Reportable Segments

9 Months Ended

Jul. 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 calendar 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 first nine months of fiscal 2017, our Corporate segment operating losses include gains of $7.1 million related to changes in the estimated fair value of contingent earn-out liabilities, compared to losses of $2.8 million in the same periods last year. Additionally, the Corporate segment operating losses in the third quarter and first nine months of fiscal 2016 include $1.0 million and $16.9 million of acquisition and integration expenses, respectively, as described in Note 3.

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

Reportable Segments

	Three Months Ended				Nine Months Ended
	July 2, 2017		June 26, 2016		July 2, 2017		June 26, 2016
	(in thousands)
Revenue
WEI	$	279,621	$	264,729	$	835,687	$	731,120
RME	417,452		414,872		1,232,352		1,134,538
RCM	4,192		5,202		12,401		36,781
Elimination of inter-segment revenue	(15,726)		(17,934)		(62,269)		(47,478)
Total revenue	$	685,539	$	666,869	$	2,018,171	$	1,854,961
Operating Income (Loss)
WEI	$	28,821	$	25,206	$	76,084	$	61,627
RME	27,308		26,882		83,648		79,802
RCM	(1,251)		(4,023)		(12,759)		(9,691)
Corporate (1)	(8,994)		(8,980)		(18,278)		(43,071)
Total operating income	$	45,884	$	39,085	$	128,695	$	88,667
Depreciation
WEI	$	1,151	$	1,223	$	3,515	$	3,594
RME	3,823		4,113		11,270		11,818
RCM	124		183		775		560
Corporate	247		393		800		1,211
Total depreciation	$	5,345	$	5,912	$	16,360	$	17,183

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

	July 2, 2017		October 2, 2016
	(in thousands)
Total Assets
WEI	$	315,189	$	308,438
RME	541,885		522,895
RCM	34,869		39,107
Corporate (1)	927,781		930,339
Total assets	$	1,819,724	$	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.  In the three and nine month periods ended July 2, 2017, 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				Nine Months Ended
	July 2, 2017		June 26, 2016		July 2, 2017		June 26, 2016
	(in thousands)
Client Sector
U.S. federal government (1)	$	224,343	$	203,663	$	665,086	$	546,700
International (2)	178,415		194,616		547,986		537,324
U.S. state and local government	83,716		74,501		250,392		214,302
U.S. commercial	199,065		194,089		554,707		556,635
Total	$	685,539	$	666,869	$	2,018,171	$	1,854,961

(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.