Document and Entity Information
Document and Entity Information - USD ($) $ in Billions | 12 Months Ended | ||
Sep. 30, 2018 | Nov. 01, 2018 | Apr. 01, 2018 | |
Document and Entity Information | |||
Entity Registrant Name | TETRA TECH INC | ||
Entity Central Index Key | 831,641 | ||
Current Fiscal Year End Date | --09-30 | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Emerging Growth Company | false | ||
Entity Small Business | false | ||
Entity Shell Company | false | ||
Document Type | 10-K | ||
Document Period End Date | Sep. 30, 2018 | ||
Document Fiscal Year Focus | 2,018 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Common Stock, Shares Outstanding | 55,356,389 | ||
Entity Public Float | $ 2.6 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2018 | Oct. 01, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 146,185 | $ 189,975 |
Accounts receivable – net | 837,103 | 788,767 |
Prepaid expenses and other current assets | 56,003 | 49,969 |
Income taxes receivable | 11,089 | 13,312 |
Total current assets | 1,050,380 | 1,042,023 |
Property and equipment – net | 43,278 | 56,835 |
Investments in unconsolidated joint ventures | 3,370 | 2,700 |
Goodwill | 798,820 | 740,886 |
Intangible assets – net | 16,123 | 26,688 |
Deferred income taxes | 8,607 | 1,763 |
Other long-term assets | 38,843 | 31,850 |
Total assets | 1,959,421 | 1,902,745 |
Current liabilities: | ||
Accounts payable | 160,222 | 177,638 |
Accrued compensation | 180,153 | 143,408 |
Billings in excess of costs on uncompleted contracts | 143,270 | 117,499 |
Current portion of long-term debt | 12,599 | 15,588 |
Current contingent earn-out liabilities | 13,633 | 2,024 |
Other current liabilities | 108,216 | 81,511 |
Total current liabilities | 618,093 | 537,668 |
Deferred income taxes | 30,166 | 43,781 |
Long-term debt | 264,712 | 341,283 |
Long-term contingent earn-out liabilities | 21,657 | 414 |
Other long-term liabilities | 57,693 | 50,975 |
Commitments and contingencies (Note 17) | ||
Equity: | ||
Preferred stock – Authorized, 2,000 shares of $0.01 par value; no shares issued and outstanding at September 30, 2018 and October 1, 2017 | 0 | 0 |
Common stock – Authorized, 150,000 shares of $0.01 par value; issued and outstanding, 55,349 and 55,873 shares at September 30, 2018 and October 1, 2017, respectively | 553 | 559 |
Additional paid-in capital | 148,803 | 193,835 |
Accumulated other comprehensive loss | (127,350) | (98,500) |
Retained earnings | 944,965 | 832,559 |
Tetra Tech stockholders' equity | 966,971 | 928,453 |
Noncontrolling interests | 129 | 171 |
Total stockholders' equity | 967,100 | 928,624 |
Total liabilities and stockholders' equity | $ 1,959,421 | $ 1,902,745 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2018 | Oct. 01, 2017 |
Statement of Financial Position [Abstract] | ||
Preferred stock, authorized shares (in shares) | 2,000,000 | 2,000,000 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, authorized shares (in shares) | 150,000,000 | 150,000,000 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares issued (in shares) | 55,349,000 | 55,873,000 |
Common stock, shares outstanding (in shares) | 55,349,000 | 55,873,000 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Sep. 30, 2018 | Oct. 01, 2017 | Oct. 02, 2016 | |
Income Statement [Abstract] | |||
Revenue | $ 2,964,148 | $ 2,753,360 | $ 2,583,469 |
Subcontractor costs | (763,414) | (719,350) | (654,264) |
Other costs of revenue | (1,816,276) | (1,680,372) | (1,598,994) |
Gross profit | 384,458 | 353,638 | 330,211 |
Selling, general and administrative expenses | (190,120) | (177,219) | (171,985) |
Acquisition and integration expenses | 0 | 0 | (19,548) |
Contingent consideration – fair value adjustments | (4,252) | 6,923 | (2,823) |
Income from operations | 190,086 | 183,342 | 135,855 |
Interest income | 1,824 | 729 | 996 |
Interest expense | (17,348) | (12,310) | (12,385) |
Income before income tax expense | 174,562 | 171,761 | 124,466 |
Income tax expense | (37,605) | (53,844) | (40,613) |
Net income | 136,957 | 117,917 | 83,853 |
Net income attributable to noncontrolling interests | (74) | (43) | (70) |
Net income attributable to Tetra Tech | $ 136,883 | $ 117,874 | $ 83,783 |
Earnings per share attributable to Tetra Tech: | |||
Basic (in dollars per share) | $ 2.46 | $ 2.07 | $ 1.44 |
Diluted (in dollars per share) | $ 2.42 | $ 2.04 | $ 1.42 |
Weighted-average common shares outstanding: | |||
Basic (in shares) | 55,670 | 56,911 | 58,186 |
Diluted (in shares) | 56,598 | 57,913 | 58,966 |
Cash dividends paid per share (in dollars per share) | $ 0.44 | $ 0.38 | $ 0.34 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2018 | Oct. 01, 2017 | Oct. 02, 2016 | |
Statement of Comprehensive Income [Abstract] | |||
Net income | $ 136,957 | $ 117,917 | $ 83,853 |
Other comprehensive income (loss), net of tax | |||
Foreign currency translation adjustments | (29,656) | 27,894 | 14,389 |
Gain on cash flow hedge valuations | 806 | 1,614 | 774 |
Other comprehensive income (loss) attributable to Tetra Tech | (28,850) | 29,508 | 15,163 |
Other comprehensive income (loss) attributable to noncontrolling interests | (64) | 8 | 3 |
Comprehensive income | 108,043 | 147,433 | 99,019 |
Comprehensive income attributable to Tetra Tech | 108,033 | 147,382 | 98,946 |
Comprehensive income attributable to noncontrolling interests | $ 10 | $ 51 | $ 73 |
Consolidated Statements of Equi
Consolidated Statements of Equity - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Total Tetra Tech Equity | Non-Controlling Interests |
Beginning balance at Sep. 27, 2015 | $ 856,798 | $ 594 | $ 326,593 | $ (143,171) | $ 672,309 | $ 856,325 | $ 473 |
Beginning balance (in shares) at Sep. 27, 2015 | 59,381 | ||||||
Comprehensive income, net of tax: | |||||||
Net income | 83,853 | 83,783 | 83,783 | 70 | |||
Foreign currency translation adjustments | 14,392 | 14,389 | 14,389 | 3 | |||
Gain on cash flow hedge valuations | 774 | 774 | 774 | ||||
Comprehensive income | 99,019 | 98,946 | 73 | ||||
Distributions paid to noncontrolling interests | (402) | (402) | |||||
Cash dividends | (19,735) | (19,735) | (19,735) | ||||
Stock-based compensation | 12,964 | 12,964 | 12,964 | ||||
Stock options exercised | 15,823 | $ 9 | 15,814 | 15,823 | |||
Stock options exercised (in shares) | 920 | ||||||
Shares issued for Employee Stock Purchase Plan | 4,707 | $ 2 | 4,705 | 4,707 | |||
Shares issued for Employee Stock Purchase Plan (in shares) | 209 | ||||||
Stock repurchases | (99,500) | $ (35) | (99,465) | (99,500) | |||
Stock repurchases (in shares) | (3,468) | ||||||
Tax benefit for stock options | (271) | (271) | (271) | ||||
Ending balance at Oct. 02, 2016 | 869,403 | $ 570 | 260,340 | (128,008) | 736,357 | 869,259 | 144 |
Ending balance (in shares) at Oct. 02, 2016 | 57,042 | ||||||
Comprehensive income, net of tax: | |||||||
Net income | 117,917 | 117,874 | 117,874 | 43 | |||
Foreign currency translation adjustments | 27,902 | 27,894 | 27,894 | 8 | |||
Gain on cash flow hedge valuations | 1,614 | 1,614 | 1,614 | ||||
Comprehensive income | 147,433 | 147,382 | 51 | ||||
Distributions paid to noncontrolling interests | (24) | (24) | |||||
Cash dividends | (21,672) | (21,672) | (21,672) | ||||
Stock-based compensation | 13,450 | 13,450 | 13,450 | ||||
Stock options exercised | 15,094 | $ 10 | 15,084 | 15,094 | |||
Stock options exercised (in shares) | 907 | ||||||
Shares issued for Employee Stock Purchase Plan | 4,940 | $ 2 | 4,938 | 4,940 | |||
Shares issued for Employee Stock Purchase Plan (in shares) | 190 | ||||||
Stock repurchases | (100,000) | $ (23) | (99,977) | (100,000) | |||
Stock repurchases (in shares) | (2,266) | ||||||
Ending balance at Oct. 01, 2017 | 928,624 | $ 559 | 193,835 | (98,500) | 832,559 | 928,453 | 171 |
Ending balance (in shares) at Oct. 01, 2017 | 55,873 | ||||||
Comprehensive income, net of tax: | |||||||
Net income | 136,957 | 136,883 | 136,883 | 74 | |||
Foreign currency translation adjustments | (29,720) | (29,656) | (29,656) | (64) | |||
Gain on cash flow hedge valuations | 806 | 806 | 806 | ||||
Comprehensive income | 108,043 | 108,033 | 10 | ||||
Distributions paid to noncontrolling interests | (52) | (52) | |||||
Cash dividends | (24,477) | (24,477) | (24,477) | ||||
Stock-based compensation | 19,582 | 19,582 | 19,582 | ||||
Restricted & performance shares released | (8,871) | $ 3 | (8,874) | (8,871) | |||
Restricted & performance shares released (in shares) | 277 | ||||||
Stock options exercised | $ 13,511 | $ 5 | 13,506 | 13,511 | |||
Stock options exercised (in shares) | 549 | 549 | |||||
Shares issued for Employee Stock Purchase Plan | $ 5,740 | $ 1 | 5,739 | 5,740 | |||
Shares issued for Employee Stock Purchase Plan (in shares) | 142 | ||||||
Stock repurchases | (75,000) | $ (15) | (74,985) | (75,000) | |||
Stock repurchases (in shares) | (1,492) | ||||||
Ending balance at Sep. 30, 2018 | $ 967,100 | $ 553 | $ 148,803 | $ (127,350) | $ 944,965 | $ 966,971 | $ 129 |
Ending balance (in shares) at Sep. 30, 2018 | 55,349 |
Consolidated Statements of Eq_2
Consolidated Statements of Equity (Parenthetical) - $ / shares | Aug. 31, 2018 | Jun. 01, 2018 | Mar. 02, 2018 | Dec. 15, 2017 | Sep. 01, 2017 | Jun. 02, 2017 | Mar. 03, 2017 | Dec. 14, 2016 | Sep. 30, 2018 | Oct. 01, 2017 | Oct. 02, 2016 |
Statement of Stockholders' Equity [Abstract] | |||||||||||
Cash dividends paid per share (in dollars per share) | $ 0.12 | $ 0.12 | $ 0.1 | $ 0.1 | $ 0.1 | $ 0.1 | $ 0.09 | $ 0.09 | $ 0.44 | $ 0.38 | $ 0.34 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2018 | Oct. 01, 2017 | Oct. 02, 2016 | |
Cash flows from operating activities: | |||
Net income | $ 136,957 | $ 117,917 | $ 83,853 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 38,636 | 45,756 | 45,588 |
Equity in income of unconsolidated joint ventures, net of distributions | (568) | (647) | 1,144 |
Non-cash stock compensation | 19,582 | 13,450 | 12,964 |
Excess tax benefits from stock-based compensation | (918) | ||
Deferred income taxes | (29,360) | (9,957) | 6,051 |
Provision for doubtful accounts | 7,167 | 2,847 | 8,082 |
Fair value adjustments to contingent consideration | 4,252 | (6,923) | 2,823 |
Lease termination costs and related asset impairment | 0 | 0 | 2,946 |
Loss (gain) on sale of assets and divested business | 1,045 | (103) | (537) |
Changes in operating assets and liabilities, net of effects of business acquisitions and divestitures: | |||
Accounts receivable | (46,273) | (64,781) | 9,062 |
Prepaid expenses and other assets | (12,638) | (8,317) | 3,720 |
Accounts payable | (16,032) | 18,597 | (3,002) |
Accrued compensation | 27,492 | 13,413 | 8,434 |
Billings in excess of costs on uncompleted contracts | 15,228 | 28,298 | (13,874) |
Other liabilities | 16,127 | 2,167 | (19,321) |
Income taxes receivable/payable | 17,596 | (13,725) | (4,995) |
Cash settled contingent earn-out liability | (2,349) | 0 | 0 |
Net cash provided by operating activities | 176,862 | 137,992 | 142,020 |
Cash flows from investing activities: | |||
Capital expenditures | (9,726) | (9,741) | (11,945) |
Payments for business acquisitions, net of cash acquired | (68,256) | (8,039) | (81,259) |
Changes in restricted cash | 0 | 0 | (2,519) |
Investments in unconsolidated joint ventures | 0 | (85) | (1,368) |
Proceeds from sale of assets and divested business, net | 35,348 | 905 | 3,076 |
Net cash used in investing activities | (42,634) | (16,960) | (94,015) |
Cash flows from financing activities: | |||
Payments on long-term debt | (485,946) | (233,889) | (148,887) |
Proceeds from borrowings | 401,965 | 243,553 | 229,049 |
Payments of contingent earn-out liabilities | (1,412) | (1,319) | (3,251) |
Debt pre-payment costs | (1,737) | 0 | (1,935) |
Excess tax benefits from stock-based compensation | 918 | ||
Repurchases of common stock | (75,000) | (100,000) | (99,500) |
Net proceeds from issuance of common stock | 13,520 | 18,555 | 17,953 |
Dividends paid | (24,477) | (21,672) | (19,735) |
Net cash used in financing activities | (173,087) | (94,772) | (25,388) |
Effect of exchange rate changes on cash | (4,931) | 3,256 | 2,516 |
Net increase (decrease) in cash and cash equivalents | (43,790) | 29,516 | 25,133 |
Cash and cash equivalents at beginning of year | 189,975 | 160,459 | 135,326 |
Cash and cash equivalents at end of year | 146,185 | 189,975 | 160,459 |
Cash paid during the year for: | |||
Interest | 15,570 | 11,504 | 12,575 |
Income taxes, net of refunds received of $2.5 million, $2.1 million and $3.2 million | $ 49,842 | $ 72,578 | $ 35,273 |
Consolidated Statements of Ca_2
Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2018 | Oct. 01, 2017 | Oct. 02, 2016 | |
Statement of Cash Flows [Abstract] | |||
Income taxes, net of refunds received | $ 2.5 | $ 2.1 | $ 3.2 |
Description of Business
Description of Business | 12 Months Ended |
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | Description of Business We are a leading global provider of consulting and engineering services that focuses on water, environment, infrastructure, resource management, energy, and international development. We are a global company that leads with science and is renowned for our expertise in providing water-related services for public and private clients. We typically begin at the earliest stage of a project by identifying technical solutions and developing execution plans tailored to our clients' needs and resources. Our solutions may span the entire life cycle of consulting and engineering projects and include applied science, data analysis, research, engineering, design, construction management, and operations and maintenance. Beginning in fiscal 2018 , we aligned our operations to better serve our clients and markets, resulting in two renamed reportable segments. Our Government Services Group (“GSG”) reportable segment primarily includes activities with U.S. government clients (federal, state and local) and activities with development agencies worldwide. Our Commercial/International Services Group (“CIG”) reportable segment primarily includes activities with U.S. commercial clients and international activities other than work for development agencies. This alignment allows us to capitalize on our growing market opportunities and enhance the development of high-end consulting and technical solutions to meet our growing client demand. We continue to report the results of the wind-down of our non-core construction activities in the Remediation and Construction Management (“RCM”) reportable segment. Prior year amounts for reportable segments have been revised to conform to the current-year presentation. |
Basis of Presentation and Prepa
Basis of Presentation and Preparation | 12 Months Ended |
