EEI 2017 Form 10-K

Table of Contents Contract Receivable Concentrations Significant concentrations of contract receivables and the allowance for doubtful accounts and contract adjustments are summarized in the following table. Balance at July 31, 2017 Balance at July 31, 2016 Region Contract Receivables Allowance for Doubtful Accounts and Contract Adjustments Contract Receivables Allowance for Doubtful Accounts and Contract Adjustments (in thousands) EEI and its subsidiaries located in the U.S. $ 25,528 $ 797 $ 29,027 $ 5,809 Subsidiaries located in South America 11,704 1,328 11,659 983 Other foreign subsidiaries --- --- 425 --- Totals $ 37,232 $ 2,125 $ 41,111 $ 6,792 Contract adjustments related to projects in the United States, Canada and South America typically result from cost overruns related to current or recently completed projects, or from recoveries of cost overruns recorded as contract adjustments in prior reporting periods. Contract adjustments related to projects in the Middle East, Africa and Asia typically result from difficulties encountered while attempting to settle and close-out claims that may be several years old. During fiscal year 2017, the Company wrote-off $4.9 million of aged and fully reserved contract receivable balances at EEI related to a specific project in the Middle East, based on management’s assessment that the client is unlikely to approve payment. The allowance for doubtful accounts and contract adjustments as a percentage of contract receivables at the Company’s subsidiaries located in South America was 11% and 8% at July 31, 2017 and 2016, respectively. During fiscal year 2017, challenging economic conditions in Brazil, Peru and Chile continued to adversely impact the operations and liquidity of certain of our local clients, resulting in increased collection risk and the risk that the Company will expend resources that it may not recover for several months, or at all. Management is monitoring any adverse trends or events that may impact the realizability of recorded receivables from our South American clients. Allowance for Doubtful Accounts and Contract Adjustments Activity within the allowance for doubtful accounts and contract adjustments is summarized in the following table. Fiscal Year Ended July 31, 2017 2016 2015 (in thousands) Balance at beginning of period $ 6,792 $ 6,817 $ 7,371 Net increase (decrease) due to adjustments in the allowance for: Contract adjustments (4,941) (577) (263) Doubtful accounts 274 552 (291) Balance at end of period $ 2,125 $ 6,792 $ 6,817 The decrease in the allowance for contract adjustments during fiscal year 2017 was primarily the result of the $4.9 million write-off of receivables related to a project in the Middle East, as described above. 20