2019 BBNC Annual Report - Page 53

The costs and estimated earnings on contracts in progress include costs and estimated earnings on firm fixed price contracts. The following table reconciles costs incurred, earnings, and billings to date on contracts in progress at March 31 (in thousands): Costs incurred on contracts in progress to date Estimated earnings to date $ Contract revenue earned to date Less billings to date Contracts revenue adjustment required to reflect percentage of completion $ 2019 2018 1,299,383 1,528,083 165,540 197,738 1,464,923 1,725,821 (1,470,413) (1,725,267) (5,490) 554 Included in the consolidated balance sheets are costs and estimated earnings on contracts in progress compared to billings and consist of the following, at March 31 (in thousands): 2019 Costs and earnings in excess of billings on uncompleted projects $ Billings in excess of costs and earnings on uncompleted contracts $ 2018 17,174 21,895 (22,664) (21,341) (5,490) 554 Costs and earnings in excess of amounts billed are classified as current assets under “costs and earnings in excess of billings.” Billings in excess of costs and earnings are classified under current liabilities as “billings in excess of costs and earnings.” Contract retentions are included in accounts receivable. Where the Corporation acting in an agency capacity, by agreement, has transferred all significant risk to vendors, manufacturers, or purchasers, the Corporation records only the net profit in contract services revenues. Gross volume from such activity excluded from the financial statements totaled $4,857,000, $7,323,000 and $10,859,000 for fiscal years 2019, 2018 and 2017, respectively. Revenue from petroleum sales is recognized when the related goods are sold and all significant obligations of the Corporation have been satisfied, which generally occurs at time of delivery. Petroleum revenues and the cost of petroleum operations, generated from purchases outside the PC network, are recorded gross of state and federal fuel taxes. PC is not responsible for collecting or remitting fuel tax for petroleum revenues from fuel directly acquired by the Corporation. Included in petroleum sales operations and costs of petroleum sales operations is $98.6 million, $105.6 million and $101.0 million of state and federal fuel taxes for the years ended March 31, 2019, 2018 and 2017, respectively. (N) INTEREST RATE SWAP From time-to-time, the Corporation enters into interest rate swaps as a means to hedge against the uncertainty of future increases in interest rates on the Corporation’s long-term debt. The Corporation applies Financial Accounting Standard Board (FASB) Accounting Standards Codification (ASC) Topic 815, Derivatives and Hedging, which among other provisions requires that all interest rate swaps be recognized as either assets or liabilities in the consolidated balance sheet and measured at fair value. Gains and losses resulting from changes in the fair value are recorded in other comprehensive income when the swaps qualify for hedge accounting. The change in the fair value of swaps that do not qualify as a hedge must be included as part of earnings. The fair values of interest rate swaps are included in accrued liabilities with the effect on earnings included as part of interest expense. M anagement ' s D iscussion and A nalysis 51