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Preparation | Basis of Presentation and Preparation Principles of Consolidation and Presentation. The consolidated financial statements include our accounts and those of joint ventures of which we are the primary beneficiary. All significant intercompany balances and transactions have been eliminated in consolidation. Fiscal Year. We report results of operations based on 52 or 53-week periods ending on the Sunday nearest September 30. Fiscal years 2018 , 2017 and 2016 contained 52, 52 and 53 weeks, respectively. Use of Estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires us to make estimates and assumptions. These estimates and assumptions affect the amounts reported in our consolidated financial statements and accompanying notes. Although such estimates and assumptions are based on management's best knowledge of current events and actions we may take in the future, actual results could differ materially from those estimates. Revenue Recognition and Contract Costs. We recognize revenue from contracts using the percentage-of-completion method, primarily utilizing the cost-to-cost approach, to estimate the progress towards completion in order to determine the amount of revenue and profit to recognize. Changes in those estimates could result in the recognition of cumulative catch-up adjustments to the contract’s inception-to-date revenue, costs and profit in the period in which such changes are made. On a quarterly basis, we review and assess our revenue and cost estimates for each significant contract. Changes in revenue and cost estimates could also result in a projected loss that would be recorded immediately in earnings. We recognize revenue for work performed under three major types of contracts: fixed-price, time-and-materials, and cost-plus. Fixed-Price. Under fixed-price contracts, our clients pay us an agreed fixed-amount negotiated in advance for a specified scope of work. We recognize revenue on fixed-price contracts using the percentage-of-completion method. If the nature or circumstances of the contract prevent us from preparing a reliable estimate at completion, we will delay profit recognition until adequate information about the contract's progress becomes available. Time-and-Materials. Under time-and-materials contracts, we negotiate hourly billing rates and charge our clients based on the actual time that we spend on a project. In addition, clients reimburse us for our actual out-of-pocket costs for materials and other direct incidental expenditures that we incur in connection with our performance under the contract. The majority of our time-and-material contracts are subject to maximum contract values and, accordingly, revenue under these contracts is recognized under the percentage-of-completion method. However, time and materials contracts that are service-related contracts are accounted for utilizing the proportional performance method. Revenue on contracts that are not subject to maximum contract values is recognized based on the actual number of hours we spend on the projects plus any actual out-of-pocket costs of materials and other direct incidental expenditures that we incur on the projects. Our time-and-materials contracts also generally include annual billing rate adjustment provisions. Cost-Plus. Under cost-plus contracts, we are reimbursed for allowable or otherwise defined costs incurred plus a negotiated fee. These contracts may also include incentives for various performance criteria, including quality, timeliness, ingenuity, safety and cost-effectiveness. In addition, our costs are generally subject to review by our clients and regulatory audit agencies, and such reviews could result in costs being disputed as non-reimbursable under the terms of the contract. Revenue for cost-plus contracts is recognized at the time services are performed. Revenue is not recognized for non-recoverable costs. Performance incentives are included in our estimates of revenue when their realization is reasonably assured. If estimated total costs on any contract indicate a loss, we recognize the entire estimated loss in the period the loss becomes known. The cumulative effect of revisions to revenue, estimated costs to complete contracts, including penalties, incentive awards, change orders, claims, liquidated damages, anticipated losses, and other revisions are recorded in the period in which the revisions are identified and the loss can be reasonably estimated. Such revisions could occur in any reporting period and the effects may be material depending on the size of the project or the adjustment. Once contract performance is underway, we may experience changes in conditions, client requirements, specifications, designs, materials, and expectations regarding the period of performance. Such changes are "change orders" and may be initiated by us or by our clients. In many cases, agreement with the client as to the terms of change orders is reached prior to work commencing; however, sometimes circumstances require that work progress without obtaining client agreement. Revenue related to change orders is recognized as costs are incurred. Change orders that are unapproved as to both price and scope are evaluated as claims. Claims are amounts in excess of agreed contract prices that we seek to collect from our clients or other third parties for delays, errors in specifications and designs, contract terminations, change orders in dispute or unapproved as to both scope and price, or other causes of unanticipated additional costs. Revenue on claims is recognized only to the extent that contract costs related to the claims have been incurred and when it is probable that the claim will result in a bona fide addition to contract value that can be reliably estimated. No profit is recognized on a claim until final settlement occurs. This can lead to a situation in which costs are recognized in one period and revenue is recognized in a subsequent period when a client agreement is obtained or a claims resolution occurs. Cash and Cash Equivalents. Cash and cash equivalents include highly liquid investments with maturities of 90 days or less at the date of purchase. We record cash and cash equivalents as restricted when we are unable to freely use such cash and cash equivalents for our general operating purposes. As of fiscal 2018 and fiscal 2017 year-ends, we had restricted cash of $2.7 million on the consolidated balance sheet, and it was included in our "Prepaid expenses and other current assets". Insurance Matters, Litigation and Contingencies. In the normal course of business, we are subject to certain contractual guarantees and litigation. In addition, we maintain insurance coverage for various aspects of our business and operations. We record in our consolidated balance sheets amounts representing our estimated liability for these legal and insurance obligations. Any adjustments to these liabilities are recorded in our consolidated statements of income. Accounts Receivable – Net. Net accounts receivable is primarily comprised of billed and unbilled accounts receivable, contract retentions and allowances for doubtful accounts. Billed accounts receivable represent amounts billed to clients that have not been collected. Unbilled accounts receivable represent revenue recognized but not yet billed pursuant to contract terms or billed after the period end date. Most of our unbilled receivables at September 30, 2018 are expected to be billed and collected within 12 months. Unbilled accounts receivable also include amounts related to requests for equitable adjustment to contracts that provide for price redetermination. These amounts are recorded only when they can be reliably estimated and realization is probable. Contract retentions represent amounts withheld by clients until certain conditions are met or the project is completed, which may be several months or years. Allowances for doubtful accounts represent the amounts that may become uncollectible or unrealizable in the future. We determine an estimated allowance for uncollectible accounts based on management's consideration of trends in the actual and forecasted credit quality of our clients, including delinquency and payment history; type of client, such as a government agency or a commercial sector client; and general economic and particular industry conditions that may affect a client's ability to pay. Billings in excess of costs on uncompleted contracts represent the amount of cash collected from clients and billings to clients on contracts in advance of work performed and revenue recognized. The majority of these amounts will be earned within 12 months. Property and Equipment. Property and equipment are recorded at cost and are depreciated over their estimated useful lives using the straight-line method. When property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are removed from our consolidated balance sheets and any resulting gain or loss is reflected in our consolidated statements of income. Expenditures for maintenance and repairs are expensed as incurred. Generally, estimated useful lives range from three to ten years for equipment, furniture and fixtures. Buildings are depreciated over periods not exceeding 40 years. Leasehold improvements are amortized on a straight-line basis over the shorter of their estimated useful lives or the length of the lease. Long-Lived Assets. Our policy regarding long-lived assets is to evaluate the recoverability of our assets when the facts and circumstances suggest that the assets may be impaired. This assessment is performed based on the estimated undiscounted cash flows compared to the carrying value of the assets. If the future cash flows (undiscounted and without interest charges) are less than the carrying value, a write-down would be recorded to reduce the related asset to its estimated fair value. We recognize a liability for contract termination costs associated with an exit activity for costs that will continue to be incurred under a lease for its remaining term without economic benefit to us, initially measured at its fair value at the cease-use date. The fair value is determined based on the remaining lease rentals, adjusted for the effects of any prepaid or deferred items recognized under the lease, and reduced by estimated sublease rentals. Business Combinations. The cost of an acquired company is assigned to the tangible and intangible assets purchased and the liabilities assumed on the basis of their fair values at the date of acquisition. The determination of fair values of assets and liabilities acquired requires us to make estimates and use valuation techniques when a market value is not readily available. Any excess of purchase price over the fair value of net tangible and intangible assets acquired is allocated to goodwill. Goodwill typically represents the value paid for the assembled workforce and enhancement of our service offerings. Transaction costs associated with business combinations are expensed as they are incurred. Goodwill and Intangible Assets. Goodwill represents the excess of the aggregate purchase price over the fair value of the net assets acquired in a business acquisition. Following an acquisition, we perform an analysis to value the acquired company's tangible and identifiable intangible assets and liabilities. With respect to identifiable intangible assets, we consider backlog, non-compete agreements, client relations, trade names, patents and other assets. We amortize our intangible assets based on the period over which the contractual or economic benefits of the intangible assets are expected to be realized. We assess the recoverability of the unamortized balance of our intangible assets when indicators of impairment are present based on expected future profitability and undiscounted expected cash flows and their contribution to our overall operations. Should the review indicate that the carrying value is not fully recoverable, the excess of the carrying value over the fair value of the intangible assets would be recognized as an impairment loss. We test our goodwill for impairment on an annual basis, and more frequently when an event occurs or circumstances indicate that the carrying value of the asset may not be recoverable. We believe the methodology that we use to review impairment of goodwill, which includes a significant amount of judgment and estimates, provides us with a reasonable basis to determine whether impairment has occurred. However, many of the factors employed in determining whether our goodwill is impaired are outside of our control and it is reasonably likely that assumptions and estimates will change in future periods. These changes could result in future impairments. We perform our annual goodwill impairment review at the beginning of our fiscal fourth quarter. Our last annual review was performed at July 2, 2018 (i.e., the first day of our fiscal fourth quarter). In addition, we regularly evaluate whether events and circumstances have occurred that may indicate a potential change in recoverability of goodwill. We perform interim goodwill impairment reviews between our annual reviews if certain events and circumstances have occurred, including a deterioration in general economic conditions, an increased competitive environment, a change in management, key personnel, strategy or customers, negative or declining cash flows, or a decline in actual or planned revenue or earnings compared with actual and projected results of relevant prior periods. We assess goodwill for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment, referred to as a component. Our operating segments are the same as our reportable segments and our reporting units for goodwill impairment testing are the components one level below our reportable segments. These components constitute a business for which discrete financial information is available and where segment management regularly reviews the operating results of that component. We aggregate components within an operating segment that have similar economic characteristics. The impairment test for goodwill involves the comparison of the estimated fair value of each reporting unit to the reporting unit's carrying value, including goodwill. We estimate the fair value of reporting units based on a comparison and weighting of the income approach, specifically the discounted cash flow method and the market approach, which estimates the fair value of our reporting units based upon comparable market prices and recent transactions and also validates the reasonableness of the multiples from the income approach. If the fair value of a reporting unit exceeds its carrying amount, the goodwill of that reporting unit is not considered impaired. However, if its carrying value exceeds its fair value, our goodwill is impaired, and we are required to record a non-cash charge that could have a material adverse effect on our consolidated financial statements. An impairment loss recognized, if any, should not exceed the total amount of goodwill allocated to the reporting unit. Contingent Consideration. Most of our acquisition agreements include contingent earn-out arrangements, which are generally based on the achievement of future operating income thresholds. The contingent earn-out arrangements are based upon our valuations of the acquired companies and reduce the risk of overpaying for acquisitions if the projected financial results are not achieved. The fair values of these earn-out arrangements are included as part of the purchase price of the acquired companies on their respective acquisition dates. For each transaction, we estimate the fair value of contingent earn-out payments as part of the initial purchase price and record the estimated fair value of contingent consideration as a liability in "Current contingent earn-out liabilities" and "Long-term contingent earn-out liabilities" on the consolidated balance sheets. We consider several factors when determining that contingent earn-out liabilities are part of the purchase price, including the following: (1) the valuation of our acquisitions is not supported solely by the initial consideration paid, and the contingent earn-out formula is a critical and material component of the valuation approach to determining the purchase price; and (2) the former owners of acquired companies that remain as key employees receive compensation other than contingent earn-out payments at a reasonable level compared with the compensation of our other key employees. The contingent earn-out payments are not affected by employment termination. We measure our contingent earn-out liabilities at fair value on a recurring basis using significant unobservable inputs classified within Level 3 of the fair value hierarchy. We use a probability weighted discounted income approach as a valuation technique to convert future estimated cash flows to a single present value amount. The significant unobservable inputs used in the fair value measurements are operating income projections over the earn-out period (generally two or three years), and the probability outcome percentages we assign to each scenario. Significant increases or decreases to either of these inputs in isolation would result in a significantly higher or lower liability with a higher liability capped by the contractual maximum of the contingent earn-out obligation. Ultimately, the liability will be equivalent to the amount paid, and the difference between the fair value estimate and amount paid will be recorded in earnings. The amount paid that is less than or equal to the liability on the acquisition date is reflected as cash used in financing activities in our consolidated statements of cash flows. Any amount paid in excess of the liability on the acquisition date is reflected as cash used in operating activities. We review and re-assess the estimated fair value of contingent consideration on a quarterly basis, and the updated fair value could differ materially from the initial estimates. Changes in the estimated fair value of our contingent earn-out liabilities related to the time component of the present value calculation are reported in interest expense. Adjustments to the estimated fair value related to changes in all other unobservable inputs are reported in operating income. Fair Value of Financial Instruments. We determine the fair values of our financial instruments, including short-term investments, debt instruments and derivative instruments based on inputs or assumptions that market participants would use in pricing an asset or a liability. We categorize our