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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q/A
(Amendment No. 1)
(Mark One)
[X] QUARTERLY REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended DECEMBER 29, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________ to ___________________
Commission File Number 0-19655
TETRA TECH, INC.
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(Exact name of registrant as specified in its charter)
Delaware 95-4148214
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification number)
670 N. Rosemead Boulevard, Pasadena, California 91107
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(Address of principal executive offices)
(626) 351-4664
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter periods that
the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes X No
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As of June 23, 1997, the total number of outstanding shares of the
Registrant's Common Stock was 16,259,169.
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The undersigned Registrant hereby amends the following items of its
Quarterly Report on Form 10-Q for the quarter ended December 29, 1996, as set
forth below:
PART I. FINANCIAL INFORMATION
1. The Registrant hereby amends the Risk Factor entitled "Potential
Liability and Insurance" to read in full as follows:
Potential Liability and Insurance. Because of the type of environmental
projects in which the Company is or may be involved, the Company's current and
anticipated future services may involve risks of potential liability under
Superfund, common law or contractual indemnification agreements. The Company is
involved in numerous environmental and hazardous waste projects. These projects,
and the associated risks, range in both size and complexity. The risk factors
include, but are not limited to, location; site characteristics; past, present
and future uses; and political, legal and economic environments. Such factors
make it difficult to assess accurately both the areas and magnitude of potential
risks.
The Company maintains comprehensive general liability insurance in the
amount of $1,000,000. This amount, together with $9,000,000 coverage under
umbrella policies, provide total general liability coverage of $10,000,000. The
Company's professional liability insurance ("E&O") policy, which includes
pollution coverage, for 1997 provides $10,000,000 in coverage, with a $100,000
self-insured retention. The Company procures insurance coverage through a broker
who is experienced in the engineering field. The broker, together with the
Company's Risk Manager, review the Company's risk/insurance programs with those
of the Company's competitors and clients. This review, combined with historical
experience, claims history and contractual requirements, allow the Company to
determine the adequate amount of insurance. However, because there are various
exclusions and retentions under the Company's insurance policies, there can be
no assurance that all liabilities that may be incurred by the Company are
subject to insurance coverage. In addition, the E&O policy is a "claims made"
policy which only covers claims made during the term of the policy. If a policy
terminates and retroactive coverage is not obtained, a claim subsequently made,
even a claim based on events or acts which occurred during the term of the
policy, would not be covered by the policy. In the event the Company expands its
services into new markets, no assurance can be given that the Company will be
able to obtain insurance coverage for such activities or, if insurance is
obtained, that the dollar amount of any liabilities incurred in connection with
the performance of such services will not exceed policy limits.
The Company evaluates and determines the risk associated with an uninsured
claim. In the event the Company determines that an uninsured claim has potential
liability, the Company establishes an appropriate reserve. The Company does not
establish a reserve if its determines that the claim has no merit. The Company's
historical levels of insurance coverage and reserves have been shown to be
adequate. However, a partially or completely uninsured claim, if successful and
of significant magnitude, could have a material adverse effect on the Company.
2. The Registrant hereby amends the Risk Factor entitled "Contracts" to
read in full as follows:
Contracts. The Company's contracts with Federal and State governments and
some of its other client contacts are subject to termination at the discretion
of the client. Some contracts made with the Federal government are subject to
annual approval of funding and audits of the Company's rates. Limitations
imposed on spending by Federal government agencies may limit the continued
funding of the
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Company's existing contracts with the Federal government and may limit the
Company's ability to obtain additional contracts. These limitations, if
significant, could have a material adverse effect on the Company.
All of the Company's contracts with the Federal government are subject to
audit by the government, primarily by the Defense Contract Audit Agency (the
"DCAA"), which reviews the Company's overhead rates, operating systems and cost
proposals. During the course of its audit, the DCAA may disallow costs if it
determines that the Company improperly accounted for such costs in a manner
inconsistent with Cost Accounting Standards. A disallowance of costs by the DCAA
could have a material adverse effect on the Company. The Company's government
contracts are also subject to renegotiation of profits in the event of a change
in the contractual scope of work to be performed.
The Company enters into various types of contracts with its clients, which
include fixed-price contracts. In fiscal 1996, 17.1% of the Company's net
revenue was derived from fixed-price contracts. Under a fixed-price contract,
the customer agrees to pay a specified price for the Company's performance of
the entire contract. Fixed-price contracts carry certain inherent risks,
including risks of losses from underestimating costs, problems with new
technologies and economic and other changes that may occur over the contract
period. Losses under fixed-price contracts could have a material adverse effect
on the Company.
PART II. OTHER INFORMATION
The Registrant hereby amends Item 6 to read in full as follows:
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
3.1 Restated Certificate of Incorporation of the Company, as
amended to date (incorporated herein by reference to
Exhibit 3.1 to the Company's Annual Report on Form 10-K for
the fiscal year ended October 1, 1995).
3.2 Bylaws of the Company, as amended to date (incorporated
herein by reference to Exhibit 3.2 to the Company's
Registration Statement on Form S-1, No. 33-43723).
10.1 Credit Agreement dated as of September 15, 1995 between the
Company and Bank of America Illinois, as amended by the
First Amendment to Credit Agreement dated as of November
27, 1995 (incorporated herein by reference to Exhibit 10.1
to the Company's Annual Report on Form 10-K for the fiscal
year ended October 1, 1995).
