gldd-10q_20180930.htm

 

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2018

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                  to                 

Commission file number: 001-33225

Great Lakes Dredge & Dock Corporation

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

20-5336063

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

2122 York Road, Oak Brook, IL

 

60523

(Address of principal executive offices)

 

(Zip Code)

(630) 574-3000

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large Accelerated Filer

 

 

Accelerated Filer

 

Non-Accelerated Filer

 

 

 

Smaller reporting company

 

Emerging Growth Company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

As of November 2, 2018, 62,479,490 shares of the Registrant’s Common Stock, par value $.0001 per share, were outstanding.

 

 

 

 


 

Great Lakes Dredge & Dock Corporation and Subsidiaries

Quarterly Report Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

For the Quarterly Period ended September 30, 2018

INDEX

 

 

 

 

 

Page

 

 

 

 

 

 

 

Part I Financial Information (Unaudited)

 

3

 

 

 

 

 

Item 1

 

Financial Statements

 

3

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheets at September 30, 2018 and December 31, 2017

 

3

 

 

 

 

 

 

 

Condensed Consolidated Statements of Operations for the Three and Nine Months ended September 30, 2018 and 2017

 

4

 

 

 

 

 

 

 

Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months ended September 30, 2018 and 2017

 

5

 

 

 

 

 

 

 

Condensed Consolidated Statements of Equity for the Nine Months Ended September 30, 2018 and 2017

 

6

 

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2018 and 2017

 

7

 

 

 

 

 

 

 

Notes to Condensed Consolidated Financial Statements

 

9

 

 

 

 

 

Item 2

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

22

 

 

 

 

 

Item 3

 

Quantitative and Qualitative Disclosures About Market Risk

 

33

 

 

 

 

 

Item 4

 

Controls and Procedures

 

33

 

 

 

 

 

 

 

Part II Other Information

 

35

 

 

 

 

 

Item 1

 

Legal Proceedings

 

35

 

 

 

 

 

Item 1A

 

Risk Factors

 

35

 

 

 

 

 

Item 2

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

35

 

 

 

 

 

Item 3

 

Defaults Upon Senior Securities

 

35

 

 

 

 

 

Item 4

 

Mine Safety Disclosures

 

35

 

 

 

 

 

Item 5

 

Other Information

 

35

 

 

 

 

 

Item 6

 

Exhibits

 

36

 

 

 

 

 

 

 

Signature

 

37

 

 

 

 

 

 

 

 

2


 

PART I — Financial Information

Item 1.

Financial Statements.

GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands, except per share amounts)  

 

 

September 30,

 

 

December 31,

 

 

 

2018

 

 

2017

 

ASSETS

 

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

23,127

 

 

$

15,852

 

Accounts receivable—net

 

 

86,665

 

 

 

75,533

 

Contract revenues in excess of billings

 

 

36,151

 

 

 

90,788

 

Inventories

 

 

32,004

 

 

 

34,600

 

Prepaid expenses and other current assets

 

 

39,411

 

 

 

45,411

 

Total current assets

 

 

217,358

 

 

 

262,184

 

 

 

 

 

 

 

 

 

 

PROPERTY AND EQUIPMENT—Net

 

 

365,491

 

 

 

407,294

 

GOODWILL AND OTHER INTANGIBLE ASSETS—Net

 

 

84,038

 

 

 

84,484

 

INVENTORIES—Noncurrent

 

 

56,821

 

 

 

54,023

 

INVESTMENTS IN JOINT VENTURES

 

 

5,164

 

 

 

2,714

 

ASSETS HELD FOR SALE—Noncurrent

 

 

8,846

 

 

 

8,530

 

OTHER

 

 

12,588

 

 

 

13,128

 

TOTAL

 

$

750,306

 

 

$

832,357

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

Accounts payable

 

$

80,302

 

 

$

87,659

 

Accrued expenses

 

 

47,411

 

 

 

56,218

 

Billings in excess of contract revenues

 

 

11,152

 

 

 

3,615

 

Current portion of long-term debt

 

 

909

 

 

 