instruments using a valuation hierarchy for disclosure of the inputs used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument; and Level 3 inputs are unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value. The classification of a financial asset or liability within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximate fair values based on their short-term nature. The carrying amounts of our revolving credit facility approximates fair value because the interest rates are based upon variable reference rates. Certain other assets and liabilities, such as contingent earn-out liabilities, assets held for sale and amounts related to cash-flow hedges, are required to be carried in our consolidated financial statements at fair value. Our fair value measurement methods may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Although we believe our valuation methods are appropriate and consistent with those used by other market participants, the use of different methodologies or assumptions to determine fair value could result in a different fair value measurement at the reporting date. Derivative Financial Instruments. We account for our derivative instruments as either assets or liabilities and carry them at fair value. For derivative instruments that hedge the exposure to variability in expected future cash flows that are designated as cash flow hedges, the effective portion of the gain or loss on the derivative instrument is reported as a component of accumulated other comprehensive income (loss) in stockholders' equity and reclassified into income in the same period or periods during which the hedged transaction affects earnings. The ineffective portion of the gain or loss on the derivative instrument, if any, is recognized in current income. To receive hedge accounting treatment, cash flow hedges must be highly effective in offsetting changes to expected future cash flows on hedged transactions. The net gain or loss on the effective portion of a derivative instrument that is designated as an economic hedge of the foreign currency translation exposure generated by the re-measurement of certain assets and liabilities denominated in a non-functional currency in a foreign operation is reported in the same manner as a foreign currency translation adjustment. Accordingly, any gains or losses related to these derivative instruments are recognized in current income. Derivatives that do not qualify as hedges are adjusted to fair value through current income. Deferred Compensation. We maintain a non-qualified defined contribution supplemental retirement plan for certain key employees and non-employee directors that is accounted for in accordance with applicable authoritative guidance on accounting for deferred compensation arrangements where amounts earned are held in a rabbi trust and invested. Employee deferrals and our match are deposited into a rabbi trust, and the funds are generally invested in individual variable life insurance contracts that we own and are specifically designed to informally fund savings plans of this nature. Our consolidated balance sheets reflect our investment in variable life insurance contracts in "Other long-term assets." Our obligation to participating employees is reflected in "Other long-term liabilities." All income and expenses related to the rabbi trust are reflected in our consolidated statements of income. Income Taxes. We file a consolidated U.S. federal income tax return. In addition, we file other returns that are required in the states, foreign jurisdictions and other jurisdictions in which we do business. We account for certain income and expense items differently for financial reporting and income tax purposes. Deferred tax assets and liabilities are computed for the difference between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to reverse. In determining the need for a valuation allowance, management reviews both positive and negative evidence, including current and historical results of operations, future income projections and potential tax planning strategies. Based on our assessment, we have concluded that a portion of the deferred tax assets at September 30, 2018 will not be realized. According to the authoritative guidance on accounting for uncertainty in income taxes, we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. This guidance also addresses de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and disclosure requirements for uncertain tax positions. Concentration of Credit Risk. Financial instruments that subject us to credit risk consist primarily of cash and cash equivalents and net accounts receivable. In the event that we have surplus cash, we place our temporary cash investments with lower risk financial institutions and, by policy, limit the amount of investment exposure to any one financial institution. Approximately 26% of accounts receivable were due from various agencies of the U.S. federal government at fiscal 2018 year-end. The remaining accounts receivable are generally diversified due to the large number of organizations comprising our client base and their geographic dispersion. We perform ongoing credit evaluations of our clients and maintain an allowance for potential credit losses. Approximately 49% , 26% and 25% of our fiscal 2018 revenue was generated from our U.S government, U.S. commercial and international clients, respectively. Foreign Currency Translation. We determine the functional currency of our foreign operating units based upon the primary currency in which they operate. These operating units maintain their accounting records in their local currency, primarily Canadian and Australian dollars. Where the functional currency is not the U.S. dollar, translation of assets and liabilities to U.S. dollars is based on exchange rates at the balance sheet date. Translation of revenue and expenses to U.S. dollars is based on the average rate during the period. Translation gains or losses are reported as a component of other comprehensive income (loss). Gains or losses from foreign currency transactions are included in income from operations. Recently Adopted and Pending Accounting Guidance. In January 2016, the Financial Accounting Standards Board (“FASB”) issued guidance that generally requires companies to measure investments in other entities, except those accounted for under the equity method, at fair value and recognize any changes in fair value in net income. The guidance is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2017 (first quarter of fiscal 2019 for us). We do not expect the adoption of this guidance to have an impact on our consolidated financial statements. In February 2016, the FASB issued guidance that requires the rights and obligations associated with leasing arrangements be reflected on the balance sheet in order to increase transparency and comparability among organizations. Under the guidance, lessees will be required to recognize a right-of-use asset and a liability to make lease payments and disclose key information about leasing arrangements. The guidance is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2018 (first quarter of fiscal 2020 for us). Early adoption is permitted. While we are currently evaluating the impact that this guidance will have on our consolidated financial statements, we currently expect that the adoption of the new guidance will result in a significant increase in the assets and liabilities on our consolidated balance sheets and will likely have an immaterial impact on our consolidated statements of income and statements of cash flows. In June 2016, the FASB issued updated guidance which requires entities to estimate all expected credit losses for certain types of financial instruments, including trade receivables, held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The updated guidance also expands the disclosure requirements to enable users of financial statements to understand the entity’s assumptions, models and methods for estimating expected credit losses. This guidance is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2019 (first quarter of fiscal 2021 for us). Early adoption is permitted. We are currently evaluating the impact that this guidance will have on our consolidated financial statements. In August 2016, the FASB issued guidance to address eight specific cash flow issues to reduce the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. This guidance is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2017 (first quarter of fiscal 2019 for us). Early adoption is permitted. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements. In October 2016, the FASB issued updated guidance which requires entities to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. This guidance is effective for fiscal reporting periods and interim reporting periods within those fiscal reporting periods, beginning after December 15, 2017 (first quarter of fiscal 2019 for us). Early adoption is permitted. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements. In November 2016, the FASB issued updated guidance which provides amendments to address the classification and presentation of changes in restricted cash in the statement of cash flows. This guidance is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2017 (first quarter of fiscal 2019 for us). We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements. In January 2017, the FASB issued updated guidance to simplify the test for goodwill impairment. This guidance eliminates step two from the goodwill impairment test. Under the updated guidance, an entity should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to the reporting unit. This guidance is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019 (first quarter of fiscal 2021 for us), on a prospective basis. Earlier adoption is permitted for goodwill impairment tests performed on testing dates after January 1, 2017. We adopted this guidance in the first quarter of our fiscal 2018, and the adoption of this guidance had no impact on our consolidated financial statements. In May 2017, the FASB issued updated guidance to clarify when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. Under the updated guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award changes as a result of a change in terms or conditions. This guidance is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2017 (first quarter of fiscal 2019 for us), on a prospective basis. Early adoption is permitted. We do not expect the adoption of this guidance to have an impact on our consolidated financial statements. In August 2017, the FASB issued accounting guidance on hedging activities. The amendment better aligns an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. This guidance is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2018 (first quarter of fiscal 2020 for us). Early adoption is permitted. We are currently evaluating the impact that this guidance will have on our consolidated financial statements. In February 2018, the FASB issued guidance on reclassification of certain tax effects from accumulated comprehensive income, which allows for a reclassification of stranded tax effects from the Tax Cuts and Jobs Act ("TCJA") from accumulated other comprehensive income to retained earnings |
Stock Repurchase and Dividends
Stock Repurchase and Dividends | 12 Months Ended |
Sep. 30, 2018 | |
Stock Repurchase And Dividends [Abstract] | |
Stock Repurchase and Dividends | Stock Repurchase and Dividends On November 7, 2016, the Board of Directors authorized a stock repurchase program under which we could repurchase up to $200 million of our common stock. In fiscal 2017 , we repurchased through open market purchases under this program a total of 2,266,397 shares at an average price of $44.12 for a total cost of $100.0 million . In fiscal 2018 , we repurchased an additional 1,491,569 shares through an open market under this program at an average price of $50.28 for a total cost of $75.0 million . The following table summarizes dividends declared and paid in fiscal 2018 and 2017 : Declaration Date Dividend Paid Per Share Record Date Payment Date Dividends Paid (in thousands, except per share data) November 6, 2017 $ 0.10 November 30, 2017 December 15, 2017 $ 5,589 January 29, 2018 $ 0.10 February 14, 2018 March 2, 2018 5,583 April 30, 2018 $ 0.12 May 16, 2018 June 1, 2018 6,664 July 30, 2018 $ 0.12 August 16, 2018 August 31, 2018 6,641 Total dividend paid as of September 30, 2018 $ 24,477 November 7, 2016 $ 0.09 December 1, 2016 December 14, 2016 $ 5,144 January 30, 2017 $ 0.09 February 17, 2017 March 3, 2017 5,157 May 1, 2017 $ 0.10 May 18, 2017 June 2, 2017 5,738 July 31, 2017 $ 0.10 August 17, 2017 September 1, 2017 5,633 Total dividend paid as of October 1, 2017 $ 21,672 Subsequent Events. On November 5, 2018, the Board of Directors declared a quarterly cash dividend of $0.12 per share payable on December 14, 2018 to stockholders of record as of the close of business on November 30, 2018. The Board also authorized a new stock repurchase program under which we could repurchase up to $200 million of our common stock in addition to the $25 million remaining under the previous stock repurchase program. |
Accounts Receivable and Revenue
Accounts Receivable and Revenue Recognition | 12 Months Ended |
Sep. 30, 2018 | |
Accounts Receivable - Net and Revenue Recognition | |
Accounts Receivable and Revenue Recognition | Accounts Receivable and Revenue Recognition Net accounts receivable and billings in excess of costs on uncompleted contracts consisted of the following at September 30, 2018 and October 1, 2017 : September 30, October 1, (in thousands) Billed $ 464,062 $ 376,287 Unbilled 397,200 404,899 Contract retentions 13,421 39,840 Total accounts receivable – gross 874,683 821,026 Allowance for doubtful accounts (37,580 ) (32,259 ) Total accounts receivable – net $ 837,103 $ 788,767 Billings in excess of costs on uncompleted contracts $ 143,270 $ 117,499 Billed accounts receivable represent amounts billed to clients that have not been collected. Unbilled accounts receivable represent revenue recognized but not yet billed pursuant to contract terms or billed after the period end date. Except for amounts related to claims as discussed below, most of our unbilled receivables at September 30, 2018 are expected to be billed and collected within 12 months. Contract retentions represent amounts withheld by clients until certain conditions are met or the project is completed, which may be several months or years. The allowance for doubtful accounts represents amounts that are expected to become uncollectible or unrealizable in the future. We determine an estimated allowance for uncollectible accounts based on management's consideration of trends in the actual and forecasted credit quality of our clients, including delinquency and payment history; type of client, such as a government agency or a commercial sector client; and general economic and particular industry conditions that may affect a client's ability to pay. Billings in excess of costs on uncompleted contracts represent the amount of cash collected from clients and billings to clients on contracts in advance of revenue recognized. The majority of billings in excess of costs on uncompleted contracts will be earned within 12 months. Once contract performance is underway, we may experience changes in conditions, client requirements, specifications, designs, materials and expectations regarding the period of performance. Such changes result in change orders and may be initiated by us or by our clients. In many cases, agreement with the client as to the terms of change orders is reached prior to work commencing; however, sometimes circumstances require that work progress without a definitive client agreement. Unapproved change orders constitute claims in excess of agreed contract prices that we seek to collect from our clients for delays, errors in specifications and designs, contract terminations, or other causes of unanticipated additional costs. Revenue on claims is recognized when contract costs related to claims have been incurred and when their addition to contract value can be reliably estimated. This can lead to a situation in which costs are recognized in one period and revenue is recognized in a subsequent period, such as when client agreement is obtained or a claims resolution occurs. Total accounts receivable at September 30, 2018 and October 1, 2017 included approximately $74 million and $59 million , respectively, related to claims, including requests for equitable adjustment, on contracts that provide for price redetermination. We regularly evaluate all unsettled claim amounts and record appropriate adjustments to operating earnings when it is probable that the claim will result in a different contract value than the amount previously estimated. Our fiscal 2018 results include a reduction of revenue of $10.6 million and a related charge to operating income of $12.5 million related to the settlement of a claim in our CIG reportable segment for a fixed-price construction project that was completed in fiscal 2014 prior to our decision to exit similar activities in our RCM segment. In fiscal 2017, we recognized a reduction of revenue of $4.9 million and related losses in operating income of $3.6 million in our RCM segment. Billed accounts receivable related to U.S. federal government contracts were $81.5 million and $45.4 million at September 30, 2018 and October 1, 2017 , respectively. U.S. federal government contracts unbilled receivables were $102.7 million and $109.7 million at September 30, 2018 and October 1, 2017 , respectively. Other than the U.S. federal government, no single client accounted for more than 10% of our accounts receivable at September 30, 2018 and October 1, 2017 . We recognize revenue from contracts using the percentage-of-completion method, primarily utilizing the cost-to-cost approach, to estimate the progress towards completion in order to determine the amount of revenue and profit to recognize. Changes in those estimates could result in the recognition of cumulative catch-up adjustments to the contract’s inception-to-date revenue, costs and profit in the period in which such changes are made. As a result, we recognized net unfavorable operating income adjustments of $11.2 million during fiscal 2018 in the CIG segment. We recognized net unfavorable operating income adjustments during fiscal 2017 of $8.0 million ( $2.3 million in the CIG segment and $5.7 million in the RCM segment) and during fiscal 2016 of $2.3 million . Changes in revenue and cost estimates could also result in a projected loss that would be recorded immediately in earnings. As of September 30, 2018 and October 1, 2017 , our consolidated balance sheets included liabilities for anticipated losses of $13.6 million and $8.1 million , respectively. The estimated cost to complete the related contracts as of September 30, 2018 was $16.4 million . |
