IES HOLDINGS, INC.
Notes to the Condensed Consolidated Financial Statements
(All Amounts in Thousands Except Share Amounts)
Given the uncertainty litigation poses, the Company has not recorded any recovery in connection with this
claim. There can be no assurance that the Company will prevail in this litigation matter or that, if the Company does prevail, it will not receive a significantly lower award.
We retain the risk for workers
compensation, employers liability, automobile liability, construction defects, general liability and employee group health claims, as well as pollution coverage, resulting from uninsured deductibles per accident or occurrence which are
generally subject to annual aggregate limits. Our general liability program provides coverage for bodily injury and property damage. In many cases, we insure third parties, including general contractors, as additional insureds under our insurance
policies. Losses are accrued based upon our known claims incurred and an estimate of claims incurred but not reported. As a result, many of our claims are effectively self-insured. Many claims against our insurance are in the form of litigation. At
June 30, 2018, and September 30, 2017, we had $6,856 and $6,204, respectively, accrued for self-insurance liabilities. We are also subject to construction defect liabilities, primarily within our Residential segment. As of June 30,
2018, and September 30, 2017, we had $179 and $218, respectively, reserved for these claims. Because the reserves are based on judgment and estimates and involve variables that are inherently uncertain, such as the outcome of litigation and an
assessment of insurance coverage, there can be no assurance that the ultimate liability will not be higher or lower than such estimates or that the timing of payments will not create liquidity issues for the Company.
Some of the underwriters of our casualty insurance program require us to post letters of credit as collateral. This is common in the insurance industry. To
date, we have not had a situation where an underwriter has had reasonable cause to effect payment under a letter of credit. At June 30, 2018, and September 30, 2017, $6,420 and $5,985, respectively, of our outstanding letters of credit was
utilized to collateralize our insurance program.
As of June 30, 2018, the estimated cost to complete our bonded projects was approximately $61,325. We evaluate our bonding requirements on a regular
basis, including the terms offered by our sureties. We believe the bonding capacity presently provided by our current sureties is adequate for our current operations and will be adequate for our operations for the foreseeable future. Posting letters
of credit in favor of our sureties reduces the borrowing availability under our credit facility.
Other Commitments and Contingencies
Some of our customers and vendors require us to post letters of credit, or provide intercompany guarantees, as a means of guaranteeing performance under our
contracts and ensuring payment by us to subcontractors and vendors. If our customer has reasonable cause to effect payment under a letter of credit, we would be required to reimburse our creditor for the letter of credit. At both June 30, 2018,
and September 30, 2017, $508 of our outstanding letters of credit were to collateralize our vendors.
From time to time, we may enter into firm
purchase commitments for materials, such as copper or aluminum wire, which we expect to use in the ordinary course of business. These commitments are typically for terms of less than one year and require us to buy minimum quantities of materials at
specific intervals at a fixed price over the term. As of June 30, 2018, we had no such commitments.
13. BUSINESS COMBINATIONS
The Company completed one acquisition in the nine
months ended June 30, 2018, for a total consideration of $6,179, which includes cash consideration paid at close of $5,806, cash consideration remaining to be paid of $125, and contingent consideration payable in July 2019 and 2020 with
aggregate acquisition date fair value estimated at of $248.