tax loss in the first ~~quarter~~quarter. For a further discussion of ~~2017 relative to~~ the ~~share-based compensation expense recognized under GAAP for these same awards.~~ ~~The effective tax rate for the second quarter of 2016 was favorably impacted by adjustments related to uncertain tax benefits. The effective rate for the first half of 2016 reflects the favorable~~ impact of the ~~uncertain tax benefit adjustments, as well as~~Tax Act, refer to Note 7 of the ~~unfavorable impact of various discrete items, including certain state tax rate changes on deferred taxes.~~Notes to the Condensed Consolidated Financial Statements.

Liquidity is provided by available cash and cash equivalents, cash generated from operations, credit facilities and access to capital markets. ~~On April 20, 2017, we issued $500 million~~We have a committed line of ~~senior notes and entered into a new~~ credit ~~facility with a~~totaling $350 million, ~~revolver. We~~which may be used ~~the net proceeds to repurchase~~ for revolving loans, letters of credit and/or ~~redeem our 2010 Senior Notes in full and repay all borrowings under our 2014 Credit Facility.~~general purposes. We believe that ~~the increased liquidity that resulted~~cash generated from ~~this refinancing will help~~operations, along with our unused credit capacity of $258 million and cash position, is sufficient to fund any working capital needs for the significant number of project opportunities that we see over the next several years, especially in our Civil segment.

Cash and cash equivalents were ~~$172.9~~$138.6 million as of June 30, ~~2017~~2018 compared to ~~$146.1~~$192.9 million as of December 31, ~~2016. The cash balances were comprised of cash held by us and~~2017. Cash available for general corporate purposes ~~of $77.2~~was $51.4 million and ~~$49.5~~$94.7 million as of June 30, 2018 and December 31, 2017, respectively, with the remainder being our proportionate share of cash ~~related to~~held by our unconsolidated joint ventures and also amounts held by our consolidated joint ventures, which isin both cases were available only for joint venture-related uses, including distributions to joint venture partners. In addition, our restricted cash and restricted investments, held primarily to secure insurance-related contingent obligations, totaled ~~$61.3~~$56.3 million as of June 30, ~~2017~~2018 compared to ~~$50.5~~$57.8 million as of December 31, ~~2016.~~2017.

During the six months ended June 30, 2018, net cash used in operating activities was $62.4 million due primarily to investments in project working capital that exceeded cash generated from earnings sources. The change in working capital primarily reflects an increase in costs and estimated earnings in excess of billings and a decrease in accounts payable due to the timing of payments to vendors and subcontractors, partially offset by an increase in billings in excess of cost and estimated earnings and a decrease in retainage receivable. For the six months ended June 30, 2017, net cash used in operating activities was $34.6 million due primarily to investments in project working capital and payments for incentive compensation that exceeded cash generated from earnings sources.

The $27.8 million increase in cash used in operating activities for the six months ended June 30, 2018 compared to the six months ended June 30, 2017 primarily reflects unfavorable changes in costs and estimated earnings in excess of billings, accrued liabilities and retainage payable, as well as a decrease in earnings sources ~~including~~(the comparable period in 2017 included the gain from the $37.0 million cash settlement ~~noted above. The change in working capital primarily reflects a significant paydown~~ of ~~accounts payable due to~~ the ~~timing of payments to vendors and subcontractors. In addition, an increase~~litigation discussed above), mostly offset by favorable changes in accounts receivable, ~~was substantially offset by increases in accrued liabilities~~retainage receivable and billings in excess of costs and estimated earnings. In

During the first six months of ~~2016, $4.6~~2018, we used $44.8 million of cash for investing activities due primarily to the acquisition of property and equipment for projects, compared to the use of cash of $16.1 million for the same period in 2017, primarily resulting from investments in securities and the acquisition of property and equipment for projects.

For the first half of 2018, net cash provided by financing activities was ~~provided from operating activities,~~$51.5 million, which was primarily due to ~~cash generated from earnings sources being mostly~~increased net borrowings of $81.4 million, partially offset by ~~increased net investment~~a $16.0 million earn-out payment related to an acquisition in ~~working capital.~~

The $39.2 million reduction in cash flow from operations for the six months ended June 30, 2017 compared to the six months ended June 30, 2016 reflects the unfavorable timing of payments of payables, increased incentive compensation payments and changes in costs and estimated earnings in excess of billings, partially offset by an increase in cash generated by income sources and improved cash collections. The 2017 year-to-date operating cash flow reduction was mostly substantially attributable to the $32.8 million reduction in the first quarter.

