Reportable Segments

6 Months Ended

Apr. 01, 2012

Reportable Segments

Reportable Segments

9.Reportable Segments

In the first quarter of fiscal 2012, we implemented organizational changes that resulted in a realignment of certain operating activities in our reportable segments.  This realignment resulted from the organic growth of new activities in a component of an existing reportable segment due to changing business conditions.  These activities are not regularly reviewed by our Chief Operating Decision Maker (“CODM”) to assess performance or make decisions about the resources to be allocated to them and do not meet the definition of a reportable operating segment.  The changes are intended to improve organizational effectiveness and efficiency by better aligning operations with similar characteristics such as client types, project types, required resources and financial metrics. Prior year amounts have been reclassified to conform to the current year presentation.

Our reportable segments are as follows:

Engineering and Consulting Services (“ECS”).  ECS provides front-end science, consulting engineering services and project management in the areas of surface water management, groundwater, waste management, mining and geotechnical sciences, arctic engineering, industrial processes, and information technology.

Technical Support Services (“TSS”).  TSS advises clients through the study, design and implementation phases of projects. TSS provides management consulting and strategic direction in the areas of environmental assessments/hazardous waste management, climate change, international development/stabilization, energy services, and technical government staffing services.

Engineering and Architecture Services (“EAS”).  EAS provides engineering and architecture design services, including Leadership in Energy and Environmental Design (“LEED”) and sustainability services, together with technical and program administration services for projects related to water infrastructure, buildings, and transportation and facilities.

Remediation and Construction Management (“RCM”).  RCM is focused on providing full-service support to U.S. federal government, U.S. state and local governments, and U.S. commercial clients.  RCM’s service lines include environmental remediation, construction management, infrastructure development, and alternative energy.

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.

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

Reportable Segments

	ECS		TSS		EAS		RCM		Total
	(in thousands)
Three months ended April 1, 2012:
Revenue	$	251,486	$	224,001	$	79,788	$	117,414	$	672,689
Segment operating income	18,022		17,063		5,413		3,999		44,497
Three months ended April 3, 2011:
Revenue	$	225,958	$	200,642	$	73,659	$	134,921	$	635,180
Segment operating income	17,771		13,458		5,163		1,801		38,193
Six months ended April 1, 2012:
Revenue	$	497,149	$	452,832	$	161,422	$	278,171	$	1,389,574
Segment operating income	37,514		32,565		9,817		9,889		89,785
Six months ended April 3, 2011:
Revenue	$	431,348	$	423,947	$	141,642	$	279,485	$	1,276,422
Segment operating income	36,072		29,247		9,907		4,912		80,138

Total assets by segment were as follows:

	April 1,2012		October 2,2011
	(in thousands)
ECS	$	808,139	$	767,347
TSS	542,378		505,198
EAS	114,592		111,555
RCM	278,981		296,361
Total assets	$	1,744,090	$	1,680,461

Reconciliations

	Three Months Ended				Six Months Ended
	April 1,2012		April 3,2011		April 1,2012		April 3,2011
	(in thousands)
Revenue
Revenue from reportable segments	$	672,689	$	635,180	$	1,389,574	$	1,276,422
Elimination of inter-segment revenue	(48,344)		(22,614)		(82,602)		(52,732)
Total consolidated revenue	$	624,345	$	612,566	$	1,306,972	$	1,223,690
Operating Income
Segment operating income	$	44,497	$	38,193	$	89,785	$	80,138
Amortization of intangibles	(6,917)		(6,942)		(15,182)		(13,723)
Other expense(1)	(2,037)		(1,995)		(2,968)		(2,834)
Total consolidated operating income	$	35,543	$	29,256	$	71,635	$	63,581
(1)   Other expense includes corporate costs not allocable to segments.

	April 1,2012		October 2,2011
	(in thousands)
Assets
Total assets of reportable segments	$	1,744,090	$	1,680,461
Assets not allocated to segments and intercompany eliminations(1)	(168,006)		(86,473)
Total consolidated assets	$	1,576,084	$	1,593,988
(1)   Assets not allocated to segments include goodwill, other 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.  All of our segments generated revenue from all client sectors.

The following table represents our revenue by client sector:

	Three Months Ended				Six Months Ended
	April 1,2012		April 3,2011		April 1,2012		April 3,2011
	(in thousands)
Client Sector
International(1)	$	154,781	$	150,024	$	314,713	$	276,581
U.S. commercial	142,438		112,072		319,868		247,207
U.S. federal government(2)	252,709		284,510		524,116		568,030
U.S. state and local government	74,417		65,960		148,275		131,872
Total	$	624,345	$	612,566	$	1,306,972	$	1,223,690
(1)  Includes revenue generated from our foreign operations, primarily in Canada, and revenue generated from non-U.S. clients.
(2)  Includes revenue generated under U.S. government contracts performed outside the United States.