Reporting Segments

During December 2015, the Company adopted an operational realignment plan and, as a result, 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. During 2016, 2015 and 2014, IBM accounted for approximately 14%, 15% and 15%, respectively, of the Company’s consolidated revenue. In September 2016, the Company and IBM executed a new two year Master Statement of Work that extends the term until September 16, 2018. IBM may terminate the contract with or without cause at any time. On September 16, 2016, CDI completed the sale of Anders, the Company's UK staffing and recruitment business. See Note 4—Acquisition and Dispositions.

•

Specialty Talent and Technology Solutions - Specialty Talent and Technology Solutions provides clients with specialized technology talent and solutions through a multi-faceted 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 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 include 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, in particular the U.S. Navy, 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.

•

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.

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, and certain corporate assets not directly associated with the reporting segments, including certain property and equipment and certain prepaid expenses and other current assets and certain other non-current assets.

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



	Year ended December 31,
	2016			2015			2014

Revenue:
Enterprise Talent ⁽¹⁾	$	495,955		$	595,963		$	728,686
Specialty Talent and Technology Solutions⁽⁴⁾	74,931			41,430			32,145
Engineering Solutions	243,298			294,941			303,237
MRI	50,183			53,160			58,904
Total revenue	$	864,367		$	985,494		$	1,122,972

Gross profit:
Enterprise Talent ⁽¹⁾	$	56,362		$	71,928		$	88,738
Specialty Talent and Technology Solutions⁽⁴⁾	22,108			13,432			10,920
Engineering Solutions	59,210			73,391			79,184
MRI	24,440			26,150			27,715
Total gross profit	$	162,120		$	184,901		$	206,557

Operating profit (loss):
Enterprise Talent ^{(1), (2), (5)}	$	(7,504	)	$	(1,448	)	$	24,594
Specialty Talent and Technology Solutions ^{(2), (3), (4)}	(483		)	731			4,053
Engineering Solutions ^{(2), (5), (6)}	(10,238		)	(12,840		)	(12,309		)
MRI ⁽²⁾	3,980			6,012			6,531
Corporate ^{(2), (7)}	(16,238		)	(21,051		)	(17,483		)
Total operating profit (loss)	(30,483		)	(28,596		)	5,386
Other income (expense), net	(988		)	61			(228		)
Income (loss) before income taxes	$	(31,471	)	$	(28,535	)	$	5,158

⁽¹⁾On September 16, 2016, the Company completed the sale of Anders, the Company's UK staffing and recruitment business, which is included in Enterprise Talent, and recorded a charge of $11.3 million on disposition. Anders results are presented in the following table for the indicated periods (excluding allocation of corporate costs):



	Year ended December 31,
	2016			2015			2014

Revenue	$	59,302		$	104,977		$	113,691
Gross profit	9,758			17,579			19,121
Operating and administrative expenses	11,542			19,503			18,716
Impairment	—			10,653			—
Operating income (loss)	(1,784		)	(12,577		)	405


⁽²⁾	In 2016, 2015 and 2014, the Company recorded pre-tax charges of $3.8 million, $4.2 million and $3.6 million, respectively, to "Restructuring and other related costs" related to certain Restructuring Plans. The following table summarizes the amount of restructuring and other related costs recognized by reporting segment for the indicated periods:



	Year ended December 31,
	2016		2015		2014

Enterprise Talent	$	433	$	1,084	$	1,001
Specialty Talent and Technology Solutions	215		130		152
Engineering Solutions	2,690		2,153		2,092
MRI	206		—		259
Corporate	223		850		141
Restructuring and other related costs	$	3,767	$	4,217	$	3,645


⁽³⁾	In 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.


⁽⁴⁾	On October 6, 2015, the Company acquired EdgeRock, which is included in Specialty Talent and Technology Solutions.


⁽⁵⁾	In 2015, the Company recorded an aggregate charge of $21.5 million to "Impairment" related to the impairment of goodwill comprised of $10.7 million in Enterprise Talent and $10.4 million in Engineering Solutions and $0.5 million related to the impairment of certain fixed assets in Engineering Solutions.


⁽⁶⁾	In 2014, the Company's Engineering Solutions segment recorded $14.7 million of charges to "Impairment" related to the impairment of goodwill, definite-lived intangibles and other assets.


⁽⁷⁾	In 2015, the Company recorded a pre-tax gain of $0.8 million for sale of a non-operating corporate asset. Proceeds from the sale were $1.2 million.

Inter-segment activity is not significant; therefore, revenue reported for each operating segment is substantially from external customers.

Total depreciation and amortization by reporting segment is presented in the table below for the indicated periods:



	Year ended December 31,
	2016		2015		2014

Depreciation and amortization:
Enterprise Talent	$	1,070	$	1,253	$	1,038
Specialty Talent and Technology Solutions	2,632		2,483		368
Engineering Solutions	4,630		5,724		6,231
MRI	275		295		344
Corporate	1,693		1,924		2,736
Total depreciation and amortization	$	10,300	$	11,679	$	10,717

Reporting segment asset data is presented in the following table as of the indicated dates:



	December 31,
	2016		2015

Assets:
Enterprise Talent	$	102,770	$	137,695
Specialty Talent and Technology Solutions	38,505		40,127
Engineering Solutions	93,067		93,810
MRI	22,558		23,273
Corporate	32,392		44,192
Total assets	$	289,292	$	339,097

Capital expenditure data by reporting segment is presented in the table below for the indicated periods:



	Year ended December 31,
	2016		2015		2014

Purchases of property and equipment:
Enterprise Talent	$	256	$	2,046	$	2,008
Specialty Talent and Technology Solutions	266		318		635
Engineering Solutions	1,316		4,276		5,050
MRI	56		153		38
Corporate	5,697		1,147		1,043
Total purchases of property and equipment	$	7,591	$	7,940	$	8,774

The Company is domiciled in the U.S. and its reporting segments operate primarily in the U.S. and Canada, except for Enterprise Talent prior to the sale of Anders, the Company's UK staffing and recruitment business, on September 16, 2016. Revenue attributable to foreign countries is determined based on the customer’s country of domicile. Revenue and fixed assets by geographic area are presented in the tables below for the indicated periods:



	Year ended December 31,
	2016		2015		2014

Revenue:
US	$	686,526	$	738,400	$	798,285
Canada	117,712		139,068		206,410
UK	59,302		105,784		113,681
Other	827		2,242		4,596
Total revenue	$	864,367	$	985,494	$	1,122,972



	December 31,
	2016		2015

Property and equipment, net:
US	$	18,052	$	17,612
Canada	137		158
UK	—		958
Total property and equipment, net	$	18,189	$	18,728