~~During the first six months of 2017, we used $17.7~~ million of cash ~~from investing activities due primarily~~distributions to ~~$9.3 million for the investment of restricted cash to obtain a higher return and the use of $8.2 million for the acquisition of property and equipment.~~noncontrolling interests. Net cash ~~used~~provided by ~~investing~~financing activities for the comparable period in ~~2016 was $11.2 million.~~

~~For the first six months of~~ 2017 ~~net cash provided by financing activities~~ was $79.1 million, which was ~~primarily~~principally due to increased net borrowings ~~of $104.5 million,~~ partially offset by ~~the use of $13.3 million for~~ debt issuance costs related to the debt restructuring transactions in April 2017, ~~and $10.8 million for~~as well as tax payments ~~related to~~associated with the net settlement of share-based compensation. Net cash provided by financing activities for the comparable period of 2016 was $24.8 million, which was principally due to increased net borrowings of $39.4 million, partially offset by $14.7 million in debt issuance costs associated with amendments to our 2014 Credit Facility and the issuance of $200.0 million of Convertible Notes in June 2016.

At June 30, ~~2017,~~2018, we had working capital of $1.5 billion, a ratio of current assets to current liabilities of ~~2.07~~1.97 and a ratio of debt to equity of ~~0.54,~~0.48, compared to working capital of ~~$1.3~~$1.5 billion, a ratio of current assets to current liabilities of ~~1.87~~1.94 and a ratio of debt to equity of ~~0.49~~0.43 at December 31, ~~2016.~~2017.

Summarized below are the key terms of the 2017 Credit Facility as of June 30, 2018. For additional information regarding our outstanding debt, refer to Note 8 of the Notes to Condensed Consolidated Financial Statements.

On April 20, 2017, we entered into a credit agreement (the “2017 Credit Facility”) with SunTrust Bank as Administrative Agent, Swing Line Lender and L/C Issuer and a syndicate of other lenders. The 2017 Credit Facility provides for a $350 million revolving credit facility (the “2017 Revolver”) and a sublimit for the issuance of letters of credit and swingline loans up to the aggregate amount of $150 million and $10 million, respectively, both maturing on April 20, 2022 unless any of the Convertible Notes are outstanding on December 17, 2020, in which case all such borrowings will mature on December 17, 2020 (subject to certain further exceptions). In addition, the 2017 Credit Facility permits additional borrowings in an aggregate amount of $150 million, which can be in the form of increased capacity on the 2017 Revolver or the establishment of one or more term loans. For additional information regarding the terms of our 2017 Credit Facility, refer to Note 68 of the Notes to Condensed Consolidated Financial Statements.

The table below presents our actual and required consolidated fixed charge coverage ratio and consolidated leverage ratio under the 2017 Credit Facility for the period, which are calculated on a rolling four-quarter ~~rolling~~ basis:

As of ~~the filing date of this Form 10-Q,~~June 30, 2018, we ~~are~~were in compliance and expect to continue to be in compliance with the ~~financial~~ covenants under the 2017 Credit Facility.

On April 20, 2017, we issued $500 million in aggregate principal amount of 6.875% Senior Notes due 2025 (the “2017 Senior Notes”) in a private placement offering. Interest on the 2017 Senior Notes is payable in arrears semi-annually on May 1 and November 1 of each year, beginning on November 1, 2017. For additional information regarding the terms of our 2017 Senior Notes, refer to Note 6 of the Notes to Condensed Consolidated Financial Statements.

~~Repurchase and Redemption of 2010 Senior Notes and Termination of 2014 Credit Facility~~

We used proceeds from the 2017 Senior Notes and 2017 Revolver to repurchase or redeem our 2010 Senior Notes, to pay off our Term Loan and 2014 Revolver, and to pay accrued but unpaid interest and fees. In addition, we satisfied and discharged the indenture governing the 2010 Senior Notes and terminated the 2014 Credit Facility.

~~Aside from the discussion above, there~~There have been no ~~significant~~material changes in our contractual obligations from ~~that~~those described in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2017.

Our significant accounting policies are described in Note 1 of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2017. Our critical accounting policies are also identified and discussed in Item 7 of our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2017. Effective January 1, 2018, the Company adopted Accounting Standards Codification 606, Revenue from Contracts with Customers. See Notes 3 and 4 of the Notes to Condensed Consolidated Financial Statements for more information.

