EEI 2017 Form 10-K

Table of Contents 7. Contract Receivables, net Contract receivables, net are summarized in the following table. Balance at July 31, 2017 2016 (in thousands) Contract Receivables: Billed $ 16,033 $ 20,415 Unbilled 21,199 20,696 37,232 41,111 Allowance for doubtful accounts and contract adjustments (2,125) (6,792) Contract receivables, net $ 35,107 $ 34,319 Billed contract receivables included contractual retainage balances of $0.9 million at each of July 31, 2017 and 2016. Management anticipates that unbilled contract receivables and retainage balances at July 31, 2017 will be substantially billed and collected within one year. 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. 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, local South American economies continued to adversely impact certain of our local clients. These heightened operating risks have resulted in increased collection risks and the Company expending 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. 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. 48