2,758

 

Total current liabilities

 

 

139,774

 

 

 

150,250

 

 

 

 

 

 

 

 

 

 

LONG-TERM DEBT

 

 

321,727

 

 

 

333,141

 

REVOLVING CREDIT FACILITY

 

 

30,882

 

 

 

95,000

 

DEFERRED INCOME TAXES

 

 

25,605

 

 

 

25,561

 

OTHER

 

 

7,883

 

 

 

7,109

 

Total liabilities

 

 

525,871

 

 

 

611,061

 

 

 

 

 

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES (Note 9)

 

 

 

 

 

 

 

 

EQUITY:

 

 

 

 

 

 

 

 

Common stock—$.0001 par value; 90,000 authorized, 62,730 and 61,897 shares issued; 62,452 and 61,619 shares outstanding at September 30, 2018 and December 31, 2017, respectively.

 

 

6

 

 

 

6

 

Treasury stock, at cost

 

 

(1,433

)

 

 

(1,433

)

Additional paid-in capital

 

 

292,902

 

 

 

289,821

 

Accumulated deficit

 

 

(67,271

)

 

 

(67,101

)

Accumulated other comprehensive income

 

 

231

 

 

 

3

 

Total equity

 

 

224,435

 

 

 

221,296

 

TOTAL

 

$

750,306

 

 

$

832,357

 

See notes to unaudited condensed consolidated financial statements.

3


 

Great Lakes Dredge & Dock Corporation and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)

(in thousands, except per share amounts)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contract revenues

 

$

204,322

 

 

$

163,317

 

 

$

501,505

 

 

$

510,762

 

Costs of contract revenues

 

 

162,188

 

 

 

143,499

 

 

 

422,426

 

 

 

455,850

 

Gross profit

 

 

42,134

 

 

 

19,818

 

 

 

79,079

 

 

 

54,912

 

General and administrative expenses

 

 

17,293

 

 

 

17,522

 

 

 

48,406

 

 

 

51,584

 

Loss on sale of assets—net

 

 

1,452

 

 

 

175

 

 

 

190

 

 

 

355

 

Operating income

 

 

23,389

 

 

 

2,121

 

 

 

30,483

 

 

 

2,973

 

Interest expense—net

 

 

(8,062

)

 

 

(6,417

)

 

 

(25,719

)

 

 

(18,440

)

Equity in earnings (loss) of joint ventures

 

 

 

 

 

26

 

 

 

 

 

 

(1,441

)

Loss on extinguishment of debt

 

 

 

 

 

 

 

 

 

 

 

(2,330

)

Other income (expense)

 

 

165

 

 

 

(266

)

 

 

(2,808

)

 

 

(343

)

Income (loss) from continuing operations before income taxes

 

 

15,492

 

 

 

(4,536

)

 

 

1,956

 

 

 

(19,581

)

Income tax (provision) benefit

 

 

(3,790

)

 

 

1,308

 

 

 

(549

)

 

 

7,555

 

Income (loss) from continuing operations

 

 

11,702

 

 

 

(3,228

)

 

 

1,407

 

 

 

(12,026

)

Loss from discontinued operations, net of income taxes

 

 

 

 

 

 

 

 

 

 

 

(12,697

)

Net income (loss)

 

$

11,702

 

 

$

(3,228

)

 

$

1,407

 

 

$

(24,723

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings (loss) per share attributable to continuing operations

 

$

0.19

 

 

$

(0.05

)

 

$

0.02

 

 

$

(0.19

)

Basic loss per share attributable to discontinued operations, net of tax

 

 

 

 

 

 

 

 

 

 

 

(0.21

)

Basic earnings (loss) per share

 

$

0.19

 

 

$

(0.05

)

 

$

0.02

 

 

$

(0.40

)

Basic weighted average shares

 

 

62,358

 

 

 

61,462

 

 

 

62,147

 

 

 

61,290

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings (loss) per share attributable to continuing operations

 

$

0.18

 

 

$

(0.05

)

 

$

0.02

 

 

$

(0.19

)

Diluted loss per share attributable to discontinued operations, net of tax

 

 

 

 

 

 

 

 

 

 

 

(0.21

)

Diluted earnings (loss) per share

 

$

0.18

 

 

$

(0.05

)

 

$

0.02

 

 

$

(0.40

)

Diluted weighted average shares

 

 

63,260

 

 

 

61,462

 

 

 

63,340

 

 

 

61,290

 

 

See notes to unaudited condensed consolidated financial statements.