Acquisitions and Divestitures
Acquisitions and Divestitures | 12 Months Ended |
Sep. 30, 2018 | |
Business Combinations [Abstract] | |
Acquisitions and Divestitures | Acquisitions and Divestitures In the fiscal 2016 , we acquired control of Coffey International Limited ("Coffey"), headquartered in Sydney, Australia. Coffey had approximately 3,300 staff delivering technical and engineering solutions in international development and geoscience. Coffey significantly expands our geographic presence, particularly in Australia and Asia-Pacific. Coffey's international development operations are included in our GSG segment and the remainder of Coffey's activities are included in our CIG segment. In addition to Australia, Coffey's international development business has operations supporting federal government agencies in the U.S., Australia and the United Kingdom. The fair value of the purchase price for Coffey was $76.1 million , in addition to $65.1 million of assumed debt, which consisted of secured bank term debt of $37.1 million and unsecured corporate bond obligations of $28.0 million . All of this debt was paid in full in the second quarter of fiscal 2016 subsequent to the acquisition. In fiscal 2016 , we also acquired INDUS Corporation ("INDUS"), headquartered in Vienna, Virginia. INDUS is an information technology solutions firm focused on water data analytics, geospatial analysis, secure infrastructure, and software applications management for U.S. federal government customers, and is included in our GSG segment. The fair value of the purchase price for INDUS was $18.7 million . Of this amount, $14.0 million was paid to the sellers and $4.7 million was the estimated fair value of contingent earn-out obligations, with a maximum of $8.0 million , based upon the achievement of specified operating income targets in each of the two years following the acquisition. In fiscal 2017 , we completed the acquisition of Eco Logical Australia (“ELA”), headquartered in Sydney, Australia. ELA is a multi-disciplinary consulting firm with over 160 staff that provides innovative, high-end environmental and ecological services, and is part of our CIG segment. The fair value of the purchase price for ELA was $9.9 million . Of this amount, $8.3 million was paid to the sellers and $1.6 million was the estimated fair value of contingent earn-out obligations, with a maximum of $1.7 million , based upon the achievement of specified operating income targets in each of the two years following the acquisition. In the first quarter of fiscal 2018 , we acquired Glumac, headquartered in Portland, Oregon. Glumac is a leader in sustainable infrastructure design with more than 300 employees and is part of our GSG segment. The fair value of the purchase price for Glumac was $38.4 million . This amount is comprised of $20.0 million of initial cash payments made to the sellers and $18.4 million for the estimated fair value of contingent earn-out obligations, with a maximum of $20.0 million payable, based upon the achievement of specified operating income targets in each of the three years following the acquisition. In the second quarter of fiscal 2018 , we completed the acquisition of Norman Disney & Young (“NDY”), a leader in sustainable infrastructure engineering design. NDY is an Australian-based global engineering design firm with more than 700 professionals operating in offices throughout Australia, the Asia-Pacific region, the United Kingdom, and Canada and is part of our CIG segment. The fair value of the purchase price for NDY was $56.1 million . This amount is comprised of $46.9 million of initial cash payments made to the sellers, $1.6 million held in escrow, and $7.6 million for the estimated fair value of contingent earn-out obligations, with a maximum amount of $20.2 million , based upon the achievement of specified operating income targets in each of the three years following the acquisition. In the third quarter of fiscal 2018 , we divested our non-core utility field services operations in the CIG reportable segment for net proceeds after transaction costs of $30.2 million . This operation generated approximately $70 million in annual revenue primarily from our U.S. commercial clients. We also divested of other non-core assets during the third quarter of fiscal 2018 further described in Note 7 , " Property and Equipment ". These non-core divestitures resulted in a pre-tax loss of $3.4 million , which is included in selling, general and administrative expenses for fiscal 2018. Goodwill additions resulting from the above business combinations are primarily attributable to the existing workforce of the acquired companies and the synergies expected to arise after the acquisitions. The goodwill additions related to our fiscal 2018 acquisitions primarily represent the value of a workforce with distinct expertise in the sustainable infrastructure design market. The goodwill additions related to the fiscal 2017 acquisitions primarily represent the value of workforces with distinct expertise in the environmental and ecological markets. In addition, these acquired capabilities, when combined with our existing global consulting and engineering business, result in opportunities that allow us to provide services under contracts that could not have been pursued individually by either us or the acquired companies. The results of these acquisitions were included in the consolidated financial statements from their respective closing dates. These acquisitions and divestitures were not considered material to our consolidated financial statements. As a result, no pro forma information has been provided. Backlog, client relations and trade name intangible assets include the fair value of existing contracts and the underlying customer relationships with lives ranging from 1 to 10 years, and trade names with lives ranging from 3 to 5 years. Most of our acquisition agreements include contingent earn-out agreements, which are generally based on the achievement of future operating income thresholds. The contingent earn-out arrangements are based on our valuations of the acquired companies, and reduce the risk of overpaying for acquisitions if the projected financial results are not achieved. The fair values of any earn-out arrangements are included as part of the purchase price of the acquired companies on their respective acquisition dates. For each transaction, we estimate the fair value of contingent earn-out payments as part of the initial purchase price and record the estimated fair value of contingent consideration as a liability in "Current contingent earn-out liabilities" and "Long-term contingent earn-out liabilities" on the consolidated balance sheets. We consider several factors when determining that contingent earn-out liabilities are part of the purchase price, including the following: (1) the valuation of our acquisitions is not supported solely by the initial consideration paid, and the contingent earn-out formula is a critical and material component of the valuation approach to determining the purchase price; and (2) the former owners of acquired companies that remain as key employees receive compensation other than contingent earn-out payments at a reasonable level compared with the compensation of our other key employees. The contingent earn-out payments are not affected by employment termination. We measure our contingent earn-out liabilities at fair value on a recurring basis using significant unobservable inputs classified within Level 3 of the fair value hierarchy. We use a probability-weighted discounted income approach as a valuation technique to convert future estimated cash flows to a single present value amount. The significant unobservable inputs used in the fair value measurements are operating income projections over the earn-out period (generally two or three years), and the probability outcome percentages we assign to each scenario. Significant increases or decreases to either of these inputs in isolation would result in a significantly higher or lower liability, with a higher liability capped by the contractual maximum of the contingent earn-out obligation. Ultimately, the liability will be equivalent to the amount paid, and the difference between the fair value estimate and amount paid will be recorded in earnings. The amount paid that is less than or equal to the contingent earn-out liability on the acquisition date is reflected as cash used in financing activities in our consolidated statements of cash flows. Any amount paid in excess of the contingent earn-out liability on the acquisition date is reflected as cash used in operating activities in our consolidated statements of cash flows. We review and re-assess the estimated fair value of contingent consideration on a quarterly basis, and the updated fair value could differ materially from the initial estimates. Changes in the estimated fair value of our contingent earn-out liabilities related to the time component of the present value calculation are reported in interest expense. Adjustments to the estimated fair value related to changes in all other unobservable inputs are reported in operating income. In fiscal 2018, we recorded adjustments to our contingent earn-out liabilities and reported related losses in operating income of $4.3 million . These losses resulted from updated valuations of the contingent consideration liabilities for NDY, ELA and Cornerstone Environmental Group ("CEG"). These valuations included our updated projections of NDY's, ELA's, and CEG's financial performance during the earn-out periods, which exceeded our original estimates at the acquisition dates. In addition, in fiscal 2018 we recognized a charge of $1.5 million that related to the earn-out for Glumac but was treated as compensation in selling, general and administrative expenses due to the terms of the arrangement, which included an on-going service requirement for a portion of the earn-out. During fiscal 2017 , we recorded adjustments to our contingent earn-out liabilities and reported related net gains in operating income totaling $6.9 million . These gains resulted from updated valuations of the contingent consideration liabilities for INDUS and CEG. During fiscal 2016, we increased our contingent earn-out liabilities and reported related losses in operating income of $2.8 million . These losses include a $1.8 million charge that reflected our updated valuation of the contingent consideration liability for CEG. The remaining $1.0 million loss represented the final cash settlement of an earn-out liability that was valued at $0 at the end of fiscal 2015. The acquisition agreement for INDUS included a contingent earn-out agreement based on the achievement of operating income thresholds in each of the first two years beginning on the acquisition date, which was in the second quarter of fiscal 2016. The maximum earn-out obligation over the two -year earn-out period was $8.0 million ( $4.0 million in each year). These amounts could be earned on a pro-rata basis starting at 50% of the earn-out maximum for operating income within a predetermined range in each year. INDUS was required to meet a minimum operating income threshold in each year to earn any contingent consideration. These minimum thresholds were $3.2 million and $3.6 million in years one and two, respectively. In order to earn the maximum contingent consideration, INDUS needed to generate operating income of $3.6 million in year one and $4.0 million in year two. The determination of the fair value of the purchase price for INDUS on the acquisition date included our estimate of the fair value of the related contingent earn-out obligation. The initial valuation was primarily based on probability-weighted internal estimates of INDUS’ operating income during each earn-out period. As a result of these estimates, we calculated an initial fair value at the acquisition date of INDUS’ contingent earn-out liability of $4.7 million in the second quarter of fiscal 2016. This amount had increased to $4.9 million at the end of fiscal 2016 due to the passage of time for the present value calculation. In determining that INDUS would earn 59% of the maximum potential earn-out, we considered several factors including INDUS’ recent historical revenue and operating income levels and growth rates. We also considered the recent trend in INDUS’ backlog level. INDUS’ actual financial performance in the first earn-out period was below our original expectation at the acquisition date. As a result, in the second quarter of fiscal 2017, we evaluated our estimate of INDUS’ contingent consideration liability for both earn-out periods. This assessment included a review of INDUS’ financial results in the first earn-out period, the status of ongoing projects in INDUS’ backlog, and the inventory of prospective new contract awards. As a result of this assessment, we concluded that INDUS’ operating income in both the first and second earn-out periods would be lower than the minimum requirements of $3.2 million and $3.6 million , respectively, to earn any contingent consideration. Accordingly, in the second quarter of fiscal 2017, we reduced the INDUS contingent earn-out liability to $0 , which resulted in a gain of $5.0 million . During the second quarter of fiscal 2017, when we determined that INDUS’ operating income would be lower than our previous estimates, including our original estimates at the acquisition dates, we also evaluated the related goodwill for potential impairment. We determined that the related reporting units’ long-term performance was not materially impacted and there was no resulting goodwill impairment. At September 30, 2018 , there was a total maximum of $50.6 million of outstanding contingent consideration related to acquisitions. Of this amount, $35.3 million was estimated as the fair value and accrued on our consolidated balance sheet. The following table summarizes the changes in the carrying value of estimated contingent earn-out liabilities: Fiscal Year Ended September 30, October 1, October 2, (in thousands) Beginning balance (at fair value) $ 2,438 $ 8,757 $ 4,169 Estimated earn-out liabilities for acquisitions during the fiscal year 32,210 1,604 4,745 Increases due to re-measurement of fair value reported in interest expense 1,005 260 271 Net increase (decrease) due to re-measurement of fair value reported as losses (gains) in operating income 4,252 (6,923 ) 2,823 Foreign exchange impact (854 ) 59 — Earn-out payments: Reported as cash used in operating activities (2,349 ) — — Reported as cash used in financing activities (1,412 ) (1,319 ) (3,251 ) Ending balance (at fair value) $ 35,290 $ 2,438 $ 8,757 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Sep. