<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q/A
(AMENDMENT NO. 1)
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 29, 1997
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.
-------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 95-4148514
------------------------------------------ ------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) 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
--- ---
As of September 8, 1997, the total number of outstanding shares of the
Registrant's Common Stock was 16,564,080.
<PAGE>
The undersigned Registrant hereby amends the following item of its Quarterly
Report on Form 10-Q for the quarter ended June 29, 1997, as set forth below:
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Tetra Tech, Inc.
Condensed Consolidated Balance Sheets
$ in thousands, except share data June 29, September 29,
1997 1996
----------- -------------
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents. . . . . . . . . . . . $ 12,793 $ 6,129
Accounts receivable - net. . . . . . . . . . . . 25,433 22,306
Unbilled receivables - net. . . . . . . . . . . 33,769 25,201
Prepaid and other current assets . . . . . . . . 6,353 1,939
Deferred income taxes. . . . . . . . . . . . . . 2,358 2,358
--------- ---------
Total Current Assets. . . . . . . . . . . . . 80,706 57,933
PROPERTY AND EQUIPMENT:
Leasehold improvements . . . . . . . . . . . . . 990 733
Equipment, furniture and fixtures. . . . . . . . 16,201 13,072
--------- ---------
Total . . . . . . . . . . . . . . . . . . . . 17,191 13,805
Accumulated depreciation and amortization. . . . (8,770) (6,790)
--------- ---------
PROPERTY AND EQUIPMENT - NET . . . . . . . . . . . 8,421 7,015
INTANGIBLE ASSETS - NET. . . . . . . . . . . . . . 63,935 22,047
OTHER ASSETS . . . . . . . . . . . . . . . . . . . 1,301 1,468
--------- ---------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . $ 154,363 $ 88,463
--------- ---------
--------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable . . . . . . . . . . . . . . . . . $ 11,329 $ 13,423
Accrued compensation . . . . . . . . . . . . . . . 10,892 7,311
Other current liabilities. . . . . . . . . . . . . 6,250 3,356
Payable to stockholder . . . . . . . . . . . . . . 5,479 0
Current portion of long-term obligations . . . . . 8,000 0
Income taxes payable . . . . . . . . . . . . . . . 1,339 1,104
--------- ---------
Total Current Liabilities . . . . . . . . . . . 43,289 25,194
--------- ---------
REEDEEMABLE PREFERRED STOCK. . . . . . . . . . . . 15,028 0
--------- ---------
STOCKHOLDERS' EQUITY:
Preferred stock - authorized, 2,000,000 shares of
$.01 par value; issued and outstanding 1,231,840
and 0 shares at June 29, 1997 and September 29,
1996, respectively . . . . . . . . . . . . . . 0 0
Common stock - authorized, 20,000,000 shares of
$.01 par value; issued and outstanding 16,264,251
and 14,127,002 shares at June 29, 1997 and
September 29, 1996, respectively . . . . . . . 163 141
Additional paid-in capital . . . . . . . . . . . 57,096 33,452
Retained earnings. . . . . . . . . . . . . . . . 38,787 29,676
--------- ---------
TOTAL STOCKHOLDERS' EQUITY . . . . . . . . . . . . 96,046 63,269
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY . . . . $ 154,363 $ 88,463
--------- ---------
--------- ---------
See accompanying notes to the condensed consolidated financial statements.
<PAGE>
Tetra Tech, Inc.
Condensed Consolidated Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
$ in thousands, except share data
Three Months Ended Nine Months Ended
------------------------------------------------------
June 29, June 30, June 29, June 30,
1997 1996 1997 1996
---------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Gross Revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 60,922 $ 54,152 $ 171,406 $ 162,243
Subcontractor costs . . . . . . . . . . . . . . . . . . . . . . . . . 12,301 13,838 38,447 43,830
--------- --------- --------- ---------
Net Revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,621 40,314 132,959 118,413
Cost of Net Revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . 35,660 30,479 100,077 90,638
--------- --------- --------- ---------
Gross Profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,961 9,835 32,882 27,775
Selling, General and Administrative Expenses . . . . . . . . . . . . . . 6,754 5,329 17,390 15,420
--------- --------- --------- ---------
Income From Operations . . . . . . . . . . . . . . . . . . . . . . . . . 6,207 4,506 15,492 12,355
Interest Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84 203 127 1,023
Interest Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . (88) (72) (210) (253)
--------- --------- --------- ---------
Income Before Income Taxes . . . . . . . . . . . . . . . . . . . . . . . 6,211 4,375 15,575 11,585
Income Tax Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,567 1,750 6,464 4,634
--------- --------- --------- ---------
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,644 $ 2,625 $ 9,111 $ 6,951
--------- --------- --------- ---------
--------- --------- --------- ---------
Net Income Per Common Share. . . . . . . . . . . . . . . . . . . . . . . $ 0.24 $ 0.18 $ 0.61 $ 0.48
--------- --------- --------- ---------
--------- --------- --------- ---------
Shares Used in Per Share Calculations. . . . . . . . . . . . . . . . . . 15,432 14,565 14,918 14,405
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
See accompanying notes to the condensed consolidated financial statements.
