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Costs and estimated earnings on uncompleted contracts and related amounts billed as of December 31, 2000 and 1999 were as follows (in thousands): 

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Such amounts were included in the accompanying Consolidated Balance Sheets at December 31, 2000 and 1999 under the following captions (in thousands): 

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As of December 31, 2000, costs and estimated earnings in excess of billings on uncompleted contracts included unbilled revenues for unapproved change orders of approximately $19.7 million and claims of approximately $12.8 million. In addition, accounts receivable as of December 31, 2000 includes claims and contractually billed amounts related to such contracts of approximately $20.1 million. Claims and related amounts included in accounts receivable aggregated approximately $28.3 million as of December 31, 1999. Generally, contractually billed amounts will not be paid by the customer to EMCOR until final resolution of related claims. 

## Classification of Contract Amounts 

In accordance with industry practice, EMCOR classifies as current all assets and liabilities related to the performance of long-term contracts. The contracting cycle for certain long-term contracts may extend beyond one year and, accordingly, collection or payment of amounts related to these contracts may extend beyond one year. Accounts receivable at December 31, 2000 and 1999 included $160.9 million and $128.7 million, respectively, of retainage billed under terms of the contracts. EMCOR estimates that approximately 75% of retainage recorded at December 31, 2000 will be collected during 2001. 

## Cash and Cash Equivalents 

For purposes of the consolidated financial statements, EMCOR considers all highly liquid instruments with original maturities of three months or less to be cash equivalents. EMCOR maintains a centralized cash management program whereby its excess cash balances are invested in high quality, short-term money market instruments which are considered cash equivalents. At times, cash balances in EMCOR’s bank accounts may exceed federally insured limits. 

## Inventories 

Inventories, which consist primarily of construction materials, are stated at the lower of cost or market. Cost is determined principally using average cost. 

## Investments, Notes and Other Long-Term Receivables 

Investments, notes and other long-term receivables at December 31, 2000 were $10.4 million compared to $8.2 million at December 31, 1999, and primarily consist of investments in joint ventures accounted for using the equity method of accounting. 

## Property, Plant and Equipment 

Property, plant and equipment is stated at cost. Depreciation is recorded principally using the straight-line method over estimated useful lives ranging from 3 to 40 years. 

Property, plant and equipment in the accompanying Consolidated Balance Sheets consisted of the following amounts as of December 31, 2000 and 1999 (in thousands): 

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## Goodwill 

Goodwill at December 31, 2000 and 1999, was approximately $67.6 million and $68.0 million, respectively, and reflects the excess of cost over fair market value of net identifiable assets of companies acquired in purchase transactions. Goodwill is being amortized using the straight-line method over periods ranging from 5 to 20 years. 

At the end of each quarter, EMCOR reviews events and changes in circumstances to determine whether the recoverability of the carrying value of goodwill should be reassessed. Should events or circumstances indicate that the carrying value may not be recoverable based on undiscounted future cash flows, an impairment loss measured by the difference between the discounted future cash flows (or another acceptable method for determining fair value) and the carrying value of goodwill would be recognized by EMCOR. Through December 31, 2000, no adjustment for the impairment of goodwill carrying value has been required. 

## Insurance Reserves 

EMCOR’s insurance liability is determined actuarially based on claims filed and an estimate of claims incurred but not yet reported. At December 31, 2000 and 1999, the estimated current portion of the discounted insurance liability was included in “Other accrued expenses and liabilities” in the accompanying Consolidated Balance Sheets. The non-current portion of the discounted insurance liability was included in “Other long-term obligations”. 