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets The following table summarizes the changes in the carrying value of goodwill: GSG CIG Total (in thousands) Balance at October 2, 2016 $ 357,050 $ 360,938 $ 717,988 Acquisition activity — 7,055 7,055 Translation and other 4,711 11,132 15,843 Balance at October 1, 2017 361,761 379,125 740,886 Acquisition activity 27,526 58,353 85,879 Divestiture activity — (12,160 ) (12,160 ) Translation and other 454 (16,239 ) (15,785 ) Balance at September 30, 2018 $ 389,741 $ 409,079 $ 798,820 We perform our annual goodwill impairment review at the beginning of our fiscal fourth quarter. Our last review at July 2, 2018 (i.e. the first day of our fourth quarter in fiscal 2018), indicated that we had no impairment of goodwill, and all of our reporting units had estimated fair values that were in excess of their carrying values, including goodwill. All of our reporting units had estimated fair values that exceeded their carrying values by more than 30% . In addition, we regularly evaluate whether events and circumstances have occurred that may indicate a potential change in the recoverability of goodwill. We perform interim goodwill impairment reviews between our annual reviews if certain events and circumstances have occurred, such as a deterioration in general economic conditions; an increase in the competitive environment; a change in management, key personnel, strategy or customers; negative or declining cash flows; or a decline in actual or planned revenue or earnings compared with actual and projected results of relevant prior periods. Our fourth quarter 2018 and 2017 goodwill impairment reviews indicated that we had no impairment of goodwill, and all of our other reporting units had estimated fair values that were in excess of their carrying values, including goodwill. Although we believe that our estimates of fair value for these reporting units are reasonable, if financial performance for these reporting units falls significantly below our expectations or market prices for similar business decline, the goodwill for these reporting units could become impaired. Foreign exchange translation relates to our foreign subsidiaries with functional currencies that are different than our reporting currency. The gross amounts of goodwill for GSG were $407.4 million and $379.5 million at September 30, 2018 and October 1, 2017 , respectively, excluding $17.7 million of accumulated impairment. The gross amounts of goodwill for CIG were $507.0 million and $477.0 million at September 30, 2018 and October 1, 2017 , respectively, excluding $97.9 million of accumulated impairment. The gross amount and accumulated amortization of our acquired identifiable intangible assets with finite useful lives included in "Intangible assets – net" on the consolidated balance sheets, were as follows: Fiscal Year Ended September 30, 2018 October 1, 2017 Weighted- Average Remaining Life (in years) Gross Amount Accumulated Amortization Gross Amount Accumulated Amortization ($ in thousands) Non-compete agreements 0.0 $ 83 $ (83 ) $ 495 $ (493 ) Client relations 2.6 54,639 (46,449 ) 90,297 (75,074 ) Backlog 0.5 23,371 (20,007 ) 21,518 (13,301 ) Technology and trade names 3.2 8,144 (3,575 ) 6,685 (3,439 ) Total $ 86,237 $ (70,114 ) $ 118,995 $ (92,307 ) Foreign currency translation adjustments reduced net identifiable intangible assets by $0.9 million and $0.1 million in fiscal 2018 and 2017 , respectively. Amortization expense for the identifiable intangible assets for fiscal 2018 , 2017 and 2016 was $18.2 million , $22.8 million and $22.1 million , respectively. Estimated amortization expense for the succeeding five years and beyond is as follows: Amount (in thousands) 2019 $ 9,016 2020 3,366 2021 2,271 2022 1,037 2023 433 Total $ 16,123 |
Property and Equipment
Property and Equipment | 12 Months Ended |
Sep. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and Equipment Property and equipment consisted of the following: Fiscal Year Ended September 30, October 1, (in thousands) Equipment, furniture and fixtures $ 131,521 $ 150,026 Leasehold improvements 31,430 27,689 Land and buildings 413 3,680 Total property and equipment 163,364 181,395 Accumulated depreciation (120,086 ) (124,560 ) Property and equipment, net $ 43,278 $ 56,835 The depreciation expense related to property and equipment was $19.6 million , $22.2 million and $22.8 million for fiscal 2018 , 2017 and 2016 , respectively. Our property and equipment declined $7.0 million ( $3.0 million of which was land and buildings) due to the divestitures of our non-core utility field services operations in the CIG reportable segment and certain non-core assets in the third quarter of fiscal 2018. |
Income Taxes
Income Taxes | 12 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The income before income taxes, by geographic area, was as follows: Fiscal Year Ended September 30, October 1, October 2, (in thousands) Income before income taxes: United States $ 180,034 $ 166,074 $ 113,576 Foreign (5,472 ) 5,687 10,890 Total income before income taxes $ 174,562 $ 171,761 $ 124,466 Income tax expense consisted of the following: Fiscal Year Ended September 30, October 1, October 2, (in thousands) Current: Federal $ 46,840 $ 45,604 $ 22,277 State 9,228 8,860 5,634 Foreign 10,897 9,337 6,651 Total current income tax expense 66,965 63,801 34,562 Deferred: Federal (22,072 ) (4,251 ) 6,231 State (1,471 ) (945 ) (16 ) Foreign (5,817 ) (4,761 ) (164 ) Total deferred income tax expense (29,360 ) (9,957 ) 6,051 Total income tax expense $ 37,605 $ 53,844 $ 40,613 Total income tax expense was different from the amount computed by applying the U.S. federal statutory rate to pre-tax income as follows: Fiscal Year Ended September 30, October 1, October 2, Tax at federal statutory rate 24.5% 35.0% 35.0% State taxes, net of federal benefit 4.2 3.4 3.1 Research and Development ("R&D") credit (1.4) (1.8) (3.4) Domestic production deduction (0.2) (0.7) (0.7) Tax differential on foreign earnings 0.5 — (1.6) Non-taxable foreign interest income (2.0) (2.9) (3.9) Non-deductible executive compensation — — 2.0 Goodwill 1.7 — — Stock compensation (2.7) (2.8) 0.3 Valuation allowance (0.5) (0.5) 2.4 Change in uncertain tax positions 1.9 1.8 (2.0) Revaluation of deferred taxes (8.4) — — Deferred tax adjustments 2.1 — — Other 1.8 (0.2) 1.4 Total income tax expense 21.5% 31.3% 32.6% The effective tax rates for fiscal 2018 and 2017 were 21.5% and 31.3% , respectively. The fiscal 2018 tax rate reflects the impact of the comprehensive tax legislation enacted by the U.S. government on December 22, 2017, which is commonly referred to as the Tax Cuts and Jobs Act (“TCJA”). The TCJA significantly revised the U.S. corporate income tax regime by, among other things, lowering the U.S. corporate tax rate from 35% to 21% effective January 1, 2018, while also repealing the deduction for domestic production activities, limiting the deductibility of certain executive compensation, and implementing a modified territorial tax system. The TCJA also imposes a one-time transition tax on deemed repatriation of historical earnings of foreign subsidiaries. We analyzed this provision of the TCJA and our related foreign earnings accumulated under legacy tax laws during fiscal 2018. Based on our analysis of tax earnings and profits and tax deficits at the prescribed measurement dates, we have a cumulative net tax deficit and do not believe we have any tax liability related to this tax. As we have a September 30 fiscal year-end, our U.S. federal corporate income tax rate was blended in fiscal 2018, resulting in a statutory federal rate of approximately 24.5% (3 months at 35% and 9 months at 21%), and will be 21% for subsequent fiscal years. GAAP requires that the impact of tax legislation be recognized in the period in which the tax law was enacted. As a result of the TCJA, we reduced our deferred tax liabilities and recorded a one-time deferred tax benefit of approximately $14.7 million in fiscal 2018 to reflect our estimate of temporary differences in the United States that will be recovered or settled in fiscal 2018 based on the 24.5% blended corporate tax rate or based on the 21% tax rate in fiscal 2019 and beyond versus the previous enacted 35% corporate tax rate. In fiscal 2018, we recognized other non-recurring adjustments to our deferred tax assets and liabilities that resulted in a net deferred tax expense of $3.6 million . Excluding these net deferred tax benefits, our effective tax rate in fiscal 2018 was 27.9% . The one-time revaluation of our deferred tax liabilities and our estimate of the one-time transition tax on foreign earnings are both preliminary and subject to adjustment as we refine the information necessary to record the final values. The provisional amounts incorporate assumptions made based on our current interpretation of the TCJA and may change as we receive additional clarification on the implementation guidance. Additionally, in order to complete the valuation of our deferred tax liabilities, additional information related to the timing of the recovery or settlement of our deferred tax assets and liabilities and the effective tax rates (including state tax rates) that will apply needs to be obtained and analyzed. Similarly, information related to the computation of our foreign earnings and profits subject to the one-time transition tax requires further analysis before we make a final determination that we have no related liability. The U.S. Securities and Exchange Commission (“SEC”) has issued rules that would allow for a measurement period of up to one year after the enactment date of the TCJA to finalize the recording of the related tax impacts. We will finalize and record any resulting adjustments by the end of the first quarter of fiscal 2019. The fiscal 2018 divestitures of our non-core utility field services operations and other non-core assets resulted in a pre-tax loss of $3.4 million and incremental tax expense of $2.6 million due to a book/tax basis difference primarily related to the $12.2 million of associated goodwill. In fiscal 2018, the Internal Revenue Service ("IRS") concluded their examination for fiscal years 2014 through 2016 and other state examinations were also completed. As a result, we recognized a net $1.6 million tax expense in fiscal 2018, and we made payments to the IRS of approximately $7.6 million . In fiscal 2017, the IRS concluded their examination for fiscal years 2010 through 2013. As a result, we recognized a $1.2 million tax benefit in and we made payments to the IRS of approximately $21.5 million in fiscal 2017 that represented the acceleration of a deferred tax liability. In fiscal 2017, we also recognized a tax expense of $2.3 million to establish a reserve for an international tax position that is under examination. Excluding these discrete amounts from both periods and the one-time impacts of the TCJA, the effective tax rates for fiscal 2018 and 2017 were 25.1% and 30.7% , respectively. Temporary differences comprising the net deferred income tax liability shown on the accompanying consolidated balance sheets were as follows: Fiscal Year Ended September 30, October 1, (in thousands) Deferred Tax Assets: State taxes $ 1,220 $ 598 Reserves and contingent liabilities 2,646 2,941 Allowance for doubtful accounts 4,259 4,273 Accrued liabilities 19,611 22,466 Stock-based compensation 6,338 10,069 Loss carry-forwards 23,492 28,261 Valuation allowance (21,479 ) (25,326 ) Total deferred tax assets 36,087 43,282 Deferred Tax Liabilities: Unbilled revenue (25,819 ) (46,408 ) Prepaid expense (3,524 ) (6,253 ) Intangibles (23,319 ) (24,328 ) Property and equipment (4,984 ) (8,311 ) Total deferred tax liability (57,646 ) (85,300 ) Net deferred tax liabilities $ (21,559 ) $ (42,018 ) At September 30, 2018, undistributed earnings of our foreign subsidiaries, primarily in Canada, amounting to approximately $11.8 million are expected to be permanently reinvested. Accordingly, no provision for foreign withholding taxes has been made. Upon distribution of those earnings, we would be subject to foreign withholding taxes. Assuming the permanently reinvested foreign earnings were repatriated under the laws and rates applicable at September 30, 2018, the incremental foreign withholding taxes applicable to those earnings would be approximately $1.0 million . At September 30, 2018, we had available unused state net operating loss ("NOL") carry forwards of $43.7 million that expire at various dates from 2023 to 2036; and available foreign NOL carry forwards of $72.4 million , of which $31.4 million expire at various dates from 2023 to 2038, and $41.0 million have no expiration date. We have performed an assessment of positive and negative evidence regarding the realization of the deferred tax assets. This assessment included the evaluation of scheduled reversals of deferred tax liabilities, availability of carrybacks, cumulative losses in recent years, and estimates of projected future taxable income. Although realization is not assured, based on our assessment, we have concluded that it is more likely than not that the assets will be realized except for the assets related to the loss carry-forwards and certain foreign intangibles for which a valuation allowance of $21.5 million has been provided. At September 30, 2018, we had $9.4 million of unrecognized tax benefits, all of which, if recognized, would affect our effective tax rate. It is not expected that there will be a significant change in the unrecognized tax benefits in the next 12 months. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: Fiscal Year Ended September 30, October 1, October 2, (in thousands) Beginning balance $ 9,337 $ 22,786 $ 21,618 Additions for current year tax positions 1,108 1,060 2,802 Additions for prior year tax positions 3,478 2,365 1,466 Reductions for prior year tax positions — (6,875 ) (3,100 ) Settlements (4,496 ) (9,999 ) — Ending balance $ 9,427 $ 9,337 $ 22,786 We recognize potential interest and penalties related to unrecognized tax benefits in income tax expense. During fiscal years 2018 and 2017, we accrued additional interest expense of $0.6 million $0.4 million , respectively, and recorded reductions in accrued interest of $0.3 million and $0.9 million , respectively, as a result of audit settlements and other prior-year adjustments. The amount of interest and penalties accrued at September 30, 2018 and October 1, 2017 was $1.2 million and $1.1 million , respectively. |
Long-Term Debt