There has been no material change in our exposure to market risk from that described in Item 7A of our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2017.

An evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined by Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (“Exchange Act”), as of the end of the period covered by this Quarterly Report on Form 10-Q was made under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures (a) were effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and (b) include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

There were no changes in our internal control over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We disclosed information about certain of our legal proceedings in Part I, Item 3 of our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2017. For an update to those disclosures, see ~~Notes 7 and 8~~Note 9 of the Notes to the Condensed Consolidated Financial Statements.

There have been no material changes to our risk factors as disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2017.

Section 1503 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) requires domestic mine operators to disclose violations and orders issued under the Federal Mine Safety and Health Act of 1977 (the “Mine Act”) by the federal Mine Safety and Health Administration. We do not act as the owner of any mines but we may act as a mining operator as defined under the Mine Act where we may be an independent contractor performing services or construction of such mine.

Information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Act and Item 104 Regulation S-K is included in Exhibit 95.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


MASSACHUSETTS		04-1717070
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)


Large accelerated filer ☒		Accelerated filer ☐

Non-Accelerated filer ☐		Smaller reporting company ☐

Emerging growth company ☐


			Page Numbers
Part I.	Financial Information:
	Item 1.	Financial Statements:
		Condensed Consolidated Statements of ~~Operations~~Income for the Three and Six Months Ended June 30, ~~2017~~2018 and ~~2016~~2017 (Unaudited)	3
		Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, ~~2017~~2018 and ~~2016~~2017 (Unaudited)	4
		Condensed Consolidated Balance Sheets as of June 30, ~~2017~~2018 and December 31, ~~2016~~2017 (Unaudited)	5
		Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, ~~2017~~2018 and ~~2016~~2017 (Unaudited)	6
		Notes to Condensed Consolidated Financial Statements (Unaudited)	~~7-23~~7-28
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	~~24-30~~29-34
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3034
	Item 4.	Controls and Procedures	3035
Part II.	Other Information:
	Item 1.	Legal Proceedings	3035
	Item 1A.	Risk Factors	3035
	Item 4.	Mine Safety Disclosures	3035
	Item 5.	Other Information	3135
	Item 6.	Exhibits	3136
	Signature		3237



	Three Months Ended				Six Months Ended				Three Months Ended				Six Months Ended
	June 30,				June 30,				June 30,				June 30,
(in thousands)	2017		2016		2017		2016		2018		2017		2018		2017
NET INCOME	$	32,633	$	21,361	$	46,397	$	36,760	$	27,896	$	32,633	$	16,954	$	46,397

OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
Defined benefit pension plan adjustments		269		324		537		571		354		269		735		537
Foreign currency translation adjustments		649		(258)		595		672		(634)		649		(1,808)		595
Unrealized loss in fair value of investments		(3)		(153)		(24)		(145)		(929)		(3)		(1,014)		(24)
Unrealized gain (loss) in fair value of interest rate swap		—		11		—		(24)
TOTAL OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX		915		(76)		1,108		1,074		(1,209)		915		(2,087)		1,108

COMPREHENSIVE INCOME		33,548		21,285		47,505		37,834		26,687		33,548		14,867		47,505
LESS: COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS		(2,537)		—		(2,537)		—		3,013		2,537		4,195		2,537
COMPREHENSIVE INCOME ATTRIBUTABLE TO TUTOR PERINI CORPORATION	$	31,011	$	21,285	$	44,968	$	37,834	$	23,674	$	31,011	$	10,672	$	44,968



