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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 MARCH 30, 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.
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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 March 30, 1997, as set forth
below:
PART I. FINANCIAL INFORMATION
1. The Registrant hereby amends Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital Resources
by adding the following paragraph as the new third paragraph thereunder:
The Company continuously evaluates the marketplace for strategic
acquisition opportunities. Once an opportunity is identified, the Company
examines the effect an acquisition may have on the business environment, as well
as on the Company's results of operations. The Company proceeds with an
acquisition only if it determines that the acquisitions is anticipated to have
an accretive effect on future operations. The Company's strategy is to position
itself to address existing and emerging markets. The Company views acquisitions
as a key component of its growth strategy, and intends to use both cash and its
securities, as it deems appropriate, to fund such acquisitions.
2. 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
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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.
3. 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 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).
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3.3 Certificate of Amendment of Certificate of Incorporation of
the Company (incorporated by reference to Exhibit 3.1 to
the Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended March 30, 1997).
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).
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).
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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).
11 Computation of Net Income Per Common Share.
27 Financial Data Schedule (incorporated by reference to
Exhibit 27 to the Company's Quarterly Report on Form 10-Q
for the fiscal quarter ended March 30, 1997).
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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 March 30,
1997.
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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
_________________________________________
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)
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<CAPTION>
$ in thousands, except share data Three Months Ended Six Months Ended
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March 30, March 31, March 30, March 31,
1997 1996 1997 1996
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<S> <C> <C> <C> <C>
Primary:
Common stock outstanding, beginning of
period ................................ 14,244,210 13,976,066 14,127,002 13,235,309
Stock options exercised ................... 45,256 20,887 60,137 55,527
Issuance of common stock .................. 147,492 84,119 249,819 790,236
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Common stock outstanding, end of period ... 14,436,958 14,081,072 14,436,958 14,081,072
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Weighted average common shares
outstanding during the period ......... 14,276,025 14,060,760 14,213,168 13,864,081
Common Stock equivalents under the
treasury stock method assuming the
exercise of options and warrants ...... 357,293 443,316 447,934 463,796
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Total ............................. 14,633,318 14,504,076 14,661,102 14,327,877
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Net Income as reported in consolidated
financial statements .................. 2,872,000 2,297,000 5,468,000 4,326,000
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Primary net income per common share ....... $ 0.20 $ 0.16 $ 0.37 $ 0.30
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Fully Diluted:
Weighted average common shares
outstanding during the period ......... 14,276,025 14,060,760 14,213,168 13,864,081
Common Stock equivalents under the
treasury stock method assuming the
exercise of options and warrants ...... 357,293 460,240 447,934 470,170
Other potentially dilutive securities:
Convertible Preferred Stock ............ -- -- -- --
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Total ............................. 14,633,318 14,521,000 14,661,102 14,334,251
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Net Income as reported in consolidated
financial statements .................. 2,872,000 2,297,000 5,468,000 4,326,000
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Fully diluted net income per common share.. $ 0.20 $ 0.16 $ 0.37 $ 0.30
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