EEI 2017 Form 10-K

Table of Contents U.S. Operations Net income from U.S. operations nearly doubled to $1.8 million during fiscal year 2017, as lower revenues were more than offset by lower direct and indirect operating expenses. Competitive pricing pressure continued to have an impact on our ability to win new work in many of our domestic market sectors. In addition, for the second straight year, we experienced a higher proportion of revenues from federal, state and local government projects, which are generally billed at lower rates than our commercial work. Indirect operating expenses decreased 6% during fiscal year 2017. We continue to improve operating efficiency within our domestic operations and operate under an expense management strategy that has resulted in significant reductions in indirect operating expenses over the past three fiscal years. South American Operations An economic downturn that adversely affected our Brazilian operations during previous fiscal years appeared to stabilize during fiscal year 2017, resulting in additional business development opportunities and higher revenues in Brazil. Although improving, economic conditions continue to be challenging for certain of our clients in Brazil, resulting in continued high levels of collection risk and receivable reserves. Global economic trends in oil, gas and commodity prices continued to have a severe negative impact on revenues and net income in Peru during fiscal year 2017. Significant energy sector project work completed in Peru during fiscal years 2016 and 2017 has not been replaced. Reduced volumes of work on power generation and transmission projects resulted in lower revenues and net income in Chile during fiscal year 2017. Government and private investments in mining projects in Chile have steadily decreased since 2013. Environmental Consulting Services Offered We offer consulting services to commercial and government clients in a variety of service sectors, which include the following: Government START Contract We provide support services to the United States Environmental Protection Agency (the “EPA”) for response and site assessment activities related to the release and threat of release of oil, petroleum products, hazardous substances, weapons of mass destruction or pollutants or contaminants that pose an actual or potential threat to human health or welfare, or to the environment. We have supported the EPA under more than 40 contracts with a total award value exceeding $1 billion spanning nearly 40 years. In July 2013, the EPA awarded us with renewal of a contract known as START IV to provide continuing support to EPA Region 10, which covers the four state territory of Alaska, Idaho, Washington and Oregon. This is a combination time and materials/cost plus contract with a base term of three years and two two-year option periods, for a total potential contract term of seven years. During fiscal year 2016, the EPA awarded the first of the option periods to EEI. This contract contains termination provisions under which the EPA may, without penalty, terminate the contract during the contract term upon written notice to us. In the event of termination, we would be paid only termination costs in accordance with the contract. We have never had a contract terminated during the contract term by the EPA. 5