Receivables, net



(in thousands)	September 30, 2013		December 31, 2012		September 30, 2012
Construction contracts:
Completed and in progress	$	275,182	$	195,244	$	228,865
Retentions	76,114		93,800		68,590
Total construction contracts	351,296		289,044		297,455
Construction material sales	55,466		26,918		59,396
Other	18,412		12,316		9,029
Total gross receivables	425,174		328,278		365,880
Less: allowance for doubtful accounts	2,565		2,749		2,425
Total net receivables	$	422,609	$	325,529	$	363,455

Receivables include amounts billed and billable to clients for services provided and/or according to contract terms as of the end of the applicable period and do not bear interest. Certain contracts include provisions that permit us to submit invoices in advance of providing services and, to the extent not collected, they are included in receivables. Other contracts include provisions that permit us to submit invoices based on the passage of time, achievement of milestones or completion of the project. To the extent the related costs have not been billed, the contract balance is included in costs and estimated earnings in excess of billings on the condensed consolidated balance sheets.

Certain construction contracts include retainage provisions. The balances billed but not paid by customers pursuant to these provisions generally become due upon completion and acceptance of the contract by the owners. As of September 30, 2013, substantially all of the retentions receivable are expected to be collected within one year. Included in other receivables at September 30, 2013, December 31, 2012 and September 30, 2012 were items such as notes receivable, fuel tax refunds and income tax refunds. No such receivables individually exceeded 10% of total net receivables at any of these dates.

Financing receivables consisted of long-term notes receivable and retentions receivable. As of September 30, 2013, December 31, 2012 and September 30, 2012 long-term notes receivable outstanding were $1.5 million, $2.0 million and $1.9 million, respectively, and primarily related to loans made to employees and were included in other noncurrent assets in our condensed consolidated balance sheets.

We segregate our retention receivables into two categories: escrow and non-escrow. The balances in each category were as follows:



(in thousands)	September 30, 2013		December 31, 2012		September 30, 2012
Escrow	$	23,794	$	41,494	$	42,297
Non-escrow	52,320		52,306		26,293
Total retention receivables	$	76,114	$	93,800	$	68,590

The escrow receivables include amounts due to Granite which have been deposited into an escrow account and bear interest. Typically, escrow retention receivables are held until work on a project is complete and has been accepted by the owner who then releases those funds, along with accrued interest, to us. There is minimal risk of not collecting on these amounts.

Non-escrow retention receivables are amounts that the project owner has contractually withheld that are to be paid upon owner acceptance of contract completion. We evaluate our non-escrow retention receivables for collectibility using certain customer information that includes the following:


•	Federal - includes federal agencies such as the Bureau of Reclamation, the Army Corp of Engineers, and the Bureau of Indian Affairs. The obligations of these agencies are backed by the federal government. Consequently, there is minimal risk of not collecting the amounts we are entitled to receive.


•	State - primarily state departments of transportation. The risk of not collecting on these accounts is low; however, we have experienced occasional delays in payment as states have struggled with budget issues.


•	Local - these customers include local agencies such as cities, counties and other local municipal agencies. The risk of not collecting on these accounts is low; however, we have experienced occasional delays in payment as some local agencies have struggled to deal with budget issues.

•

Private - includes individuals, developers and corporations. The majority of our collection risk is associated with these customers. We perform ongoing credit evaluations of our customers and generally do not require collateral, although the law provides us certain remedies, including, but not limited to, the ability to file mechanics’ liens on real property improved for private customers in the event of non-payment by such customers.

The following table summarizes the amount of our non-escrow retention receivables within each category:



(in thousands)	September 30, 2013		December 31, 2012		September 30, 2012
Federal	$	5,161	$	3,234	$	2,569
State	3,444		2,971		3,595
Local	35,003		31,559		12,003
Private	8,712		14,542		8,126
Total	$	52,320	$	52,306	$	26,293

We regularly review our accounts receivable, including past due amounts, to determine their probability of collection. If it is probable that an amount is uncollectible, it is charged to bad debt expense and a corresponding reserve is established in allowance for doubtful accounts. If it is deemed certain that an amount is uncollectible, the amount is written off. Based on contract terms, non-escrow retention receivables are typically due within 60 days of owner acceptance of contract completion. We consider retention amounts beyond 60 days of owner acceptance of contract completion to be past due. The following tables present the aging of our non-escrow retention receivables (in thousands):



September 30, 2013	Current		1 - 90 Days Past Due		Over 90 Days Past Due		Total
Federal	$	4,121	$	237	$	803	$	5,161
State	1,685		368		1,391		3,444
Local	24,845		2,924		7,234		35,003
Private	5,238		968		2,506		8,712
Total	$	35,889	$	4,497	$	11,934	$	52,320



December 31, 2012	Current		1 - 90 Days Past Due		Over 90 Days Past Due		Total
Federal	$	3,116	$	72	$	46	$	3,234
State	2,148		502		321		2,971
Local	25,743		1,082		4,734		31,559
Private	13,310		716		516		14,542
Total	$	44,317	$	2,372	$	5,617	$	52,306



September 30, 2012	Current		1 - 90 Days Past Due		Over 90 Days Past Due		Total
Federal	$	2,012	$	—	$	557	$	2,569
State	3,177		239		179		3,595
Local	11,141		555		307		12,003
Private	7,495		321		310		8,126
Total	$	23,825	$	1,115	$	1,353	$	26,293

Federal, state and local agencies generally require several approvals to release payments, and these approvals often take over 90 days past contractual due dates to obtain. Amounts past due from government agencies primarily result from delays caused by paperwork processing and obtaining proper agency approvals rather than lack of funds, as was the case with the majority of local agencies with past due balances as of September 30, 2013. We generally receive payment within one year of owner acceptance. As of September 30, 2013, December 31, 2012 and September 30, 2012, our allowance for doubtful accounts contained no material provision related to non-escrow retention receivables as we determined there were no significant collectibility issues.