EEI 2017 Form 10-K

Table of Contents Risk Factors Related to Our Operations International operations are subject to a number of risks. Revenues from international operations represented 21%, 21% and 30% of total revenues for fiscal years 2017, 2016 and 2015, respectively. International operations are subject to a number of risks, including: · greater counterparty risk, leading to longer collection cycles and potentially uncollectible accounts; · currency fluctuations; · logistical and language challenges that affect our ability to effectively communicate with and manage foreign employees; · exposure to liability and sanctions under the Foreign Corrupt Practices Act; · exposure to liability and sanctions under laws and regulations established by foreign jurisdictions in which we conduct business; · lack of developed legal systems to enforce our contractual rights; · volatility in economic and political conditions, particularly in our South American markets; · civil disturbance, unrest or violence; and · difficulties in staffing international operations with appropriately credentialed and trained personnel. Failure to manage these risks effectively may result in harm to our overall operations and significantly reduce our future revenues, earnings and available liquidity. Failure to attract and retain key employees could impair our ability to provide quality service to clients. We provide professional and technical services that depend on our ability to attract, retain and train our professional employees to conduct our business and perform our obligations to ensure success. The experience of our senior management team and other key employees is essential to the success of any company and our ability to retain such talent is crucial to our profitability. Failure to effectively develop staff and complete succession planning for key senior management roles could adversely affect customer relationships, the quality of work that we complete for our clients and business development efforts. Our services could expose us to significant liability not covered by insurance. The services we provide expose us to significant risks of professional and other liabilities. Our contracts generally require us to maintain certain insurance coverages and to indemnify our clients for claims, damages or losses for personal injury or property damage relating to performance of our duties unless such injury or damage is the result of the client's negligence or willful acts. Currently, we are able to obtain insurance coverage to meet the requirements of our contracts, subject to certain pollution exclusions. Additionally, we have an errors and omissions insurance policy that covers our environmental consulting services, including legal liability for pollution conditions resulting therefrom. Where possible, we require that our clients cross-indemnify us for asserted claims. There can be no assurance, however, that any such cross-indemnification agreements, together with our general liability insurance and errors and omissions coverage, will be sufficient to protect us against any asserted claim. We are unable to predict the total amount of all potential liabilities that could arise under contracts with our clients. While we believe that we hold an appropriate level of coverage, insurance may be inadequate or unavailable in the future to protect us for such liabilities and risks. Extraordinary events, including natural disasters and terrorist actions, could negatively impact the economies in which we operate or disrupt our operations. The geographic area of our operations includes regions that have experienced hurricanes, earthquakes and forest fires. The occurrence of extraordinary events such as these, as well as other natural disasters or terrorist actions, could cause the delay or cancellation of projects, closure of offices, and the evacuation or loss of personnel. Such events could limit or disrupt markets and our operations, which could have a negative impact on our business, financial condition, and results of operations or cash flows. Failure to establish and maintain effective internal controls over financial reporting could result in material misstatements in our financial statements. Our management is responsible for establishing and maintaining adequate internal controls over financial reporting. As reported in Item 9A of this Annual Report, management identified control deficiencies as of July 31, 2017 related to accounting for income taxes and to management’s review controls over the financial statement close process. Although the deficiencies did not result in a material misstatement of the Company’s financial statements, management concluded that there was a reasonable possibility that, if any material misstatement had occurred, it would not have been prevented or detected on a timely basis. Therefore, management reported that material weaknesses in our internal controls over financial reporting existed as of July 31, 2017. If the remedial measures that are designed to address these material weaknesses are insufficient to address the deficiencies, or if additional material weaknesses or significant deficiencies in our internal controls are discovered or occur in the future, our consolidated financial statements may contain material errors and misstatements, and we could be required to restate financial results reported in prior periods. 14