	As of June 30,		As of December 31,		As of June 30,		As of December 31,
(in thousands, except share and per share amounts)	2017		2016		2018		2017
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ($37,445 and $0 related to variable interest entities ("VIEs"))	$	172,927	$	146,103
Cash and cash equivalents ($53,575 and $53,067 related to variable interest entities (VIEs))					$	138,569	$	192,868
Restricted cash		52,051		50,504		3,434		4,780
Accounts receivable ("AR") including retainage of $602,581 and $569,391 (AR of $56,912 and $0 related to VIEs)		1,838,359		1,743,300
Restricted investments						52,900		53,014
Accounts receivable ($57,008 and $30,003 related to VIEs)						1,272,932		1,265,717
Retainage receivable ($24,288 and $12,410 related to VIEs)						490,751		535,939
Costs and estimated earnings in excess of billings		850,634		831,826		1,044,233		932,758
Other current assets		77,736		66,023
Other current assets ($35,657 and $0 related to VIEs)						141,472		89,316
Total current assets		2,991,707		2,837,756		3,144,291		3,074,392
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $339,045 and $313,783		456,001		477,626
PROPERTY AND EQUIPMENT ("P&E"), net of accumulated depreciation of $337,101 and $359,188 (net P&E of $41,150 and $11,641 related to VIEs)						490,614		467,499
GOODWILL		585,006		585,006		585,006		585,006
INTANGIBLE ASSETS, NET		91,226		92,997		87,683		89,454
OTHER ASSETS		40,926		45,235		50,171		47,772
TOTAL ASSETS	$	4,164,866	$	4,038,620	$	4,357,765	$	4,264,123

LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt	$	30,333	$	85,890	$	28,105	$	30,748
Accounts payable ("AP") including retainage of $274,045 and $258,294 (AP of $57,888 and $0 related to VIEs)		899,284		994,016
Billings in excess of costs and estimated earnings ($30,293 and $0 related to VIEs)		339,808		331,112
Accounts payable ($44,118 and $19,243 related to VIEs)						625,436		699,971
Retainage payable						236,545		261,820
Billings in excess of cost and estimated earnings ($240,545 and $120,952 related to VIEs)						574,392		456,869
Accrued expenses and other current liabilities		176,148		107,925		134,264		132,438
Total current liabilities		1,445,573		1,518,943		1,598,742		1,581,846
LONG-TERM DEBT, less current maturities, net of unamortized discounts and debt issuance costs totaling $57,434 and $56,072		832,327		673,629
LONG-TERM DEBT, less current maturities, net of unamortized discounts and debt issuance costs totaling $40,437 and $45,631						794,509		705,528
DEFERRED INCOME TAXES		131,292		131,007		106,284		108,504
OTHER LONG-TERM LIABILITIES		155,810		162,018		145,764		163,465
TOTAL LIABILITIES		2,565,002		2,485,597		2,645,299		2,559,343

CONTINGENCIES AND COMMITMENTS (NOTE 7)
COMMITMENTS AND CONTINGENCIES (NOTE 9)

EQUITY
Stockholders' Equity:
Preferred stock - authorized 1,000,000 shares ($1 par value), none issued		—		—		—		—
Common stock - authorized 75,000,000 shares ($1 par value), issued and outstanding 49,760,256 and 49,211,353 shares		49,760		49,211
Common stock - authorized 75,000,000 shares ($1 par value), issued and outstanding 50,010,863 and 49,781,010 shares						50,011		49,781
Additional paid-in capital		1,075,637		1,075,600		1,093,874		1,084,205
Retained earnings		517,485		473,625		631,004		622,007
Accumulated other comprehensive loss		(44,305)		(45,413)		(44,805)		(42,718)
Total Stockholders' Equity		1,598,577		1,553,023
Total stockholders' equity						1,730,084		1,713,275
Noncontrolling interests		1,287		—		(17,618)		(8,495)
TOTAL EQUITY		1,599,864		1,553,023		1,712,466		1,704,780

TOTAL LIABILITIES AND EQUITY	$	4,164,866	$	4,038,620	$	4,357,765	$	4,264,123



	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands, except per common share amounts)	2017		2016		2017		2016
Net income attributable to Tutor Perini Corporation	$	30,096	$	21,361	$	43,860	$	36,760

Weighted-average common shares outstanding, basic		49,735		49,131		49,510		49,105
Effect of dilutive restricted stock units and stock options		1,020		430		1,343		318
Weighted-average common shares outstanding, diluted		50,755		49,561		50,853		49,423

Earnings per common share:
Basic earnings per common share	$	0.61	$	0.43	$	0.89	$	0.75
Diluted earnings per common share	$	0.59	$	0.43	$	0.86	$	0.74

Anti-dilutive shares not included above		353		1,704		672		1,704



	As of June 30, 2017						As of December 31, 2016
(in thousands)	Outstanding Long-Term Debt		Unamortized Discounts and Issuance Costs		Long-Term Debt, as reported		Outstanding Long-Term Debt		Unamortized Discounts and Issuance Costs		Long-Term Debt, as reported
2017 Senior Notes	$	500,000	$	(7,640)	$	492,360	$	—	$	—	$	—
2017 Credit Facility		125,000		(6,840)		118,160		—		—		—
2010 Senior Notes		—		—		—		300,000		(1,880)		298,120
2014 Revolver		—		—		—		152,500		(4,510)		147,990
Term Loan		—		—		—		57,000		(2,350)		54,650
Convertible Notes		200,000		(42,954)		157,046		200,000		(47,332)		152,668



