Contract Receivables, net

12 Months Ended

Jul. 31, 2017

Contract Receivables, net [Abstract]

Contract Receivables, net

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.

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 (1)		(4,941	)		(577	)		(263	)
Doubtful accounts (2)		274			552			(291	)
Balance at end of period	$	2,125		$	6,792		$	6,817

(1) Increases (decreases) to the allowance for contract adjustments on the consolidated balance sheets are recorded as (decreases) increases to revenue on the consolidated statements of operations.  During fiscal year 2017, the Company reversed $4.9 million of allowance related to a specific project in the Middle East, for which a corresponding $4.9 million contract receivable balance was also written off during the period.

(2) Increases (decreases) to the allowance for doubtful accounts on the consolidated balance sheets are recorded as increases (decreases) to administrative and other indirect operating expenses on the consolidated statements of operations.

During fiscal year 2017, the South American economies continue to adversely impact some of our local clients.  Management is monitoring any adverse trends or events that may impact the realizability of the recorded net book value of contract receivables from our South American clients.