Long-Term Debt | 12 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt Long-term debt consisted of the following: Fiscal Year Ended September 30, October 1, (in thousands) Credit facilities $ 277,127 $ 356,438 Other 184 433 Total long-term debt 277,311 356,871 Less: Current portion of long-term debt (12,599 ) (15,588 ) Long-term debt, less current portion $ 264,712 $ 341,283 On July 30, 2018, we entered into a Second Amended and Restated Credit Agreement (“Amended Credit Agreement”) that will mature in July 2023 with a total borrowing capacity of $1 billion . The Amended Credit Agreement is a $700 million senior secured, five -year facility that provides for a $250 million term loan facility (the “Amended Term Loan Facility”) and a $450 million revolving credit facility (the “Amended Revolving Credit Facility”). In addition, the Amended Credit Agreement includes a $300 million accordion feature that allows us to increase the Amended Credit Agreement to $1 billion subject to lender approval. The Amended Credit Agreement allows us to, among other things, (i) refinance indebtedness under our Credit Agreement dated as of May 7, 2013; (ii) finance certain permitted open market repurchases of the our common stock, permitted acquisitions, and cash dividends and distributions; and (iii) utilize the proceeds for working capital, capital expenditures and other general corporate purposes. The Amended Revolving Credit Facility includes a $100 million sublimit for the issuance of standby letters of credit, a $20 million sublimit for swingline loans, and a $200 million sublimit for multicurrency borrowings and letters of credit. The entire Amended Term Loan Facility was drawn on July 30, 2018. The Amended Term Loan Facility is subject to quarterly amortization of principal at 5% annually beginning December 31, 2018. We may borrow on the Amended Revolving Credit Facility, at our option, at either (a) a Eurocurrency rate plus a margin that ranges from 1.00% to 1.75% per annum, or (b) a base rate for loans in U.S. dollars (the highest of the U.S. federal funds rate plus 0.50% per annum, the bank’s prime rate or the Eurocurrency rate plus 1.00% ) plus a margin that ranges from 0% to 0.75% per annum. In each case, the applicable margin is based on our Consolidated Leverage Ratio, calculated quarterly. The Amended Term Loan Facility is subject to the same interest rate provisions. The Amended Credit Agreement expires on July 30, 2023, or earlier at our discretion upon payment in full of loans and other obligations. As of September 30, 2018 , we had $277.1 million in outstanding borrowings under the Amended Credit Agreement, which was comprised of $250 million under the Amended Term Loan Facility and $27.1 million under the Amended Revolving Credit Facility at a weighted-average interest rate of 3.27% per annum. In addition, we had $0.9 million in standby letters of credit under the Amended Credit Agreement. Our average effective weighted-average interest rate on borrowings outstanding at September 30, 2018 under the Amended Credit Agreement, including the effects of interest rate swap agreements described in Note 14, "Derivative Financial Instruments", was 3.28% At September 30, 2018 , we had $422.0 million of available credit under the Amended Revolving Credit Facility, all of which could be borrowed without a violation of our debt covenants. The Amended Credit Agreement contains certain affirmative and restrictive covenants, and customary events of default. The financial covenants provide for a maximum Consolidated Leverage Ratio of 3.00 to 1.00 (total funded debt/EBITDA, as defined in the Amended Credit Agreement) and a minimum Consolidated Interest Coverage Ratio of 3.00 to 1.00 (EBITDA/Consolidated Interest Charges, as defined in the Amended Credit Agreement). Our obligations under the Amended Credit Agreement are guaranteed by certain of our domestic subsidiaries and are secured by first priority liens on (i) the equity interests of certain of our subsidiaries, including those subsidiaries that are guarantors or borrowers under the Amended Credit Agreement, and (ii) the accounts receivable, general intangibles and intercompany loans, and those of our subsidiaries that are guarantors or borrowers. At September 30, 2018 , we were in compliance with these covenants with a consolidated leverage ratio of 1.23 x and a consolidated interest coverage ratio of 15.42 x. Our obligations under the Credit Agreement are guaranteed by certain of our subsidiaries and are secured by first priority liens on (i) the equity interests of certain of our subsidiaries, including those subsidiaries that are guarantors or borrowers under the Credit Agreement, and (ii) our accounts receivable, general intangibles and intercompany loans, and those of our subsidiaries that are guarantors or borrowers. In addition to the credit facility, we entered into agreements to issue standby letters of credit. The aggregate amount of standby letters of credit outstanding under these additional agreements and other bank guarantees was $29.8 million , of which $4.3 million was issued in currencies other than the U.S. dollar. We maintain at our Australian subsidiary an AUD $30 million credit facility, which may be used for bank overdrafts, short-term cash advances and bank guarantees. This facility expires in March 2019 and is secured by a parent guarantee. At September 30, 2018 , there were no borrowings outstanding under this facility and bank guarantees outstanding of $7.1 million , which were issued in currencies other than the U.S. dollar. The following table presents scheduled maturities of our long-term debt: Amount (in thousands) 2019 $ 12,599 2020 12,585 2021 12,500 2022 12,500 2023 227,127 Total $ 277,311 |
Leases
Leases | 12 Months Ended |
Sep. 30, 2018 | |
Leases [Abstract] | |
Leases | Leases We lease office and field equipment, vehicles and buildings under various operating leases. In fiscal 2018 , 2017 and 2016 , we recognized $77.8 million , $71.3 million and $75.0 million of expense associated with operating leases, respectively. The following are amounts payable under non-cancelable operating and capital lease commitments for the next five fiscal years and beyond: Operating Capital (in thousands) 2019 $ 84,442 $ 92 2020 65,119 85 2021 46,003 — 2022 29,846 — 2023 19,078 — Beyond 18,253 — Total $ 262,741 $ 177 Net present value $ 177 We vacated certain facilities under long-term non-cancelable leases and recorded contract termination costs of $2.9 million in fiscal 2016. These amounts were initially measured at the fair value of the portion of the lease payments associated with the vacated facilities, reduced by estimated sublease rentals, less the write off of a prorated portion of existing deferred items previously recognized on these leases. We expect the remaining lease payments to be paid through the various lease expiration dates that continue until 2022. We initially measured the lease contract termination liability at the fair value of the prorated portion of the lease payments associated with the vacated facilities, reduced by estimated sublease rentals and other costs. If the actual timing and potential termination costs or realization of sublease income differ from our estimates, the resulting liabilities could vary from recorded amounts. These liabilities are reviewed periodically and adjusted when necessary. The following is a reconciliation of the beginning and ending balances of these liabilities related to lease contract termination costs: GSG CIG RCM Total (in thousands) Balance at October 2, 2016 $ 674 $ 2,391 $ 39 $ 3,104 Adjustments (1) (415 ) (959 ) (36 ) (1,410 ) Balance at October 1, 2017 259 1,432 3 1,694 Adjustments (1) (259 ) (512 ) (3 ) (774 ) Balance at September 30, 2018 $ — $ 920 $ — $ 920 (1) Adjustments of the actual timing and potential termination costs or realization of sublease income. |
Stockholders' Equity and Stock
Stockholders' Equity and Stock Compensation Plans | 12 Months Ended |
Sep. 30, 2018 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity and Stock Compensation Plans | Stockholders' Equity and Stock Compensation Plans At September 30, 2018 , we had the following stock-based compensation plans: • Employee Stock Purchase Plan ("ESPP"). Purchase rights to purchase common stock are granted to our eligible full and part-time employees, and shares of common stock are issued upon exercise of the purchase rights. An aggregate of 2,373,290 shares may be issued pursuant to such exercise. The maximum amount that an employee can contribute during a purchase right period is $5,000 . The exercise price of a purchase right is the lesser of 100% of the fair market value of a share of common stock on the first day of the purchase right period or 85% of the fair market value on the last day of the purchase right period (December 15, or the business day preceding December 15 if December 15 is not a business day). • 2005 Equity Incentive Plan ("2005 EIP"). Key employees and non-employee directors may be granted equity awards, including stock options, restricted stock and restricted stock units ("RSUs"). Options granted before March 6, 2006 vested at 25% on the first anniversary of the grant date, and the balance vests monthly thereafter, such that these options become fully vested no later than four years from the date of grant. These options expire no later than ten years from the date of grant. Options granted on and after March 6, 2006 vest at 25% on each anniversary of the grant date. These options expire no later than eight years from the grant date. RSUs granted to date vest at 25% on each anniversary of the grant date. Our Compensation Committee has also awarded restricted stock to executive officers and non-employee directors under the 2005 EIP. Restricted stock grants generally vest over a minimum three -year period, and may be performance-based, determined by EPS growth, or service-based. No awards have made under the 2005 EIP since the adoption of the 2018 Equity Incentive Plan described below. • 2015 Equity Incentive Plan ("2015 EIP"). Key employees and non-employee directors may be granted equity awards, including stock options, performance share units ("PSUs") and RSUs. Shares issued with respect to awards granted under the 2015 EIP other than stock options or stock appreciation rights, which are referred to as "full value awards", are counted against the 2015 EIP's aggregate share limit as three shares for every share or unit actually issued. No awards have made under the 2015 Equity Incentive Plan since the adoption of the 2018 Equity Incentive Plan on March 8, 2018 described below. • 2018 Equity Incentive Plan ("2018 EIP") . Key employees and non-employee directors may be granted equity awards, including stock options, performance share units ("PSUs") and RSUs. Shares issued with respect to awards granted under the 2018 EIP other than stock options or stock appreciation rights, which are referred to as "full value awards", are counted against the 2018 EIP's aggregate share limit as one share for every share or unit issued. At September 30, 2018 , there were 3.0 million shares available for future awards pursuant to the 2018 EIP. The stock-based compensation and related income tax benefits were as follows: Fiscal Year Ended September 30, October 1, October 2, (in thousands) Total stock-based compensation $ 19,582 $ 13,450 $ 12,964 Income tax benefit related to stock-based compensation (5,288 ) (4,715 ) (4,656 ) Stock-based compensation, net of tax benefit $ 14,294 $ 8,735 $ 8,308 Stock Options Stock option activity for the fiscal year ended September 30, 2018 was as follows: Number of Options (in thousands) Weighted- Average Exercise Price per Share Weighted- Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (in thousands) Outstanding on October 1, 2017 1,753 $ 27.18 Granted 171 48.01 Exercised (549 ) 50.85 Forfeited (20 ) 26.90 Outstanding at September 30, 2018 1,355 30.87 5.17 $ 50,689 Vested or expected to vest at September 30, 2018 1,330 30.94 5.13 49,694 Exercisable on September 30, 2018 929 27.21 3.93 38,152 The aggregate intrinsic value in the table above represents the total intrinsic value (the difference between our closing stock price on the last trading day of fiscal 2018 and the exercise price, times the number of shares) that would have been received by the in-the-money option holders if they had exercised their options on September 30, 2018 . This amount will change based on the fair market value of our stock. At September 30, 2018 , we expect to recognize $3.8 million of unrecognized compensation cost related to stock option grants over a weighted-average period of 2 years . The weighted-average fair value of stock options granted during fiscal 2018 , 2017 and 2016 was $14.82 , $12.35 and $8.05 , respectively. The aggregate intrinsic value of options exercised during fiscal 2018 , 2017 and 2016 was $14.4 million , $16.4 million and $7.3 million , respectively. The fair value of our stock options was estimated on the date of grant using the Black-Scholes option pricing model. The following assumptions were used in the calculation: Fiscal Year Ended September 30, October 1, October 2, Dividend yield 1.0% 1.0% 1.2% Expected stock price volatility 36.1% - 38.8% 36.1% - 38.8% 36.1% - 38.8% Risk-free rate of return, annual 1.7% - 2.9% 1.7% - 1.9% 1.6% - 1.8% For purposes of the Black-Scholes model, forfeitures were estimated based on historical experience. For the fiscal 2018 , 2017 and 2016 year-ends, we based our expected stock price volatility on historical volatility behavior and current implied volatility behavior. Our risk-free rate of return was based on constant maturity rates provided by the U.S. Treasury. The expected life was based on historical experience. Net cash proceeds from the exercise of stock options were $13.5 million , $18.6 million and $18.0 million for fiscal 2018 , 2017 and 2016 , respectively. Our policy is to issue shares from our authorized shares upon the exercise of stock options. The actual income tax benefit realized from exercises of nonqualified stock options and disqualifying dispositions of qualified options for fiscal 2018 , 2017 and 2016 was $5.1 million , $4.9 million and $5.3 million , respectively. RSU and PSU RSU awards are granted to our key employee and non-employee directors. The fair value of the RSU was determined at the date of grant using the market price of the underlying common stock as of the date of grant. All of the RSUs have time-based vesting over a four -year period, except that RSUs awarded to directors vest after one year . The total compensation cost of the awards is then amortized over their applicable vesting period on a straight-line basis. PSU awards are granted to our executive officers and non-employee directors. All of the PSUs are performance-based and vest, if at all, after the conclusion of the three -year performance period. The number of PSUs that ultimately vest is based on 50% on the growth in our EPS and 50% on our relative total shareholder return over the vesting period. For the performance-based awards, our expected performance is reviewed to estimate the percentage of shares that will vest. The total compensation cost of the awards is then amortized over their applicable vesting period on a straight-line basis. A summary of the RSU and PSU activity under our stock plans is as follows: RSU PSU Number of Weighted- per Share Number of Shares (in thousands) Weighted- Average Grant Date Fair Value per Share Nonvested balance at September 27, 2015 483 $ 26.75 139 $ 31.66 Granted 217 27.14 138 31.63 Vested (180 ) 26.03 — — Forfeited (21 ) 27.11 — — Nonvested balance at October 2, 2016 499 27.16 277 31.65 Granted 226 41.00 99 48.36 Vested (186 ) 26.98 — — Forfeited (28 ) 30.15 — — Nonvested balance at October 1, 2017 511 33.19 376 36.05 Granted 199 48.16 99 57.40 Vested (184 ) 31.85 (139 ) 31.66 Forfeited (38 ) 36.39 (13 ) 41.80 Nonvested balance at September 30, 2018 488 39.56 323 44.27 During fiscal 2018 , 2017 and 2016 , we awarded 198,960 , 226,241 and 216,539 shares of RSUs, respectively, to our key employees and non-employee directors. The weighted-average grant-date fair value of RSUs granted during fiscal 2018 , 2017 and 2016 was $48.16 , $41.00 and $27.14 , respectively. At September 30, 2018 , there were 488,139 RSUs outstanding. RSU forfeitures result from employment terminations prior to vesting. Forfeited shares return to the pool of authorized shares available for award. During fiscal 2018 , 2017 and 2016 , we awarded 99,217 , 99,180 and 137,777 shares of PSUs, respectively, to our executive officers and non-employee directors. The weighted-average grant-date fair value of PSUs granted during fiscal 2018 , 2017 and 2016 was $57.40 , $48.36 and $31.63 , respectively. The stock-based compensation expense related to RSUs and PSUs for fiscal 2018 , 2017 and 2016 was $15.5 million , $10.6 million and $10.3 million , respectively, and was included in total stock-based compensation expense. At September 30, 2018 , there was $18.1 million of unrecognized stock-based compensation costs related to nonvested RSUs and PSUs that will be substantially recognized by the end of fiscal 2020. ESPP The following table summarizes shares purchased, weighted-average purchase price, cash received and the aggregate intrinsic value for shares purchased under the ESPP: Fiscal Year Ended September 30, October 1, October 2, (in thousands, except for purchase price) Shares purchased 141 190 209 Weighted-average purchase price $ 40.38 $ 26.02 $ 22.54 Cash received from exercise of purchase rights $ 5,727 $ 4,940 $ 4,707 Aggregate intrinsic value $ 337 $ — $ 710 The grant date fair value of each award granted under the ESPP was estimated using the Black-Scholes option pricing model with the following assumptions: Fiscal Year Ended September 30, October 1, October 2, Dividend yield 1.0% 1.0% 1.3% Expected stock price volatility 24.0% 22.4% 23.7% Risk-free rate of return, annual 1.8% 0.9% 0.2% Expected life (in years) 1 1 1 For fiscal 2018 , 2017 and 2016 , we based our expected stock price volatility on historical volatility behavior and current implied volatility behavior. The risk-free rate of return was based on constant maturity rates provided by the U.S. Treasury. The expected life was based on the ESPP terms and conditions. Stock-based compensation expense for fiscal 2018 , 2017 and 2016 included $0.6 million , $0.5 million and $0.4 million , respectively, related to the ESPP. The unrecognized stock-based compensation costs for awards granted under the ESPP at September 30, 2018 and October 1, 2017 were $0.2 million and $0.1 million , respectively. At September 30, 2018 , ESPP participants had accumulated $3.5 million to purchase our common stock. |
