Reportable Segments

6 Months Ended

Apr. 02, 2017

Reportable Segments

Reportable Segments

10.           Reportable Segments

Our reportable segments are described as follows:

WEI:  WEI provides consulting and engineering services worldwide for a broad range of water and infrastructure-related needs in both developed and emerging economies.  WEI supports both public and private clients including federal, state/provincial, and local governments, and global and local commercial clients.  The primary markets for WEI’s services include water resources analysis and water management, environmental restoration, government consulting, and a broad range of civil infrastructure master planning and engineering design for facilities, transportation, and regional and local development.  WEI’s services span from early data collection and monitoring, to data analysis and information technology, to science and engineering applied research, to engineering design, to construction management and operations and maintenance.

RME:  RME provides consulting and engineering services worldwide for a broad range of resource management and energy needs.  RME supports both private and public clients, including global industrial and commercial clients, U.S. federal agencies in large scale remediation, and major international development agencies.  The primary markets for RME’s services include natural resources, energy, international development, remediation, waste management and utilities.  RME’s services span from early data collection and monitoring, to data analysis and information technology, to science and engineering applied research, to engineering design, to construction management and operations and maintenance.  RME also supports engineering, procurement and construction management (“EPCM”) for full service implementation of commercial projects.

RCM:  We report the results of the wind-down of our non-core construction activities in the RCM reportable segment.  The remaining work to be performed in this segment will be substantially completed in fiscal 2017.

Management evaluates the performance of these reportable segments based upon their respective segment operating income before the effect of amortization expense related to acquisitions, and other unallocated corporate expenses.  We account for inter-segment sales and transfers as if the sales and transfers were to third parties; that is, by applying a negotiated fee onto the costs of the services performed.  All significant intercompany balances and transactions are eliminated in consolidation.

In the second quarter and first half of fiscal 2017, our Corporate segment operating losses reflect gains of $7.1 million related to changes in the estimated fair value of contingent earn-out liabilities in both periods, compared to losses of $1.8 million and $2.8 million, respectively, in the same periods last year.  Additionally, the Corporate segment operating losses in the second quarter and first half of fiscal 2016 include $15.9 million of acquisition and integration expenses (all in the second quarter) as described in Note 3.

The following tables set forth summarized financial information regarding our reportable segments:

Reportable Segments

	Three Months Ended				Six Months Ended
	April 2, 2017		March 27, 2016		April 2, 2017		March 27, 2016
	(in thousands)
Revenue
WEI	$	268,931	$	226,008	$	556,067	$	466,391
RME	418,878		403,949		814,900		719,666
RCM	(23)		10,753		8,209		31,579
Elimination of inter-segment revenue	(24,005)		(13,326)		(46,544)		(29,544)
Total revenue	$	663,781	$	627,384	$	1,332,632	$	1,188,092
Operating Income (Loss)
WEI	$	22,284	$	16,391	$	47,263	$	36,420
RME	29,607		27,477		56,341		52,920
RCM	(8,466)		(386)		(11,508)		(5,668)
Corporate (1)	(469)		(26,832)		(9,285)		(34,091)
Total operating income	$	42,956	$	16,650	$	82,811	$	49,581
Depreciation
WEI	$	1,200	$	1,203	$	2,364	$	2,371
RME	3,800		4,171		7,447		7,705
RCM	496		185		651		377
Corporate	268		409		553		818
Total depreciation	$	5,764	$	5,968	$	11,015	$	11,271

(1) Includes amortization of intangibles, other costs, and other income not allocable to our reportable segments.

	April 2, 2017		October 2, 2016
	(in thousands)
Total Assets
WEI	$	307,840	$	308,438
RME	518,588		522,895
RCM	32,753		39,107
Corporate (1)	939,188		930,339
Total assets	$	1,798,369	$	1,800,779

(1)      Corporate assets consist of assets not allocated to our reportable segments including goodwill, intangible assets, deferred income taxes and certain other assets.

Major Clients

Other than the U.S. federal government, no single client accounted for more than 10% of our revenue.  WEI and RME generated revenue from all client sectors, while RCM generated revenue from the U.S. federal government and U.S. state and local client sectors.

The following table represents our revenue by client sector:

	Three Months Ended				Six Months Ended
	April 2, 2017		March 27, 2016		April 2, 2017		March 27, 2016
	(in thousands)
Client Sector
U.S. federal government (1)	$	218,110	$	178,015	$	440,744	$	343,037
International (2)	197,114		206,902		369,571		342,708
U.S. state and local government	83,181		68,086		166,676		139,802
U.S. commercial	165,376		174,381		355,641		362,545
Total	$	663,781	$	627,384	$	1,332,632	$	1,188,092

(1) Includes revenue generated under U.S. federal government contracts performed outside the United States.

(2) Includes revenue generated from foreign operations, primarily in Canada and Australia, and revenue generated from non-U.S. clients.