10.2 Security Agreement dated as of September 15, 1995 among the
Company, GeoTrans, Inc., Simons Li & Associates, Inc.,
Hydro-Search, Inc., PRC Environmental Management, Inc. and
Bank of America Illinois (incorporated herein by reference
to Exhibit 10.2 to the Company's Annual Report on Form 10-K
for the fiscal year ended October 1, 1995).
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10.3 Pledge Agreement dated as of September 15, 1995 between the
Company and Bank of America Illinois (incorporated herein
by reference to Exhibit 10.3 to the Company's Annual Report
on Form 10-K for the fiscal year ended October 1, 1995).
10.4 Guaranty dated as of September 15, 1995, executed by the
Company in favor of Bank of America Illinois (incorporated
herein by reference to Exhibit 10.4 to the Company's Annual
Report on Form 10-K for the fiscal year ended October 1,
1995).
*10.5 Architect-Engineer Contract No. N62474-88-R-5086 dated as
of June 6, 1989 between PRC Environmental Management, Inc.
(a subsidiary of the Company) and the Western Division,
Naval Facilities Engineering Command (incorporated herein
by reference to Exhibit 10.5 to the Company's Annual Report
on Form 10-K/A (Amendment No. 1) for the fiscal year ended
September 29, 1996).
10.6 1989 Stock Option Plan dated as of February 1, 1989
(incorporated herein by reference to Exhibit 10.13 to the
Company's Registration Statement on Form S-1, No. 33-
43723).
10.7 Form of Incentive Stock Option Agreement executed by the
Company and certain individuals in connection with the
Company's 1989 Stock Option Plan (incorporated herein by
reference to Exhibit 10.14 to the Company's Registration
Statement on Form S-1, No. 33-43723).
10.8 Executive Medical Reimbursement Plan (incorporated herein
by reference to Exhibit 10.16 to the Company's Registration
Statement on Form S-1, No. 33-43723).
10.9 1992 Incentive Stock Plan (incorporated herein by reference
to Exhibit 10.18 to the Company's Annual Report on Form 10-
K for the fiscal year ended October 3, 1993).
10.10 Form of Incentive Stock Option Agreement used by the
Company in connection with the Company's 1992 Incentive
Stock Plan (incorporated herein by reference to Exhibit
10.19 to the Company's Annual Report on Form 10-K for the
fiscal year ended October 3, 1993).
10.11 1992 Stock Option Plan for Nonemployee Directors
(incorporated herein by reference to Exhibit 10.20 to the
Company's Annual Report on Form 10-K for the fiscal year
ended October 3, 1993).
10.12 Form of Nonqualified Stock Option Agreement used by the
Company in connection with the Company's 1992 Stock Option
Plan for Nonemployee Directors (incorporated herein by
reference to Exhibit 10.21 to the Company's Annual Report
on Form 10-K for the fiscal year ended October 3, 1993).
10.13 1994 Employee Stock Purchase Plan (incorporated herein by
reference to Exhibit 10.22 to the Company's Annual Report
on Form 10-K for the fiscal year ended October 2, 1994).
10.14 Form of Stock Purchase Agreement used by the Company in
connection with the Company's 1994 Employee Stock Purchase
Plan (incorporated herein by reference to Exhibit 10.23 to
the Company's Annual Report on Form 10-K for the fiscal
year ended October 2, 1994).
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11 Computation of Net Income Per Common Share.
27 Financial Data Schedule (incorporated herein by reference
to Exhibit 27 to the Company's Quarterly Report on Form 10-
Q for the fiscal quarter ended December 29, 1996).
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* Certain portions of this Exhibit were omitted from the copies filed as part
of the Annual Report on Form 10-K/A (Amendment No. 1). Complete copies of
this Exhibit were filed separately, together with an application to obtain
confidential treatment with respect thereto.
(b) No Report on Form 8-K was filed during the quarter ended December 29,
1996.
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
TETRA TECH, INC.
Date: June 27, 1997 By: /s/ James M. Jaska
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James M. Jaska
Vice President and Chief Financial Officer
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EXHIBIT 11
Tetra Tech, Inc.
Computation of Net Income Per Common Share
(Unaudited)
<TABLE>
<CAPTION>
$ in thousands, except share data
Three Months Ended
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December 29, December 31,
1996 1995
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<S> <C> <C>
Primary:
Common stock outstanding, beginning of
period............................... 14,127,002 13,235,309
Stock options exercised................... 14,881 34,640
Issuance of common stock.................. 102,327 706,117
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Common stock outstanding, end of period... 14,244,210 13,976,066
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Weighted average shares common
outstanding during the period........ 14,150,312 13,667,404
Common Stock equivalents under the
treasury stock method assuming the
exercise of options and warrants..... 538,575 484,273
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Total............................ 14,688,887 14,151,677
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Net Income as reported in consolidated
financial statements................. 2,596,000 2,029,000
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Primary net income per common share....... $ 0.18 $ 0.14
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Fully Diluted:
Weighted average shares common
outstanding during the period........ 14,150,312 13,667,404
Common Stock equivalents under the
treasury stock method assuming the
exercise of options and warrants..... 538,575 491,853
Other potentially dilutive securities:
Convertible Preferred Stock.......... -- --
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Total............................ 14,688,887 14,159,257
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Net Income as reported in consolidated
financial statements................. 2,596,000 2,029,000
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Fully diluted net income per common share. $ 0.18 $ 0.14
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</TABLE>