Retirement Plans
Retirement Plans | 12 Months Ended |
Sep. 30, 2018 | |
Retirement Benefits [Abstract] | |
Retirement Plans | Retirement Plans We have established defined contribution plans including 401(k) plans. Generally, employees are eligible to participate in the defined contribution plans upon completion of one year of service and in the 401(k) plans upon commencement of employment. For fiscal 2018 , 2017 and 2016 , employer contributions to the plans were $22.4 million , $11.4 million and $10.7 million , respectively. We have established a non-qualified deferred compensation plan for certain key employees and non-employee directors. Eligible employees and non-employee directors may elect to defer the receipt of salary, incentive payments, restricted stock, PSU and RSU awards, and non-employee director fees, which are generally invested by us in individual variable life insurance contracts we own that are designed to informally fund savings plans of this nature. At September 30, 2018 and October 1, 2017 , the consolidated balance sheets reflect assets of $29.4 million and $25.0 million , respectively, related to the deferred compensation plan in "Other long-term assets," and liabilities of $30.2 million and $25.2 million , respectively, related to the deferred compensation plan in "Other long-term liabilities." |
Earnings per Share
Earnings per Share | 12 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Earnings per Share | Earnings per Share The following table sets forth the number of weighted-average shares used to compute basic and diluted EPS: Fiscal Year Ended September 30, October 1, October 2, (in thousands, except per share data) Net income attributable to Tetra Tech $ 136,883 $ 117,874 $ 83,783 Weighted-average common shares outstanding – basic 55,670 56,911 58,186 Effect of diluted stock options and unvested restricted stock 928 1,002 780 Weighted-average common stock outstanding – diluted 56,598 57,913 58,966 Earnings per share attributable to Tetra Tech: Basic $ 2.46 $ 2.07 $ 1.44 Diluted $ 2.42 $ 2.04 $ 1.42 For fiscal 2018 , 0.1 million options were excluded from the calculation of dilutive potential common shares. For fiscal 2017 and 2016 , no options were excluded from the calculation of dilutive potential common shares. These options were not included in the computation of dilutive potential common shares because the assumed proceeds per share exceeded the average market price per share for that period. Therefore, their inclusion would have been anti-dilutive. |
Derivative Financial Instrument
Derivative Financial Instruments | 12 Months Ended |
Sep. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | Derivative Financial Instruments We use certain interest rate derivative contracts to hedge interest rate exposures on our variable rate debt. We enter into foreign currency derivative contracts with financial institutions to reduce the risk that cash flows and earnings will be adversely affected by foreign currency exchange rate fluctuations. Our hedging program is not designated for trading or speculative purposes. We recognize derivative instruments as either assets or liabilities on the accompanying consolidated balance sheets at fair value. We record changes in the fair value (i.e., gains or losses) of the derivatives that have been designated as cash flow hedges in our consolidated balance sheets as accumulated other comprehensive income (loss), and in our consolidated statements of income for those derivatives designated as fair value hedges. In fiscal 2013, we entered into three interest rate swap agreements that we designated as cash flow hedges to fix the variable interest rates on a portion of borrowings under our term loan facility. In the first quarter of fiscal 2014, we entered into two interest rate swap agreements that we designated as cash flow hedges to fix the variable interest rates on the borrowings under our term loan facility. All of these interest rate swap agreements expired in May 2018. In the fourth quarter of fiscal 2018, we entered into five interest rate swap agreements that we designated as cash flow hedges to fix the variable interest rates on the borrowings under our Amended Term Loan Facility. The interest rate swaps expire in July 2023. At September 30, 2018 and October 1, 2017, the effective portion of our interest rate swap agreements designated as cash flow hedges before tax effect was $(1.3) million and $(0.05) million , respectively, all of which we expect to be reclassified from accumulated other comprehensive income (loss) to interest expense within the next 12 months. As of September 30, 2018 , the notional principal, fixed rates and related expiration dates of our outstanding interest rate swap agreements are as follows: Notional Amount (in thousands) Fixed Rate Expiration Date $50,000 2.79% July 2023 50,000 2.79% July 2023 50,000 2.79% July 2023 50,000 2.79% July 2023 50,000 2.79% July 2023 The fair values of our outstanding derivatives designated as hedging instruments were as follows: Fair Value of Derivative Instruments as of Balance Sheet Location September 30, October 1, (in thousands) Interest rate swap agreements Other current assets $ 1,244 $ 49 The impact of the effective portions of derivative instruments in cash flow hedging relationships and fair value relationships on income and other comprehensive income was immaterial for the fiscal years ended September 30, 2018 and October 1, 2017 . Additionally, there were no ineffective portions of derivative instruments. Accordingly, no amounts were excluded from effectiveness testing for our interest rate swap agreements. We had no other derivative instruments that were not designated as hedging instruments for fiscal 2018 , 2017 and 2016 . |
Reclassifications Out of Accumu
Reclassifications Out of Accumulated Other Comprehensive Income (Loss) | 12 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
Reclassifications Out of Accumulated Other Comprehensive Income (Loss) | Reclassifications Out of Accumulated Other Comprehensive Income (Loss) The accumulated balances and reporting period activities for fiscal 2018 and 2017 related to reclassifications out of accumulated other comprehensive income (loss) are summarized as follows: Foreign Currency Translation Adjustments Gain (Loss) on Derivative Instruments Accumulated Other Comprehensive Income (Loss) (in thousands) Balances at October 2, 2016 $ (126,840 ) $ (1,168 ) $ (128,008 ) Other comprehensive income before reclassifications 27,894 2,363 30,257 Amounts reclassified from accumulated other comprehensive income Interest rate contracts, net of tax (1) — (749 ) (749 ) Net current-period other comprehensive income 27,894 1,614 29,508 Balances at October 1, 2017 $ (98,946 ) $ 446 $ (98,500 ) Other comprehensive income (loss) before reclassifications (29,656 ) 1,215 (28,441 ) Amounts reclassified from accumulated other comprehensive income Interest rate contracts, net of tax (1) — (409 ) (409 ) Net current-period other comprehensive income (loss) (29,656 ) 806 (28,850 ) Balances at September 30, 2018 $ (128,602 ) $ 1,252 $ (127,350 ) (1) This accumulated other comprehensive component is reclassified to "Interest expense" in our consolidated statements of income. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Derivative Instruments. For additional information about our derivative financial instruments (see Note 2 , " Basis of Presentation and Preparation " and Note 14 , " Derivative Financial Instruments "). Contingent Consideration. We measure our contingent earn-out liabilities at fair value on a recurring basis (see Note 2 , " Basis of Presentation and Preparation " and Note 5 , " Acquisitions and Divestitures " for further information). Debt. The fair value of long-term debt was determined using the present value of future cash flows based on the borrowing rates currently available for debt with similar terms and maturities (Level 2 measurement). The carrying value of our long-term debt approximated fair value at September 30, 2018 and October 1, 2017 . At September 30, 2018 , we had borrowings of $277.1 million outstanding under our Amended Credit Agreement, which were used to fund our business acquisitions, working capital needs, stock repurchases, dividends, capital expenditures and contingent earn-outs. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies We are subject to certain claims and lawsuits typically filed against the engineering, consulting and construction profession, alleging primarily professional errors or omissions. We carry professional liability insurance, subject to certain deductibles and policy limits, against such claims. However, in some actions, parties are seeking damages that exceed our insurance coverage or for which we are not insured. While management does not believe that the resolution of these claims will have a material adverse effect, individually or in aggregate, on our financial position, results of operations or cash flows, management acknowledges the uncertainty surrounding the ultimate resolution of these matters. On October 15, 2018, the Civil Division of the United States Attorney's Office ("USAO") filed a notice of election to intervene in three qui tam actions filed against our subsidiary, Tetra Tech EC, Inc. ("TtEC"), in the U.S. District Court for the Northern District of California. The complaints of the qui tam relators allege False Claims Act violations related to TtEC's contracts to perform environmental remediation services at the former Hunters Point Naval Shipyard in San Francisco, California. The court has ordered the USAO to file a complaint in intervention on or before January 14, 2019. We are currently unable to determine the probability of the outcome of this matter or the range of a reasonably possible loss, if any. |
Reportable Segments
Reportable Segments | 12 Months Ended |
Sep. 30, 2018 | |
Segment Reporting [Abstract] | |
Reportable Segments | Reportable Segments Beginning in fiscal 2018 , we aligned our operations to better serve our clients and markets, resulting in two renamed reportable segments. Our GSG reportable segment primarily includes activities with U.S. government clients (federal, state and local) and all activities with development agencies worldwide. Our CIG reportable segment primarily includes activities with U.S. commercial clients and international clients other than development agencies. This alignment allows us to capitalize on our growing market opportunities and enhance the development of high-end consulting and technical solutions to meet our growing client demand. We continue to report the results of the wind-down of our non-core construction activities in the RCM segment. Prior year amounts for reportable segments have been revised to conform to the current-year presentation. Our reportable segments are described as follows: GSG: GSG provides consulting and engineering services primarily to U.S. government clients (federal, state and local) and development agencies worldwide. GSG supports U.S. government civilian and defense agencies with services in water, environment, infrastructure, information technology, and emergency management services. GSG also provides engineering design services for municipal and commercial clients, especially in water infrastructure, solid waste, and high-end sustainable infrastructure designs. GSG also leads our support for development agencies worldwide, especially in the U.S., United Kingdom, and Australia. CIG: CIG provides consulting and engineering services primarily to U.S. commercial clients and international clients, both commercial and government. CIG supports commercial clients across the Fortune 500, oil and gas, energy utilities, manufacturing, aerospace, and mining markets. CIG also provides infrastructure and related environmental and geotechnical services, testing, engineering and project management services to commercial and local government clients across Canada, in Asia-Pacific (primarily Australia and New Zealand), as well as Brazil and Chile. CIG also provides field construction management activities in the United States and Western Canada. RCM: We report the results of the wind-down of our non-core construction activities in the RCM reportable segment. The remaining backlog for RCM as of September 30, 2018 was immaterial as the related projects are substantially complete. 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 revenues and transfers as if they 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 fiscal 2016 , the corporate segment operating losses included $19.5 million of acquisition and integration expenses. The following tables set forth summarized financial information concerning our reportable segments: Reportable Segments Fiscal Year Ended September 30, October 1, October 2, (in thousands) Revenue GSG $ 1,694,871 $ 1,487,611 $ 1,289,506 CIG 1,323,142 1,326,020 1,297,209 RCM 14,199 18,207 52,150 Elimination of inter-segment revenue (68,064 ) (78,478 ) (55,396 ) Total revenue $ 2,964,148 $ 2,753,360 $ 2,583,469 Income from operations GSG $ 168,211 $ 138,199 $ 101,595 CIG 74,451 90,817 106,602 RCM (4,573 ) (14,712 ) (11,834 ) Corporate (1) (48,003 ) (30,962 ) (60,508 ) Total operating income $ 190,086 $ 183,342 $ 135,855 (1) Includes goodwill and intangible assets impairment charges, amortization of intangibles, other costs and other income not allocable to segments. The intangible asset amortization expense for fiscal 2018 , 2017 and 2016 was $18.2 million , $22.8 million and $22.1 million , respectively. Corporate results also included income (loss) for fair value adjustments to contingent consideration liabilities of $(4.3) million , $6.9 million and $(2.8) million for fiscal 2018 , 2017 and 2016 , respectively. Fiscal 2016 also included $19.5 million of acquisition and integration related expenses recorded at Corporate. September 30, October 1, (in thousands) Total Assets GSG $ 468,010 $ 378,839 CIG 478,197 518,697 RCM 25,683 33,620 Corporate (1) 987,531 971,589 Total assets $ 1,959,421 $ 1,902,745 (1) Corporate assets consist of intercompany eliminations and assets not allocated to reportable segments including goodwill, intangible assets, deferred income taxes and certain other assets. Geographic Information Fiscal Year Ended September 30, 2018 October 1, 2017 October 2, 2016 Revenue Long-Lived Assets (2) Revenue Long-Lived Assets (2) Revenue Long-Lived Assets (2) United States $ 2,232,013 $ 59,164 $ 2,018,841 $ 58,965 $ 1,858,551 $ 59,334 Foreign countries (1) 732,135 34,934 734,519 34,183 724,918 39,067 (1) Includes revenue generated from our foreign operations, primarily in Canada and Australia, and revenue generated from non-U.S. clients. Long-lived assets consist primarily of amounts from our Canadian operations. (2) Excludes goodwill and intangible assets. Major Clients Other than the U.S. federal government, we had no single client that accounted for more than 10% of our revenue. All of our segments generated revenue from all client sectors. The following table presents our revenue by client sector: Fiscal Year Ended September 30, October 1, October 2, (in thousands) Client Sector U.S. state and local government $ 469,231 $ 353,062 $ 310,740 U.S. federal government (1) 974,384 901,136 784,368 U.S commercial 788,398 764,643 763,443 International (2) 732,135 734,519 724,918 Total $ 2,964,148 $ 2,753,360 $ 2,583,469 (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. |
Quarterly Financial Information
Quarterly Financial Information-Unaudited | 12 Months Ended |
