7.	Contract Receivables, net

Adoption of ASC Topic 606

The Company adopted ASC Topic 606 effective August 1, 2018. Gross revenue for reporting periods beginning after July 31, 2018 is recognized under ASC Topic 606. Gross revenue for previous reporting periods was recognized in accordance with historic accounting under U.S. GAAP, as summarized in revenue recognition policies included in the Company’s 2018 Annual Report.

The Company adopted ASC Topic 606 using the modified retrospective method. As a practical expedient allowed under ASC Topic 606, the Company applied the new guidance only to contracts that were not completed as of the date of initial application. The Company did not record any cumulative effect adjustment to retained earnings as of August 1, 2018 and did not record any material adjustment to gross revenue for the fiscal year ended July 31, 2019 as a result of applying the guidance in ASC Topic 606.

Contract Receivables, net and Contract Assets

Contract receivables, net are summarized in the following table.

	July 31,
	2019			2018
	(in thousands)
Contract receivables:
Billed	$	12,405		$	12,905
Unbilled		13,686			13,994
		26,091			26,899
Allowance for doubtful accounts		(1,004	)		(1,284	)
Contract receivables, net	$	25,087		$	25,615

The Company anticipates that substantially all billed contract receivables will be collected over the next twelve months. Billed contract receivables included contractual retainage balances of $0.8 million and $1.4 million at July 31, 2019 and 2018, respectively. Management anticipates that the unbilled contract receivables and retainage balances at July 31, 2019, will be substantially billed and collected within one year.

Management identified contract receivables, net of allowance for doubtful accounts, of less than $0.1 million and $0.5 million as of July 31, 2019 and July 31, 2018, respectively, that are not expected to be collected within one year. These net receivables represent long-term assets that are included in other assets on the consolidated balance sheets.

The Company may record contract assets for the right to receive consideration from customers when that right is conditional based on future performance under a contract. Contract assets are transferred to billed contract receivables when the right to consideration becomes unconditional. The Company did not record any contract assets at July 31, 2019 or 2018.

Allowance for Doubtful Accounts

Activity within the allowance for doubtful accounts is summarized in the following table.

	Fiscal Year Ended July 31,
	2019			2018			2017
	(in thousands)

Balance at beginning of period	$	1,284		$	2,044		$	6,792
Provision for doubtful accounts during the period		182			813			682
Write-offs and recoveries of allowance recorded in prior periods		(676	)		(943	)		(5,430	)
Reclassification of allowance (to) from noncurrent assets		214			(630	)		---
Balance at end of period	$	1,004		$	1,284		$	2,044

Contract Receivable Concentrations

Significant concentrations of contract receivables and the allowance for doubtful accounts are summarized in the following table.

	July 31, 2019				July 31, 2018
Region	Contract Receivables		Allowance for Doubtful Accounts		Contract Receivables		Allowance for Doubtful Accounts
	(in thousands)

U.S. operations	$	20,211	$	489	$	21,580	$	569
South American operations		5,880		515		5,319		715
Totals	$	26,091	$	1,004	$	26,899	$	1,284

The allowance for doubtful accounts for the Company’s South American operations represented 9% and 13% of related contract receivables at July 31, 2019 and 2018, respectively. Unstable local economies that adversely impacted certain of our South American clients in recent years demonstrated signs of stabilizing during fiscal year 2019. Management continues to monitor trends and events that may adversely impact the realizability of recorded receivables from our South American clients.

Disaggregation of Revenues

The following table provides a summary of the Company’s gross revenue, disaggregated by operating segment and contract type.

	Fiscal Year Ended July 31,
	2019		2018		2017

Gross revenue from time and materials contracts:
U.S. operations	$	40,478	$	38,562	$	47,732
South American operations		27		-		-
Total gross revenue from time and materials contracts	$	40,505	$	38,562	$	47,732

Gross revenue from fixed price contracts:
U.S. operations	$	13,113	$	14,313	$	16,232
South American operations		17,861		18,949		15,541
Total gross revenue from fixed price contracts	$	30,974	$	33,262	$	31,773

Gross revenue from cost-plus contracts:
U.S. operations	$	17,031	$	18,860	$	16,578
South American operations		-		-		-
Total gross revenue from cost-plus contracts	$	17,031	$	18,860	$	16,578

Gross revenue from all contracts:
U.S. operations	$	70,622	$	71,735	$	80,542
South American operations		17,888		18,949		15,541
Consolidated gross revenue	$	88,510	$	90,684	$	96,083

Customer Deposits

Customer deposits of $3.6 million and $3.2 million at July 31, 2019 and 2018, respectively, represent cash advances received from customers for future services.