NOTE 7 – COSTS, ESTIMATED EARNINGS AND BILLINGS ON UNCOMPLETED CONTRACTS
The Company’s billing practices are governed primarily by the contract terms of each project based on the achievement of milestones, pre-agreed schedules or progress towards completion approved by the project owner. Billings do not necessarily correlate with net revenues recognized under the percentage-of-completion method of accounting.
The tables below set forth the aggregate amount of costs incurred and earnings accrued on uncompleted contracts compared with the billings on those contracts through January 31, 2013 and 2012, and reconcile the net amounts of billings in excess of costs and estimated earnings to the amounts included in the consolidated balance sheets at those dates.
| 2013 | 2012 | |||||||
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Costs incurred on uncompleted contracts |
$ | 259,390,000 | $ | 106,379,000 | ||||
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Estimated accrued earnings |
48,724,000 | 12,121,000 | ||||||
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| 308,114,000 | 118,500,000 | |||||||
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Less – Billings to date |
380,295,000 | 183,723,000 | ||||||
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Billings in excess of costs and estimated earnings on uncompleted contracts, net |
$ | 72,181,000 | $ | 65,223,000 | ||||
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Costs and estimated earnings in excess of billings |
$ | 1,178,000 | $ | 2,781,000 | ||||
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Billings in excess of costs and estimated earnings |
73,359,000 | 68,004,000 | ||||||
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Billings in excess of costs and estimated earnings on uncompleted contracts, net |
$ | 72,181,000 | $ | 65,223,000 | ||||
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Contract costs include all direct costs, such as material and labor, and those indirect costs related to contract performance such as payroll taxes, insurance, job supervision and equipment charges. The amounts of costs and estimated earnings in excess of billings are expected to be billed and collected in the normal course of business.