<PAGE>
Tetra Tech, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
$ in thousands
Nine Months Ended
------------------------
June 29, June 30,
1997 1996
----------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,111 $ 6,951
Adjustments to reconcile net income to net cash provided by operating. . . . . . . .
activities:
Depreciation and Amortization. . . . . . . . . . . . . . . . . . . . . . . . . 2,929 2,731
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (71) (2)
Changes in operating assets and liabilities, net of effects of
acquisitions:
Accounts receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 15,157
Unbilled receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,849) 224
Prepaid and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . (305) (519)
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,844 (7,618)
Accrued compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,976) (1,467)
Other current liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . (1,214) 525
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174 410
--------- ---------
Net Cash (Used In) Provided By Operating Activities . . . . . . . . . . . . (5,035) 16,392
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,832) (1,751)
Proceeds from sale of property and equipment . . . . . . . . . . . . . . . . . . . . 44 45
Payments for business acquisitions, net of cash acquired . . . . . . . . . . . . . . (1,124) (6,748)
--------- ---------
Net Cash Used In Investing Activities . . . . . . . . . . . . . . . . . . . (2,912) (8,454)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,842) (19,003)
Proceeds from issuance of long-term debt . . . . . . . . . . . . . . . . . . . . . . 8,000 5,145
Proceeds from payable to stockholder . . . . . . . . . . . . . . . . . . . . . . . . 5,479 0
Payments on obligations under capital leases . . . . . . . . . . . . . . . . . . . . 0 (6)
Net proceeds from issuance of common stock . . . . . . . . . . . . . . . . . . . . . 2,974 542
--------- ---------
Net Cash Provided By (Used In) Financing Activities . . . . . . . . . . . . 14,611 (13,322)
--------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS . . . . . . . . . . . . . . . . 6,664 (5,384)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD . . . . . . . . . . . . . . . . . . 6,129 13,130
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD . . . . . . . . . . . . . . . . . . . . . $ 12,793 $ 7,746
--------- ---------
--------- ---------
</TABLE>
(Continued)
<PAGE>
Tetra Tech, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
$ in thousands Nine Months Ended
------------------------
June 29, June 30,
1997 1996
--------- ---------
<S> <C> <C>
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 83 $ 1,077
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,513 $ 4,225
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING
ACTIVITIES:
In November 1995, the Company purchased all of the capital stock of
KCM, Inc. In conjunction with this acquisition, liabilities were
assumed as follows:
Fair value of assets acquired. . . . . . . . . . . . . . . . . . . . . . . . . $ 20,393
Cash paid. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,645)
Issuance of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . (10,313)
Other acquisition costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . (415)
---------
Liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,020
---------
---------
In December 1996, the Company purchased all of the capital stock of
IWA Engineers. In conjunction with this acquisition, liabilities were
assumed as follows:
Fair value of assets acquired. . . . . . . . . . . . . . . . . . . . . . . . . $ 2,956
Cash paid. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (310)
Issuance of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,056)
Other acquisition costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . (70)
---------
Liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,520
---------
---------
In December 1996, the Company purchased all of the capital stock of
FLO Engineering, Inc. In conjunction with this acquisition, liabilities were
assumed as follows:
Fair value of assets acquired. . . . . . . . . . . . . . . . . . . . . . . . . $ 892
Cash paid. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (139)
Issuance of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . (459)
Other acquisition costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . (70)
---------
Liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 224
---------
---------
In March 1997, the Company purchased all of the capital stock of
SCM Consultants, Inc. In conjunction with this acquisition, liabilities
were assumed as follows:
Fair value of assets acquired. . . . . . . . . . . . . . . . . . . . . . . . . $ 2,859
Cash paid. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (311)
Issuance of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,830)
Other acquisition costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . (70)
---------
Liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 648
---------
---------
</TABLE>
(Continued)
<PAGE>
Tetra Tech, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
$ in thousands Nine Months Ended
--------------------------
June 29, June 30,
1997 1996
----------- -----------
<S> <C> <C>
In June 1997, the Company purchased all of the capital stock of Whalen
& Company, Inc. and Whalen Service Corps Inc. In conjunction with
this acquisition, liabilities were assumed as follows:
Fair value of assets acquired. . . . . . . . . . . . . . . . . . . . . . . . . $ 53,282
Cash paid. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,051)
Issuance of common and preferred stock . . . . . . . . . . . . . . . . . . . . (33,304)
Other acquisition costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,925)
----------
Liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10,002
----------
----------
</TABLE>
(Concluded)
See accompanying notes to the condensed consolidated financial statements.
