EEI 2017 Form 10-K

Table of Contents Fiscal Year 2017 Versus 2016 Total direct operating expenses for fiscal year 2017 decreased 1% from the prior year. Comparative increases and/or decreases within business segments were generally consistent with corresponding changes in segment revenues. Fiscal Year 2016 Versus 2015 Total direct operating expenses for fiscal year 2016 decreased 18% from the prior year. Lower direct expenses generally resulted from lower project revenue for each of our business segments. Our consolidated project revenue and related costs were generally lower in all of our business segments during fiscal year 2016. The sale of the Company’s majority investment in a Kentucky-based subsidiary during the first quarter of fiscal year 2016 also contributed to lower direct operating expenses during fiscal year 2016. Indirect Operating Expenses Administrative and indirect operating expenses and marketing and related costs represent administrative and other operating costs not directly associated with the generation of revenue. We refer to these costs as “indirect operating expenses.” Indirect operating expenses by business entity are summarized in the following table. Fiscal Year Ended July 31, 2017 2016 2015 (in thousands) EEI and its subsidiaries located in the U.S. $ 32,021 $ 34,130 $ 35,602 Subsidiaries located in South America: Walsh Peru 3,308 3,505 4,896 GAC 2,601 2,247 1,294 E&E Brasil 2,522 2,923 3,841 Other 354 170 257 8,785 8,845 10,288 Other foreign subsidiaries 15 95 1,147 Total indirect operating expenses $ 40,821 $ 43,070 $ 47,037 EEI and its subsidiaries may, at the discretion of their respective Board of Directors, award incentive compensation to senior management and other employees in the form of cash bonuses. Cash bonuses to EEI’s Directors were also considered at the discretion of EEI’s Board of Directors prior to fiscal year 2017. During fiscal year 2017, the Board of Directors decided to discontinue cash bonuses to Directors. Cash bonus expense may vary significantly from year to year depending on company financial performance. The Company recorded $0.9 million, $1.0 million and $2.8 million of incentive compensation expense in indirect operating expenses during fiscal years 2017, 2016 and 2015, respectively, as a result of cash bonus awards. 23