 

 

4


 

Great Lakes Dredge & Dock Corporation and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

(in thousands)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

11,702

 

 

$

(3,228

)

 

$

1,407

 

 

$

(24,723

)

Currency translation adjustment—net of tax (1)

 

 

(14

)

 

 

(2

)

 

 

1,290

 

 

 

(24

)

Net unrealized (gain) loss on derivatives—net of tax (2)

 

 

(201

)

 

 

1,684

 

 

 

(1,062

)

 

 

232

 

Other comprehensive income (loss)—net of tax

 

 

(215

)

 

 

1,682

 

 

 

228

 

 

 

208

 

Comprehensive income (loss)

 

$

11,487

 

 

$

(1,546

)

 

$

1,635

 

 

$

(24,515

)

 

(1)

Net of income tax benefit of $21 and $13 for the three months ended September 30, 2018 and 2017, respectively. Net of income tax (provision) benefit of $(551) and $46 for the nine months ended September 30, 2018 and 2017, respectively.

(2)

Net of income tax (provision) benefit of $(242) and $1,098 for the three months ended September 30, 2018 and 2017, respectively. Net of income tax (provision) benefit of $(1,191) and $151 for the nine months ended September 30, 2018 and 2017, respectively.

See notes to unaudited condensed consolidated financial statements.

 

 

5


 

Great Lakes Dredge & Dock Corporation and Subsidiaries

Condensed Consolidated Statements of Equity

(Unaudited)

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

Shares of

 

 

 

 

 

 

Shares of

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

Common

 

 

Common

 

 

Treasury

 

 

Treasury

 

 

Paid-In

 

 

Accumulated

 

 

Comprehensive

 

 

 

 

 

 

 

Stock

 

 

Stock

 

 

Stock

 

 

Stock

 

 

Capital

 

 

Deficit

 

 

Income

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE—January 1, 2018

 

 

61,897

 

 

$

6

 

 

 

(278

)

 

$

(1,433

)

 

$

289,821

 

 

$

(67,101

)

 

$

3

 

 

$

221,296

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cumulative effect of recent accounting pronouncements

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,577

)

 

 

 

 

 

(1,577

)

Share-based compensation

 

 

105

 

 

 

 

 

 

 

 

 

 

 

 

3,294

 

 

 

 

 

 

 

 

 

3,294

 

Vesting of restricted stock units, including impact of shares withheld for taxes

 

 

492

 

 

 

 

 

 

 

 

 

 

 

 

(1,075

)

 

 

 

 

 

 

 

 

(1,075

)

Exercise of options and purchases from employee stock plans

 

 

236

 

 

 

 

 

 

 

 

 

 

 

 

862

 

 

 

 

 

 

 

 

 

862

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,407

 

 

 

 

 

 

1,407

 

Other comprehensive income—net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

228

 

 

 

228

 

BALANCE—September 30, 2018

 

 

62,730

 

 

$

6

 

 

 

(278

)

 

$

(1,433

)

 

$

292,902

 

 

$

(67,271

)

 

$

231

 

 

$

224,435

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

Shares of

 

 

 

 

 

 

Shares of

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

Common

 

 

Common

 

 

Treasury

 

 

Treasury

 

 

Paid-In

 

 

Accumulated

 

 

Comprehensive

 

 

 

 

 

 

 

Stock

 

 

Stock

 

 

Stock

 

 

Stock

 

 

Capital

 

 

Deficit

 

 

Income (loss)

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE—January 1, 2017

 

 

61,240

 

 

$

6

 

 

 

(278

)

 

$

(1,433

)

 

$

286,303

 