<PAGE>
TETRA TECH, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying condensed consolidated balance sheets as of June 29, 1997,
the condensed consolidated statements of income for the three-month and nine-
month periods ended June 29, 1997 and June 30, 1996 and the condensed
consolidated statements of cash flows for the nine-month periods ended June 29,
1997 and June 30, 1996 are unaudited, and in the opinion of management include
all adjustments, consisting of only normal and recurring adjustments, necessary
for a fair presentation of the financial position and the results of operations
for the periods presented.
The condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes thereto
included in the Company's Annual Report on Form 10-K for the fiscal year ended
September 29, 1996.
The results of operations for the three and nine months ended June 29, 1997
are not necessarily indicative of the results to be expected for the fiscal year
ending September 28, 1997.
The computation of net income per common share is based upon the weighted
average number of shares outstanding, including the effects of common stock
equivalents (common stock options and Series A Preferred Stock).
2. CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments purchased with a
maturity of three months or less to be cash equivalents. Cash totaled
$8,705,000 and cash equivalents totaled $4,088,000 at June 29, 1997.
3. ACQUISITIONS
On June 11, 1997, the Company acquired 100% of the capital stock of Whalen
& Company, Inc. and Whalen Service Corps Inc. (collectively, "WAC"). WAC, a
wireless telecommunications firm, provides a full range of wireless
telecommunications site development services for PCS, cellular, ESMR, air-to-
ground, microwave, paging, fiber optic and switching centers technology. The
acquisition was accounted for as a purchase. The purchase has been valued at
approximately $43,070,000 consisting of cash and Company common and preferred
stock. The common and preferred stock (see Note 5. REDEEMABLE PREFERRED STOCK)
was issued in a private placement and had a combined value of $33,304,000. The
Company's stock was valued based upon the extended restriction period and
economic factors specific to the Company's circumstances which resulted in a
fair valuation approximately 28% below the then prevailing market price. On the
business day prior to the merger, WAC distributed to its stockholders (i) cash
in the amount of $4,138,000 and (ii) accounts receivable having a net value of
$18,455,000.
<PAGE>
On March 20, 1997, the Company acquired 100% of the capital stock of SCM
Consultants, Inc. ("SCM"), a consulting and engineering firm, providing design
of irrigation, water and wastewater systems, as well as facility and
infrastructure engineering services, to State and local government, private and
industrial customers. The acquisition was accounted for as a purchase. The
purchase was valued at approximately $2,211,000, consisting of cash and Company
common stock, as adjusted based upon SCM's Net Asset Value on March 30, 1997 as
described in the related purchase agreement.
On December 18, 1996, the Company acquired 100% of the capital stock of FLO
Engineering, Inc. ("FLO"), a consulting and engineering firm specializing in
water resource engineering involving hydraulic engineering and hydrographic data
collection. The acquisition was accounted for as a purchase. The purchase was
valued at approximately $668,000, consisting of cash and Company common stock,
as adjusted based upon FLO's Net Asset Value on December 29, 1996 as described
in the related purchase agreement.
On December 11, 1996, the Company acquired 100% of the capital stock of IWA
Engineers ("IWA"), an architecture and engineering firm providing a wide range
of planning, engineering, and design capabilities in water, wastewater, and
facility design, and serving State and local government and private customers.
The acquisition was accounted for as a purchase. The purchase was valued at
approximately $1,436,000, consisting of cash and Company common stock, as
adjusted based upon IWA's Net Asset Value on December 29, 1996 as described in
the related purchase agreement.
