Reporting Segments

During December 2015, the Company adopted a plan to deliver improved performance and efficiencies through increased strategic focus and operational realignment. As a result of this realignment, certain historical segment financial information has been reclassified to conform to the current period segment presentation that became effective during the first quarter of 2016. This reclassification did not impact any previously reported consolidated revenues, gross profit or results of operations.

The Company's reporting segments are as follows:

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Enterprise Talent - Enterprise Talent provides staff augmentation, placement and other staffing-related services to support its clients’ access to engineering and technology personnel on a temporary or permanent basis. Enterprise Talent focuses on delivering its services to medium and larger sized enterprises that have ongoing needs for skilled and technical labor. The duration of individual client engagements can range from several months to multiple years based on a client’s project, seasonal or business cycle needs. In addition, Enterprise Talent offers enterprise clients managed staffing program services, vendor management solutions, certification management solutions, and recruitment process outsourcing solutions. Enterprise Talent currently operates in North America under the CDI^® brand name and in the United Kingdom under the AndersElite^® brand name.

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Specialty Talent and Technology Solutions - Specialty Talent and Technology Solutions provides clients with specialized technology talent and solutions through a flexible delivery model that spans staff augmentation and placement services, project execution and management services, and outsourced managed services. Specialty Talent, currently comprised entirely of EdgeRock, provides staff augmentation services focused on highly specialized information technology skillsets, including enterprise resource planning, business intelligence, analytics, infrastructure and application management and development. Technology Solutions provides a range of information technology professional services in a consult, integrate and operate model. These services include IT strategy and consulting, assessments, execution of IT infrastructure and IT engineering solutions, business application solutions, digital marketing services, service management, quality assurance and testing, and program management.

•

Engineering Solutions - Engineering Solutions provides engineering design, as well as complete physical asset and product delivery solutions for its clients. Engineering design principally involves the production of construction and/or technical documentation and specifications performed at a CDI facility or at a client's facility under the supervision of CDI personnel. Complete physical asset and product delivery solutions involve services that manage the integration of all supply chain contributors to a new or upgraded industrial production or infrastructure asset, naval asset or in support of aerospace and industrial original equipment manufacturers. Engineering Solutions is organized around the following business verticals: Energy, Chemicals and Infrastructure (EC&I), Aerospace and Industrial Equipment (AIE) and Government Services.


◦	EC&I serves producers and operators of energy, chemicals, industrial, education and civil infrastructures with a full range of engineering solutions. Specific services including up-front planning, engineering design, industrial and commercial architecture, design/build, transportation and civil engineering, site services, procurement, construction management, start up and commissioning.


◦	AIE serves commercial and defense aviation, as well as industrial original equipment manufacturers, with design and manufacturing engineering services, including mechanical and electrical systems design, drafting, engineering analysis, software design and verification, validation and testing, and tooling design and development.


◦	Government Services primarily serves the U.S. Department of Defense and the U.S. Navy, in particular, with a variety of design and engineering services, including naval architecture, ship alteration, systems modification and installation, technical documentation and training, logistics management, marine manufacturing and aviation engineering.

Within each of the verticals, Engineering Solutions provides these solutions through a services delivery model consisting of skill-based centers of excellence, together with regional offices to serve more localized project or client needs.

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Management Recruiters International (MRI) - MRI is a global franchisor that does business as MRINetwork^® and provides the use of its trademarks, business systems and training and support services to its franchisees, who engage in the search and recruitment of executive, technical, professional and managerial personnel for employment by their clients. The MRI franchisees provide permanent placement services primarily under the brand names MRINetwork^®, Management Recruiters^®and Sales Consultants^®. MRI also provides training and support, implementation and back-office services to enable franchisees to pursue contract staffing opportunities.

Inter-segment revenue is eliminated in consolidation and is not significant. For purposes of performance measurement, the Company charges certain expenses directly attributable to the reporting segments and allocates certain other expenses and support costs. Support costs consist principally of employee benefits administration, accounting support, IT services and shared service center costs. Operating and administrative expenses that are not directly attributable to the reporting segments are classified as corporate. Identifiable assets of the reporting segments exclude corporate assets. Corporate assets consist principally of all cash and cash equivalents, all current and deferred income tax assets, certain prepaid expenses, other current assets, certain property and equipment and certain other non-current assets.

Reporting segment operations data is presented in the following table for the indicated periods:



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2016			2015			2016			2015

Revenue:
Enterprise Talent	$	133,480		$	149,392		$	273,129		$	310,818
Specialty Talent and Technology Solutions ⁽¹⁾	19,129			7,901			37,522			15,591
Engineering Solutions	61,153			76,536			124,407			151,367
MRI	12,931			12,992			25,159			26,503
Total revenue	$	226,693		$	246,821		$	460,217		$	504,279

Gross profit:
Enterprise Talent	$	15,434		$	18,326		$	31,915		$	37,586
Specialty Talent and Technology Solutions ⁽¹⁾	5,510			2,595			10,822			5,157
Engineering Solutions	14,776			19,254			30,253			37,633
MRI	6,375			6,472			12,380			13,041
Total gross profit	$	42,095		$	46,647		$	85,370		$	93,417

Operating profit (loss):
Enterprise Talent	$	(458	)	$	3,093		$	677		$	7,269
Specialty Talent and Technology Solutions ^{(1), (2)}	(436		)	444			9			1,169
Engineering Solutions ⁽³⁾	(2,943		)	907			(4,878		)	510
MRI	1,081			1,574			1,664			3,030
Corporate	(3,704		)	(4,815		)	(7,753		)	(9,635		)
Total operating profit (loss)	(6,460		)	1,203			(10,281		)	2,343
Other income (expense), net	(452		)	(97		)	(601		)	(84		)
Income (loss) before income taxes	$	(6,912	)	$	1,106		$	(10,882	)	$	2,259


⁽¹⁾	On October 6, 2015, the Company acquired EdgeRock, which is included in Specialty Talent and Technology Solutions.


⁽²⁾	In the first quarter of 2016, the Company's Specialty Talent and Technology Solutions segment recorded a benefit to "Operating and administrative expenses" of $0.8 million related to the reversal of the EdgeRock acquisition earnout liability.


⁽³⁾	In the first quarter of 2015, the Company's Engineering Solutions segment recorded a charge of $0.3 million related to the loss on disposition of the Company's controlling interest in a Mexico-based engineering design company.

Reporting segment asset data is presented in the following table for the indicated periods:



	June 30,		December 31,
	2016		2015

Assets:
Enterprise Talent	$	145,772	$	137,695
Specialty Talent and Technology Solutions	38,305		40,127
Engineering Solutions	96,511		93,810
MRI	21,943		23,273
Corporate	37,500		44,192
Total assets	$	340,031	$	339,097

Reporting segment depreciation and amortization data is presented in the following table for the indicated periods:



	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2016		2015		2016		2015

Depreciation and amortization:
Enterprise Talent	$	315	$	274	$	631	$	666
Specialty Talent and Technology Solutions ⁽¹⁾	652		73		1,654		145
Engineering Solutions	1,197		1,505		2,468		3,016
MRI	66		80		132		162
Corporate	395		518		822		1,023
Total Depreciation and amortization	$	2,625	$	2,450	$	5,707	$	5,012


⁽¹⁾	On October 6, 2015, the Company acquired EdgeRock, which is included in Specialty Talent and Technology Solutions.