NOTE 6 - CONTRACTS

9 Months Ended

Sep. 28, 2013

Contractors [Abstract]

Long-term Contracts or Programs Disclosure [Text Block]

NOTE 6 – CONTRACTS

Costs, estimated earnings and billings on uncompleted contracts consisted of the following (amounts in thousands):

	September 28, 2013			December 29,  2012
Costs incurred on uncompleted contracts	$	40,312		$	51,649
Estimated earnings (losses) on uncompleted contracts		10,199			3,216
Earned revenues		50,511			54,865
Less: billings to date		53,257			55,855
Net costs and estimated earnings in excess of billings on uncompleted contracts	$	(2,746	)	$	(990	)
Costs and estimated earnings in excess of billings on uncompleted contracts	$	1,431		$	3,840
Billings in excess of costs and estimated earnings on uncompleted contracts		(4,177	)		(4,830	)
Net billings in excess of costs and estimated earnings on uncompleted contracts	$	(2,746	)	$	(990	)

Revenue on fixed-price contracts is recorded primarily using the percentage-of-completion (cost-to-cost) method. Under this method, revenue on long-term contracts is recognized in the ratio that contract costs incurred bear to total estimated contract costs. Revenue and gross margin on fixed-price contracts are subject to frequent review and revision throughout the lives of the contracts and any required adjustments are made in the period in which the revisions become known. Pursuant to Company policy, fixed price contracts in excess of $250,000 are afforded a cost contingency component applied at the beginning of the project based on a tiered rate calculation.  As a project surpasses 70% completion, the contingency is released on a pro-rata basis over the final 30% of the life of the project.  In the event that a review indicates a project has experienced cost overruns, the contingency is also used to offset those overruns.  When recognized, cost contingencies increase the cost of sales and reduce the gross margin of those fixed-price contracts.  To manage unknown risks, management may use contingency amounts to increase the estimated costs, therefore, lowering the earned revenues until the risks are better identified and quantified or have been mitigated. Losses on contracts are recorded in full as they are identified.

The Company recognizes service revenue as soon as the services are performed. For clients that we consider higher risk, due to past payment history or history of not providing written work authorizations, we defer revenue recognition until we receive either a written authorization or a payment. The current amount of revenue deferred for these reasons is approximately $0.1 million as of September 28, 2013, compared to $1.2 million as of December 29, 2012. We expect a majority of the deferred revenue to be realized by year end 2013.