On November 7, 1995, the Company acquired 100% of the capital stock of KCM,
Inc. ("KCM"), an engineering services firm specializing in areas of water
quality, water and wastewater systems, surface water management, fisheries and
facilities. The acquisition was accounted for as a purchase. The purchase was
valued at approximately $13,373,000 consisting of cash and Company common stock
issued in a private placement. The Company's stock was valued based upon the
extended restriction period and economic factors specific to the Company's
circumstances which resulted in a fair valuation approximately 26% below the
then prevailing market price.
The results of operations from each of the acquired entities have been
included in the Company's condensed consolidated financial statements from the
effective dates of the acquisitions. The purchase price of the acquisitions in
excess of the fair value of the net assets acquired is being amortized over a
period of 30 years and is included under the caption "INTANGIBLE ASSETS - NET"
in the accompanying condensed consolidated balance sheets. The final
determination of such excess amount is subject to a final determination of the
value of the consideration paid and the net assets acquired.
The effect of unaudited pro forma operating results of the SCM, FLO and IWA
transactions, had they been acquired on October 2, 1995, is not material.
<PAGE>
The effect of unaudited pro forma operating results assuming that the
Company had acquired KCM and WAC on October 2, 1995 is presented in Note 6. PRO
FORMA OPERATING RESULTS.
4. ACCOUNTS RECEIVABLE
The Accounts Receivable valuation allowance includes amounts to provide for
doubtful accounts and for the potential disallowance of billed and unbilled
costs. The allowance for doubtful accounts as of June 29, 1997 and September
29, 1996 was $1,178,000 and $1,062,000, respectively. The allowance for
disallowed costs as of June 29, 1997 and September 29, 1996 was $9,943,000 and
$10,039,000, respectively. Disallowance of billed and unbilled costs is
primarily associated with contracts with the U.S. government which contain
clauses that subject contractors to several levels of audit. Management
believes that resolution of these matters will not have a material adverse
impact on the Company's financial position or results of operations.
5. REDEEMABLE PREFERRED STOCK
On June 11, 1997, the Company issued Series A convertible preferred stock
in conjunction with the WAC acquisition ("Series A Stock"). The Series A Stock
carries dividend and voting rights substantially identical to those of common
stock and will be converted to common stock on a share for share basis
immediately upon the filing of an amendment to the Company's Certificate of
Incorporation. The amendment will increase the number of authorized shares of
common stock to a number sufficient to permit the conversion of all Series A
Stock. If an amendment to the Company's Certificate of Incorporation is not
executed by December 10, 1997, the holders of the Series A Stock may put the
Series A Stock to the Company for cash at the average closing price of the
Company's common stock on the five days ending one day prior to the exercise of
the put.
The Series A Stock is presented at its fair value of $15,028,000 as of June
29, 1997. Had the Series A Stock been put to the Company for cash at June 29,
1997, the cash obligation would have been $27,408,000. The Company is currently
taking all necessary steps to convert the Series A Stock to common stock prior
to December 10, 1997.
6. SUBSEQUENT EVENT
On July 11, 1997, the Company acquired 100% of the capital stock of
CommSite Development Corporation ("CDC"), a wireless telecommunications site
development service firm. The purchase price of $5,700,000 consisted of Company
common stock and is subject to a purchase price adjustment as described in the
related purchase agreement. The acquisition will be accounted for as a
purchase. The effect of unaudited pro forma operating results, had CDC been
acquired on October 2, 1995, is presented in Note 6. Pro Forma Operating
Results.
<PAGE>
7. PRO FORMA OPERATING RESULTS
The following table presents summarized unaudited pro forma operating
results assuming that the Company had acquired KCM, WAC and CDC (the historical
information for WAC and CDC is unaudited) on October 2, 1995:
Pro Forma Nine Months Ended
----------------------------
June 29, 1997 June 30, 1996
--------------- -------------
($ in thousands, except per share data)
Gross revenue $219,040 $203,155
Income from operations 27,411 21,434
Net income 15,780 12,244
Net income per share 0.87 0.69
Weighted average shares outstanding 18,038 17,696
<PAGE>
SIGNATURES
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.
Dated: September 18, 1997 TETRA TECH, INC.
By: /s/ James M. Jaska
--------------------------
James M. Jaska
Vice President and Chief Financial Officer