 

$

(35,841

)

 

$

(1,145

)

 

$

247,890

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation

 

 

208

 

 

 

 

 

 

 

 

 

 

 

 

2,514

 

 

 

 

 

 

 

 

 

2,514

 

Vesting of restricted stock units, including impact of shares withheld for taxes

 

 

147

 

 

 

 

 

 

 

 

 

 

 

 

(328

)

 

 

 

 

 

 

 

 

(328

)

Exercise of options and purchases from employee stock plans

 

 

258

 

 

 

 

 

 

 

 

 

 

 

 

867

 

 

 

 

 

 

 

 

 

867

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(24,723

)

 

 

 

 

 

(24,723

)

Other comprehensive income—net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

208

 

 

 

208

 

BALANCE—September 30, 2017

 

 

61,853

 

 

$

6

 

 

 

(278

)

 

$

(1,433

)

 

$

289,356

 

 

$

(60,564

)

 

$

(937

)

 

$

226,428

 

 

See notes to unaudited condensed consolidated financial statements.

 

 

6


 

Great Lakes Dredge & Dock Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)

 

 

 

Nine Months Ended

 

 

 

September 30,

 

 

 

2018

 

 

2017

 

OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net income (loss)

 

$

1,407

 

 

$

(24,723

)

Loss from discontinued operations, net of income taxes

 

 

 

 

 

(12,697

)

Income (loss) from continuing operations

 

$

1,407

 

 

$

(12,026

)

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

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

41,290

 

 

 

38,707

 

Equity in earnings of joint ventures

 

 

(2,988

)

 

 

(5,726

)

Cash distributions from joint ventures

 

 

538

 

 

 

4,486

 

Loss on extinguishment of 7 3/8% senior notes

 

 

 

 

 

2,330

 

Deferred income taxes

 

 

931

 

 

 

(7,347

)

Loss on sale of assets

 

 

190

 

 

 

355

 

Other non-cash restructuring items

 

 

2,015

 

 

 

 

Amortization of deferred financing fees

 

 

2,637

 

 

 

2,468

 

Unrealized net loss from mark-to-market valuations of derivatives

 

 

 

 

 

1,747

 

Unrealized foreign currency gain

 

 

(215

)

 

 

(64

)

Share-based compensation expense

 

 

3,294

 

 

 

2,514

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(6,657

)

 

 

8,794

 

Contract revenues in excess of billings

 

 

49,563

 

 

 

12,409

 

Inventories

 

 

(202

)

 

 

(3,443

)

Prepaid expenses and other current assets

 

 

12,581

 

 

 

6,148

 

Accounts payable and accrued expenses

 

 

(11,157

)

 

 

(27,055

)

Billings in excess of contract revenues

 

 

(146

)

 

 

(316

)

Other noncurrent assets and liabilities

 

 

(4,147

)

 

 

(482

)

Net cash flows provided by operating activities from continuing operations

 

 

88,934

 

 

 

23,498

 

Net cash flows used in operating activities of discontinued operations

 

 

 

 

 

(20,900

)

Cash provided by operating activities

 

 

88,934

 

 

 

2,598

 

 

 

 

 

 

 

 

 

 

INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(29,671

)

 

 

(49,377

)

Proceeds from dispositions of property and equipment

 

 

12,245

 

 

 

9,198

 

Cash used in investing activities

 

 

(17,426

)

 

 

(40,179

)

 

7


 

 

 

 

Nine Months Ended

 

 

 

September 30,

 

 

 

2018

 

 

2017

 

FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

7 3/8% senior notes tender premium

 

 

 

 

 

(744

)

Deferred financing fees

 

 

 

 

 

(4,522

)

Repayments of debt

 

 

(1,428

)

 

 

(277,026

)

Proceeds from issuance of debt

 

 

 

 

 

326,241

 

Taxes paid on settlement of vested share awards

 

 

(1,075

)

 

 

(328

)

Exercise of options and purchases from employee stock plans

 

 

862

 

 

 

867

 

Borrowings under revolving loans

 

 

18,000

 