	As of June 30, 2018						As of December 31, 2017
(in thousands)	Outstanding Long-Term Debt		Unamortized Discount and Issuance Costs		Long-Term Debt, as reported		Outstanding Long-Term Debt		Unamortized Discount and Issuance Costs		Long-Term Debt, as reported
2017 Senior Notes	$	500,000	$	(6,879)	$	493,121	$	500,000	$	(7,266)	$	492,734
Convertible Notes		200,000		(33,558)		166,442		200,000		(38,365)		161,635



	As of June 30, 2018								As of December 31, 2017
	Fair Value Hierarchy								Fair Value Hierarchy
(in thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Cash and cash equivalents(a)	$	138,569	$	—	$	—	$	138,569	$	192,868	$	—	$	—	$	192,868
Restricted cash(a)		3,434		—		—		3,434		4,780		—		—		4,780
Restricted investments(b)		—		52,900		—		52,900		—		—		—		—
Investments in lieu of retainage(c)		63,441		2,094		—		65,535		69,891		2,405		—		72,296
Other investments(b)		—		5,949		—		5,949		—		—		—		—
Total	$	205,444	$	60,943	$	—	$	266,387	$	267,539	$	2,405	$	—	$	269,944



	Six Months Ended						Six Months Ended
	June 30, 2017						June 30, 2016
(in thousands)	Before-Tax Amount		Tax (Expense) Benefit		Net-of-Tax Amount		Before-Tax Amount		Tax (Expense) Benefit		Net-of-Tax Amount
Other comprehensive income (loss):
Defined benefit pension plan adjustments	$	912	$	(375)	$	537	$	853	$	(282)	$	571
Foreign currency translation adjustment		1,009		(414)		595		1,208		(536)		672
Unrealized loss in fair value of investments		(42)		18		(24)		(258)		113		(145)
Unrealized loss in fair value of interest rate swap		—		—		—		(45)		21		(24)
Total other comprehensive income (loss)		1,879		(771)		1,108		1,758		(684)		1,074
Other comprehensive income (loss) attributable to Tutor Perini Corporation	$	1,879	$	(771)	$	1,108	$	1,758	$	(684)	$	1,074



	Three Months Ended June 30, 2017
	Defined				Unrealized		Accumulated
	Benefit		Foreign		Gain (Loss) in		Other
	Pension		Currency		Fair Value of		Comprehensive
(in thousands)	Plan		Translation		Investments, Net		Loss
Balance as of March 31, 2017	$	(40,597)	$	(4,918)	$	295	$	(45,220)
Other comprehensive gain (loss) before reclassifications		—		649		(3)		646
Amounts reclassified from AOCI		269		—		—		269
Total other comprehensive income (loss)		269		649		(3)		915
Balance as of June 30, 2017	$	(40,328)	$	(4,269)	$	292	$	(44,305)



	Six Months Ended						Six Months Ended
	June 30, 2018						June 30, 2017
(in thousands)	Before-Tax Amount		Tax (Expense) Benefit		Net-of-Tax Amount		Before-Tax Amount		Tax (Expense) Benefit		Net-of-Tax Amount
Other comprehensive income:
Defined benefit pension plan adjustments	$	1,026	$	(291)	$	735	$	912	$	(375)	$	537
Foreign currency translation adjustment		(2,553)		745		(1,808)		1,009		(414)		595
Unrealized loss in fair value of investments		(1,295)		281		(1,014)		(42)		18		(24)
Total other comprehensive income (loss)		(2,822)		735		(2,087)		1,879		(771)		1,108
Total other comprehensive income (loss) attributable to Tutor Perini Corporation	$	(2,822)	$	735	$	(2,087)	$	1,879	$	(771)	$	1,108



