EEI 2017 Form 10-K

Table of Contents Billed contract receivables represent amounts billed to clients in accordance with contracted terms but not collected as of the end of the reporting period. Billed contract receivables may include: (i) amounts billed for revenues from incurred costs and fees that have been earned in accordance with contractual terms; and (ii) progress billings in accordance with contractual terms that include revenue not yet earned as of the end of the reporting period. Unbilled contract receivables result from: (i) revenues from incurred costs and fees which have been earned, but are not billed as of period-end; and (ii) differences between year-to-date provisional billings and year-to-date actual contract costs incurred. The Company reduces contract receivables by establishing an allowance for contract adjustments related to revenues that are deemed to be unrealizable, or that may become unrealizable in the future. Management reviews contract receivables and determines allowance amounts based on the adequacy of the Company’s performance under the contract, the status of change orders and claims, historical experience with the client for settling change orders and claims, and economic, geopolitical and cultural considerations for the home country of the client. The Company records such contract adjustments as direct adjustments to revenue in the consolidated statements of operations. The Company also reduces contract receivables by recording an allowance for doubtful accounts to account for the estimated impact of collection issues resulting from a client’s inability or unwillingness to pay valid obligations to the Company. The resulting provision for bad debts is recorded within administrative and indirect operating expenses on the consolidated statements of operations. Refer to Note 7 of these consolidated financial statements for additional disclosures regarding the Company’s contract receivables, net. Property, Buildings and Equipment, Depreciation and Amortization Property, buildings and equipment are stated at the lower of depreciated or amortized cost or fair value. Land and land improvements are not depreciated or amortized. Methods of depreciation or amortization and useful lives for all other long-lived assets are summarized in the following table. Depreciation / Amortization Method Useful Lives Buildings Straight-line 32-40 Years Building Improvements Straight-line 7-15 Years Field Equipment Straight-line 3-7 Years Computer equipment Straight-line and Accelerated 3-7 Years Computer software Straight-line 10 Years Office furniture and equipment Straight-line 3-7 Years Vehicles Straight-line 3-5 Years Leasehold improvements Straight-line (1) (1) Leasehold improvements are amortized for book purposes over the terms of the leases or the estimated useful lives of the assets, whichever is shorter. Expenditures for maintenance and repairs are charged to expense as incurred. Expenditures for improvements are capitalized when either the value or useful life of the related asset have been increased. When property or equipment is retired or sold, any gain or loss on the transaction is reflected in the current year's earnings. The Company capitalizes costs of software acquisition and development projects, including costs related to software design, configuration, coding, installation, testing and parallel processing. Capitalized software costs are recorded in fixed assets, net of accumulated amortization, on the consolidated balance sheets. Capitalized software development costs generally include: · external direct costs of materials and services consumed to obtain or develop software for internal use; · payroll and payroll-related costs for employees who are directly associated with and who devote time to the project, to the extent of time spent directly on the project; · costs to obtain or develop software that allows for access or conversion of old data by new systems; · costs of upgrades and/or enhancements that result in additional functionality for existing software; and · interest costs incurred while developing internal-use software that could have been avoided if the expenditures had not been made. 42