4.	Accounts Receivable, Transit Accounts Receivable and Transit Accounts Payable

The Company’s accounts receivable are comprised as follows:

	September 28, 2019			December 29, 2018
Billed	$	25,889		$	32,323
Accrued and unbilled		17,191			10,383
Work-in-progress		3,758			2,252
Accounts receivable subject to arbitration		12,177			8,820
Allowance for sales discounts and doubtful accounts		(1,545	)		(1,443	)

Accounts receivable, net	$	57,470		$	52,335

Unbilled receivables primarily represent revenue earned whereby those services are ready to be billed as of the balance sheet ending date. Work-in-progress primarily represents revenue earned under contracts which the Company contractually invoices at future dates.

From time to time, the Company’s Engineering segment enters into agreements to provide, among other things, construction management and engineering services. Pursuant to these agreements, the Company a)

may

engage subcontractors to provide construction or other services; b) typically earns a fixed percentage of the total project value; and c) assumes

ownership or risks of inventory. Under the terms of the agreements, the Company is typically

not

required to pay the subcontractor until after the corresponding payment from the Company’s end-client is received. Upon invoicing the end-client on behalf of the subcontractor or staffing agency the Company records this amount simultaneously as both a “transit account receivable” and “transit account payable” as the amount when paid to the Company is due to and generally paid to the subcontractor within a few days. The Company typically does

not

pay a given transit account payable until the related transit account receivable is collected. The Company is typically obligated to pay the subcontractor or staffing agency whether or

not

the client pays the Company. The Company’s transit accounts payable generally exceeds the Company’s transit accounts receivable but absolute amounts and spreads fluctuate significantly from quarter to quarter in the normal course of business. The transit accounts receivable was

$3.7

million and related transit accounts payable was

$4.5

million, for a net payable of

$0.8

million, as of

September 28, 2019.

The transit accounts receivable was

$2.6

million and related transit accounts payable was

$2.5

million, for a net receivable of

$0.1

million, as of

December 29, 2018.

The Company has a dispute with a customer that is a major utility in the United States. Both parties agreed in fiscal

2017

to resolve this dispute through binding arbitration. Arbitration hearings with this customer started in fiscal

2018.

Essentially, the customer has

not

paid the balance of accounts receivable the Company believes are owed for certain disputed projects. As of

September 28, 2019

and

December 29, 2018,

the total amount of outstanding receivables from this customer on these disputed projects was

$12.2

million and

$8.9

million, respectively, subject to potential upward adjustment in damages claimed in arbitration. Additionally, as part of the arbitration process, the customer has asserted counter-claims. While the total amount of asserted counter-claims is unknown as of

September 28, 2019,

the total amount of such counter-claims is anticipated to be at least

$10.3

million. The Company believes these counter-claims are retaliatory in nature. Prior to the Company asserting its claims, the customer had

not

asserted any counter-claims. The Company believes these counter-claims asserted by its customer have

merit and were merely asserted as a strategy to reduce the Company’s own claims in any arbitration award or potential settlement agreement. The Company believes that its accounts receivable balance, subject to reserves, is fully collectible. Furthermore, the Company believes that this arbitration will conclude prior to reporting its fiscal

2019

financial results. While the Company believes the customer’s counter-claims to be frivolous and without merit, it can give

assurances that it will ultimately

not

have to pay all or a portion of such counter-claims. The Company is continuing work on

one

of the engagements that have given rise to this dispute and also on several engagements from the same client that are

not

currently part of the arbitration.