	Three Months Ended June 30, 2016
							Unrealized				Six Months Ended June 30, 2017
	Defined				Unrealized		Gain (Loss) in		Accumulated		Defined				Unrealized		Accumulated
	Benefit		Foreign		Gain (Loss) in		Fair Value of		Other		Benefit		Foreign		Gain (Loss) in		Other
	Pension		Currency		Fair Value of		Interest Rate		Comprehensive		Pension		Currency		Value of		Comprehensive
(in thousands)	Plan		Translation		Investments, Net		Swap, Net		Loss		Plan		Translation		Investments, Net		Loss
Balance as of March 31, 2016	$	(37,995)	$	(3,673)	$	664	$	(11)	$	(41,015)
Other comprehensive gain (loss) before reclassifications		—		(258)		(153)		11		(400)
Attributable to Tutor Perini Corporation:
Balance as of December 31, 2016											$	(40,865)	$	(4,864)	$	316	$	(45,413)
Other comprehensive income (loss) before reclassifications												—		595		(24)		571
Amounts reclassified from AOCI		324		—		—		—		324		537		—		—		537
Total other comprehensive income (loss)		324		(258)		(153)		11		(76)		537		595		(24)		1,108
Balance as of June 30, 2016	$	(37,671)	$	(3,931)	$	511	$	—	$	(41,091)
Balance as of June 30, 2017											$	(40,328)	$	(4,269)	$	292	$	(44,305)



	Location in	Three Months Ended				Six Months Ended
	Condensed Consolidated	June 30,				June 30,
(in thousands)	Statements of Operations	2017		2016		2017		2016
Defined benefit pension plan adjustments	Various accounts(a)	$	456	$	427	$	912	$	853
Income tax benefit	Provision for income taxes		(187)		(103)		(375)		(282)
Net of tax		$	269	$	324	$	537	$	571



					As of		As of
(in thousands)	June 30, 2017		December 31, 2016		June 30, 2018		December 31, 2017
Civil	$	2,311,858	$	2,152,123	$	2,507,912	$	2,452,108
Building		878,501		917,317		913,031		909,207
Specialty Contractors		844,919		813,851		751,174		767,807
Corporate and other (a)		129,588		155,329		185,648		135,001
Total assets	$	4,164,866	$	4,038,620	$	4,357,765	$	4,264,123



	Backlog at		New		Revenue		Backlog at		Backlog at		New		Revenue		Backlog at
(in millions)	December 31, 2016		Awards (a)		Recognized		June 30, 2017		December 31, 2017		Awards(a)		Recognized		June 30, 2018(b)
Civil	$	2,672.1	$	2,345.7	$	(777.2)	$	4,240.6	$	4,118.2	$	1,284.8	$	(665.6)	$	4,737.4
Building		1,981.2		817.1		(989.9)		1,808.4		1,701.4		1,321.4		(937.2)		2,085.6
Specialty Contractors		1,573.8		535.3		(597.6)		1,511.5		1,463.8		949.9		(545.4)		1,868.3
Total	$	6,227.1	$	3,698.1	$	(2,364.7)	$	7,560.5	$	7,283.4	$	3,556.1	$	(2,148.2)	$	8,691.3



	Twelve Months Ended June 30, ~~2017~~2018
	Actual	Required
Fixed charge coverage ratio	~~2.18 :~~2.62 to 1.00	> or = 1.25 : 1.00
Leverage ratio	~~2.79 :~~3.35 to 1.00	< or = ~~4.00~~3.50 : 1.00



Exhibits	Description
~~4.1~~10.1	~~Indenture, dated as of April 20, 2017, among~~ Tutor Perini Corporation ~~the guarantors named therein and Wilmington Trust, National Association, as trustee (incorporated by reference to Exhibit 4.1 to Form 8-K filed on April 25, 2017).~~
~~10.1~~	Credit Agreement, dated as of April 20, 2017, by and among Tutor Perini Corporation, the subsidiaries of Tutor Perini Corporation identified therein, SunTrust Bank, as Administrative Agent, Swing Line Lender and L/C Issuer, and the other lenders from time to time party thereto (incorporated by reference to Exhibit 10.1 to Form 8-K filed on April 25, 2017).
~~10.2~~	~~Tutor Perini Corporation~~Omnibus Incentive ~~Compensation~~ Plan (incorporated by reference to Exhibit 10.1 to Form 8-K filed on May ~~26, 2017)~~25, 2018).
31.1	Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
95	Mine Safety Disclosure.
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema Document.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.


	Tutor Perini Corporation


Dated: August 7, ~~2017~~2018	By:By:	/s/Gary G. Smalley
	Gary G. Smalley
	Executive Vice President and Chief Financial Officer