 

 

89,425

 

Repayments of revolving loans

 

 

(82,118

)

 

 

(103,536

)

Cash provided by (used in) financing activities

 

 

(65,759

)

 

 

30,377

 

Effect of foreign currency exchange rates on cash and cash equivalents

 

 

26

 

 

 

(8

)

Net increase (decrease) in cash, cash equivalents and restricted cash

 

 

5,775

 

 

 

(7,212

)

Cash, cash equivalents and restricted cash at beginning of period

 

 

17,352

 

 

 

19,702

 

Cash, cash equivalents and restricted cash at end of period

 

$

23,127

 

 

$

12,490

 

 

 

 

 

 

 

 

 

 

Supplemental Cash Flow Information

 

 

 

 

 

 

 

 

Cash paid for interest

 

$

17,402

 

 

$

20,986

 

Cash paid for income taxes

 

$

255

 

 

$

574

 

 

 

 

 

 

 

 

 

 

Non-cash Investing and Financing Activities

 

 

 

 

 

 

 

 

Property and equipment purchased but not yet paid

 

$

3,920

 

 

$

2,021

 

Repayments of debt with proceeds from sale-leaseback transactions

 

$

13,034

 

 

$

 

 

See notes to unaudited condensed consolidated financial statements.

 

 

8


 

GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(dollar amounts in thousands, except per share amounts or as otherwise noted)

 

 

1.

Basis of presentation

The unaudited condensed consolidated financial statements and notes herein should be read in conjunction with the audited consolidated financial statements of Great Lakes Dredge & Dock Corporation and Subsidiaries (the “Company” or “Great Lakes”) and the notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. The condensed consolidated financial statements included herein have been prepared by the Company without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to the SEC’s rules and regulations, although management believes that the disclosures are adequate and make the information presented not misleading. In the opinion of management, all adjustments, which are of a normal and recurring nature (except as otherwise noted), that are necessary to present fairly the Company’s financial position as of September 30, 2018, and its results of operations for the three and nine months ended September 30, 2018 and 2017 and cash flows for the nine months ended September 30, 2018 and 2017 have been included.

The Company adopted Accounting Standard Update No. 2016-18 (“ASU 2016-18”), Statement of Cashflows (Topic 230): Restricted Cash on January 1, 2018. The amendments require that the statement of cash flows explain the changes during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore amounts generally described as restricted cash or restricted cash equivalents should be included with the cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The impact of the adoption of ASU 2016-18 has been applied retrospectively and the prior period presented has been recast.

The following table provides a reconciliation of cash, cash equivalents and restricted cash at September 30, 2018 and December 31, 2017 reported within the Condensed Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Condensed Consolidated Statements of Cash Flows.

 

September 30, 2018

 

 

December 31, 2017

 

Cash and cash equivalents

$

23,127

 

 

$

15,852

 

Restricted cash included in other long-term assets

 

 

 

 

1,500

 

Cash, cash equivalents and restricted cash at end of period

$

23,127

 

 

$

17,352

 

 

Effective beginning the first quarter of 2018, the Company changed the method of accounting for allocated fixed equipment costs for interim periods such that fixed equipment costs are now recognized as incurred. The Company adopted this change as a result of management’s belief that the new method is preferable and results in a more objective measure of quarterly expense that will better support planning and resource allocation decisions by management. The change has been applied retrospectively and all prior interim periods presented have been recast. The Company’s cost structure includes significant annual equipment-related costs, including depreciation, maintenance, insurance and long-term rentals. Previously, the Company allocated fixed equipment costs to interim periods in proportion to revenues recognized over the year. Specifically, at each interim reporting date the Company compared actual revenues earned to date on its dredging contracts to expected annual revenues and recognized equipment costs on the same proportionate basis. In the fourth quarter, any over or under allocated equipment costs are recognized such that the expense for the year equals actual equipment costs incurred during the year. The impact of the change in accounting policy on our Condensed Consolidated Statements of Operations and Condensed Consolidated Balance Sheets is as follows:

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30, 2017

 

 

September 30, 2017