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Accounts Receivable - Net | 6 Months Ended
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Mar. 27, 2016
Accounts Receivable - Net |
Accounts Receivable - Net | 2.Accounts Receivable – Net Net accounts receivable and billings in excess of costs on uncompleted contracts consisted of the following:
|  | March 27, 2016 |  | September 27, 2015 |
|  | (in thousands) |
Billed |  | $ | 348,360 |  | $ | 331,364 |
Unbilled |  | 342,828 |  | 311,823 |
Contract retentions |  | 28,695 |  | 24,333 |
Total accounts receivable – gross |  | 719,883 |  | 667,520 |
Allowance for doubtful accounts |  | (38,760) |  | (31,490) |
Total accounts receivable – net |  | $ | 681,123 |  | $ | 636,030 |
Billings in excess of costs on uncompleted contracts |  | $ | 92,125 |  | $ | 93,989 |
Billed accounts receivable represent amounts billed to clients that have not been collected. Unbilled accounts receivable represent revenue recognized but not yet billed pursuant to contract terms or billed after the period end date. Most of our unbilled receivables at March 27, 2016 are expected to be billed and collected within 12 months. Contract retentions represent amounts withheld by clients until certain conditions are met or the project is completed, which may be several months or years. The a llowance for doubtful accounts represents amounts that may become uncollectible or unrealizable in the future. We determine an estimated allowance for uncollectible accounts based on management’s consideration of trends in the actual and forecasted credit quality of our clients, including delinquency and payment history; type of client, such as a government agency or a commercial sector client; and general economic and particular industry conditions that may affect a client’s ability to pay. Billings in excess of costs on uncompleted contracts represent the amount of cash collected from clients and billings to clients on contracts in advance of revenue recognized. The majority of billings in excess of costs on uncompleted contracts will be earned within 12 months. Once contract performance is underway, we may experience changes in conditions, client requirements, specifications, designs, materials and expectations regarding the period of performance. Such changes result in “change orders” and may be initiated by us or by our clients. In many cases, agreement with the client as to the terms of change orders is reached prior to work commencing; however, sometimes circumstances require that work progress without a definitive client agreement. Unapproved change orders constitute claims in excess of agreed contract prices that we seek to collect from our clients (or other third parties) for delays, errors in specifications and designs, contract terminations, or other causes of unanticipated additional costs. Revenue on claims is recognized when contract costs related to claims have been incurred and when their addition to contract value can be reliably estimated. This can lead to a situation in which costs are recognized in one period and revenue is recognized in a subsequent period, such as when client agreement is obtained or a claims resolution occurs. Total accounts receivable at March 27, 2016 and September 27, 2015 included approximately $42 million and $53 million, respectively, related to claims, including requests for equitable adjustment, on contracts that provide for price redetermination. During the first half of fiscal 2016 (all in the first quarter), we collected $13.4 million to settle claims of $8.8 million, which resulted in gains in operating income of $4.6 million in the RCM reportable segment. W e regularly evaluate all unsettled claim amounts and record appropriate adjustments to operating earnings when it is probable that the claim will result in a different contract value than the amount previously estimated. In the first six months of fiscal 2016 (all in the first quarter), we also recognized reductions to operating income in our RCM segment and a related increase in the allowance for doubtful accounts of $7.9 million as a result of our updated assessment of the collectability of certain accounts receivable, of which $4.6 million related to unsettled claims. In last year’s second quarter, as a result of the assessment of claims, we reduced revenue and operating income by $3.0 million. In the first half of fiscal 2015, we recorded net gains of $0.2 million related to claims. Billed accounts receivable related to U.S. federal government contracts were $56.8 million and $61.9 million at March 27, 2016 and September 27, 2015, respectively. U.S. federal government unbilled receivables were $76.0 million and $74.2 million at March 27, 2016 and September 27, 2015, respectively. The U.S. federal government and one international commercial client each accounted for more than 10% of our accounts receivable at March 27, 2016. No single client, other than the U.S. federal government, accounted for more than 10% of our accounts receivable at September 27, 2015. We recognize revenue for most of our contracts using the percentage-of-completion method, primarily utilizing the cost-to-cost approach, to estimate the progress towards completion in order to determine the amount of revenue and profit to recognize. Changes in those estimates could result in the recognition of cumulative catch-up adjustments to the contract’s inception-to-date revenue, costs and profit in the period in which such changes are made. As a result, we recognized immaterial net operating income adjustments during the second quarter and first half of fiscal 2016 compared to unfavorable operating income adjustments of $3.5 million and $5.9 million in the comparable periods of last year. Changes in revenue and cost estimates could also result in a projected loss that would be recorded immediately in earnings. As of March 27, 2016 and September 27, 2015, our balance sheet included a liability for anticipated losses of $7.9 million and $10.5 million, respectively. The estimated cost to complete the related contracts as of March 27, 2016 was $36.7 million.

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- Definition Disclosure itemizing the various types of trade accounts receivable such as billed and unbilled accounts receivable ,contract retentions and billings in excess of costs, as well as the gross carrying value, allowance, and net carrying value as of the balance sheet date. This disclosure may include (1) the basis at which such receivables are carried in the entity's statements of financial position (2) how the level of the valuation allowance for receivables is determined (3) when impairments, charge-offs or recoveries are recognized for such receivables (4) the treatment of any premiums or discounts or unearned income. + References No definition available. + Details
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