Sep. 30, 2018 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Financial Information-Unaudited | Quarterly Financial Information – Unaudited In the opinion of management, the following unaudited quarterly data for the fiscal years ended September 30, 2018 and October 1, 2017 reflect all adjustments necessary for a fair statement of the results of operations. As a result of the TCJA, we reduced our deferred tax liabilities and recorded a one-time deferred tax benefit of approximately $14.7 million in the first quarter of fiscal 2018. In the third quarter of fiscal 2018, we recognized losses of $3.4 million related to the divestiture of our non-core utility field services operations and other non-core assets. We settled a claim related to a fixed-price construction project completed in fiscal 2014 and recognized a reduction in revenue of $10.6 million and a related loss in operating income of $12.5 million in the fourth quarter of fiscal 2018. First Quarter Second Quarter Third Quarter Fourth Quarter (in thousands, except per share data) Fiscal Year 2018 Revenue $ 759,749 $ 700,262 $ 764,795 $ 739,343 Income from operations 48,589 42,716 55,496 43,285 Net income attributable to Tetra Tech 46,034 28,725 33,322 28,802 Earnings per share attributable to Tetra Tech: Basic $ 0.82 $ 0.51 $ 0.60 $ 0.52 Diluted $ 0.81 $ 0.51 $ 0.59 $ 0.51 Weighted-average common shares outstanding: Basic 55,855 55,841 55,537 55,341 Diluted 56,875 56,673 56,390 56,349 Fiscal Year 2017 Revenue $ 668,851 $ 663,781 $ 685,539 $ 735,188 Income from operations 39,855 42,956 45,884 54,647 Net income attributable to Tetra Tech 26,562 26,862 29,983 34,467 Earnings per share attributable to Tetra Tech: Basic $ 0.47 $ 0.47 $ 0.52 $ 0.61 Diluted $ 0.46 $ 0.46 $ 0.52 $ 0.60 Weighted-average common shares outstanding: Basic 57,099 57,270 57,184 56,338 Diluted 58,145 58,270 58,161 57,326 |
SCHEDULE II-VALUATION AND QUALI
SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS AND RESERVES | 12 Months Ended |
Sep. 30, 2018 | |
SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract] | |
SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS AND RESERVES | TETRA TECH, INC. SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS AND RESERVES For the Fiscal Years Ended October 2, 2016 , October 1, 2017 and September 30, 2018 (in thousands) Balance at Beginning of Period Charged to Costs, Expenses and Revenue Deductions (1) Other (2) Balance at End of Period Allowance for doubtful accounts: Fiscal 2016 $ 31,490 $ 8,082 $ (12,191 ) 7,852 $ 35,233 Fiscal 2017 35,233 2,848 (6,233 ) 411 32,259 Fiscal 2018 32,259 7,167 (4,485 ) 2,639 37,580 Income tax valuation allowance: Fiscal 2016 $ 7,791 $ 3,856 $ — $ 13,800 $ 25,447 Fiscal 2017 25,447 (121 ) — — 25,326 Fiscal 2018 25,326 900 (4,747 ) 21,479 (1) Primarily represents uncollectible accounts written off, net of recoveries. (2) Includes allowances from new business acquisitions, loss in foreign jurisdictions, currency adjustments, and valuation allowance adjustments related to net operating loss carry-forwards . |
Basis of Presentation and Pre_2
Basis of Presentation and Preparation (Policies) | 12 Months Ended |
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Principles of Consolidation and Presentation | Principles of Consolidation and Presentation. The consolidated financial statements include our accounts and those of joint ventures of which we are the primary beneficiary. All significant intercompany balances and transactions have been eliminated in consolidation. |
Fiscal Year | Fiscal Year. We report results of operations based on 52 or 53-week periods ending on the Sunday nearest September 30. Fiscal years 2018 , 2017 and 2016 contained 52, 52 and 53 weeks, respectively. |
Use of Estimates | Use of Estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires us to make estimates and assumptions. These estimates and assumptions affect the amounts reported in our consolidated financial statements and accompanying notes. Although such estimates and assumptions are based on management's best knowledge of current events and actions we may take in the future, actual results could differ materially from those estimates. |
Revenue Recognition and Contract Costs | Revenue Recognition and Contract Costs. We recognize revenue from contracts using the percentage-of-completion method, primarily utilizing the cost-to-cost approach, to estimate the progress towards completion in order to determine the amount of revenue and profit to recognize. Changes in those estimates could result in the recognition of cumulative catch-up adjustments to the contract’s inception-to-date revenue, costs and profit in the period in which such changes are made. On a quarterly basis, we review and assess our revenue and cost estimates for each significant contract. Changes in revenue and cost estimates could also result in a projected loss that would be recorded immediately in earnings. We recognize revenue for work performed under three major types of contracts: fixed-price, time-and-materials, and cost-plus. Fixed-Price. Under fixed-price contracts, our clients pay us an agreed fixed-amount negotiated in advance for a specified scope of work. We recognize revenue on fixed-price contracts using the percentage-of-completion method. If the nature or circumstances of the contract prevent us from preparing a reliable estimate at completion, we will delay profit recognition until adequate information about the contract's progress becomes available. Time-and-Materials. Under time-and-materials contracts, we negotiate hourly billing rates and charge our clients based on the actual time that we spend on a project. In addition, clients reimburse us for our actual out-of-pocket costs for materials and other direct incidental expenditures that we incur in connection with our performance under the contract. The majority of our time-and-material contracts are subject to maximum contract values and, accordingly, revenue under these contracts is recognized under the percentage-of-completion method. However, time and materials contracts that are service-related contracts are accounted for utilizing the proportional performance method. Revenue on contracts that are not subject to maximum contract values is recognized based on the actual number of hours we spend on the projects plus any actual out-of-pocket costs of materials and other direct incidental expenditures that we incur on the projects. Our time-and-materials contracts also generally include annual billing rate adjustment provisions. Cost-Plus. Under cost-plus contracts, we are reimbursed for allowable or otherwise defined costs incurred plus a negotiated fee. These contracts may also include incentives for various performance criteria, including quality, timeliness, ingenuity, safety and cost-effectiveness. In addition, our costs are generally subject to review by our clients and regulatory audit agencies, and such reviews could result in costs being disputed as non-reimbursable under the terms of the contract. Revenue for cost-plus contracts is recognized at the time services are performed. Revenue is not recognized for non-recoverable costs. Performance incentives are included in our estimates of revenue when their realization is reasonably assured. If estimated total costs on any contract indicate a loss, we recognize the entire estimated loss in the period the loss becomes known. The cumulative effect of revisions to revenue, estimated costs to complete contracts, including penalties, incentive awards, change orders, claims, liquidated damages, anticipated losses, and other revisions are recorded in the period in which the revisions are identified and the loss can be reasonably estimated. Such revisions could occur in any reporting period and the effects may be material depending on the size of the project or the adjustment. Once contract performance is underway, we may experience changes in conditions, client requirements, specifications, designs, materials, and expectations regarding the period of performance. Such changes are "change orders" and may be initiated by us or by our clients. In many cases, agreement with the client as to the terms of change orders is reached prior to work commencing; however, sometimes circumstances require that work progress without obtaining client agreement. Revenue related to change orders is recognized as costs are incurred. Change orders that are unapproved as to both price and scope are evaluated as claims. Claims are amounts in excess of agreed contract prices that we seek to collect from our clients or other third parties for delays, errors in specifications and designs, contract terminations, change orders in dispute or unapproved as to both scope and price, or other causes of unanticipated additional costs. Revenue on claims is recognized only to the extent that contract costs related to the claims have been incurred and when it is probable that the claim will result in a bona fide addition to contract value that can be reliably estimated. No profit is recognized on a claim until final settlement occurs. This can lead to a situation in which costs are recognized in one period and revenue is recognized in a subsequent period when a client agreement is obtained or a claims resolution occurs. |
Cash and Cash Equivalents | Cash and Cash Equivalents. Cash and cash equivalents include highly liquid investments with maturities of 90 days or less at the date of purchase. We record cash and cash equivalents as restricted when we are unable to freely use such cash and cash equivalents for our general operating purposes. |
Insurance Matters, Litigation and Contingencies | Insurance Matters, Litigation and Contingencies. In the normal course of business, we are subject to certain contractual guarantees and litigation. In addition, we maintain insurance coverage for various aspects of our business and operations. We record in our consolidated balance sheets amounts representing our estimated liability for these legal and insurance obligations. Any adjustments to these liabilities are recorded in our consolidated statements of income. |
Accounts Receivable - Net | Accounts Receivable – Net. Net accounts receivable is primarily comprised of billed and unbilled accounts receivable, contract retentions and allowances for doubtful accounts. Billed accounts receivable represent amounts billed to clients that have not been collected. Unbilled accounts receivable represent revenue recognized but not yet billed pursuant to contract terms or billed after the period end date. Most of our unbilled receivables at September 30, 2018 are expected to be billed and collected within 12 months. Unbilled accounts receivable also include amounts related to requests for equitable adjustment to contracts that provide for price redetermination. These amounts are recorded only when they can be reliably estimated and realization is probable. Contract retentions represent amounts withheld by clients until certain conditions are met or the project is completed, which may be several months or years. Allowances for doubtful accounts represent the amounts that may become uncollectible or unrealizable in the future. We determine an estimated allowance for uncollectible accounts based on management's consideration of trends in the actual and forecasted credit quality of our clients, including delinquency and payment history; type of client, such as a government agency or a commercial sector client; and general economic and particular industry conditions that may affect a client's ability to pay. Billings in excess of costs on uncompleted contracts represent the amount of cash collected from clients and billings to clients on contracts in advance of work performed and revenue recognized. The majority of these amounts will be earned within 12 months. |
Property and Equipment | Property and Equipment. Property and equipment are recorded at cost and are depreciated over their estimated useful lives using the straight-line method. When property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are removed from our consolidated balance sheets and any resulting gain or loss is reflected in our consolidated statements of income. Expenditures for maintenance and repairs are expensed as incurred. Generally, estimated useful lives range from three to ten years for equipment, furniture and fixtures. Buildings are depreciated over periods not exceeding 40 years. Leasehold improvements are amortized on a straight-line basis over the shorter of their estimated useful lives or the length of the lease. |
Long-Lived Assets | Long-Lived Assets. Our policy regarding long-lived assets is to evaluate the recoverability of our assets when the facts and circumstances suggest that the assets may be impaired. This assessment is performed based on the estimated undiscounted cash flows compared to the carrying value of the assets. If the future cash flows (undiscounted and without interest charges) are less than the carrying value, a write-down would be recorded to reduce the related asset to its estimated fair value. We recognize a liability for contract termination costs associated with an exit activity for costs that will continue to be incurred under a lease for its remaining term without economic benefit to us, initially measured at its fair value at the cease-use date. The fair value is determined based on the remaining lease rentals, adjusted for the effects of any prepaid or deferred items recognized under the lease, and reduced by estimated sublease rentals. |
Business Combinations | Business Combinations. The cost of an acquired company is assigned to the tangible and intangible assets purchased and the liabilities assumed on the basis of their fair values at the date of acquisition. The determination of fair values of assets and liabilities acquired requires us to make estimates and use valuation techniques when a market value is not readily available. Any excess of purchase price over the fair value of net tangible and intangible assets acquired is allocated to goodwill. Goodwill typically represents the value paid for the assembled workforce and enhancement of our service offerings. Transaction costs associated with business combinations are expensed as they are incurred. |
Goodwill and Intangible Assets | Goodwill and Intangible Assets. Goodwill represents the excess of the aggregate purchase price over the fair value of the net assets acquired in a business acquisition. Following an acquisition, we perform an analysis to value the acquired company's tangible and identifiable intangible assets and liabilities. With respect to identifiable intangible assets, we consider backlog, non-compete agreements, client relations, trade names, patents and other assets. We amortize our intangible assets based on the period over which the contractual or economic benefits of the intangible assets are expected to be realized. We assess the recoverability of the unamortized balance of our intangible assets when indicators of impairment are present based on expected future profitability and undiscounted expected cash flows and their contribution to our overall operations. Should the review indicate that the carrying value is not fully recoverable, the excess of the carrying value over the fair value of the intangible assets would be recognized as an impairment loss. We test our goodwill for impairment on an annual basis, and more frequently when an event occurs or circumstances indicate that the carrying value of the asset may not be recoverable. We believe the methodology that we use to review impairment of goodwill, which includes a significant amount of judgment and estimates, provides us with a reasonable basis to determine whether impairment has occurred. However, many of the factors employed in determining whether our goodwill is impaired are outside of our control and it is reasonably likely that assumptions and estimates will change in future periods. These changes could result in future impairments. We perform our annual goodwill impairment review at the beginning of our fiscal fourth quarter. Our last annual review was performed at July 2, 2018 (i.e., the first day of our fiscal fourth quarter). In addition, we regularly evaluate whether events and circumstances have occurred that may indicate a potential change in recoverability of goodwill. We perform interim goodwill impairment reviews between our annual reviews if certain events and circumstances have occurred, including a deterioration in general economic conditions, an increased competitive environment, a change in management, key personnel, strategy or customers, negative or declining cash flows, or a decline in actual or planned revenue or earnings compared with actual and projected results of relevant prior periods. We assess goodwill for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment, referred to as a component. Our operating segments are the same as our reportable segments and our reporting units for goodwill impairment testing are the components one level below our reportable segments. These components constitute a business for which discrete financial information is available and where segment management regularly reviews the operating results of that component. We aggregate components within an operating segment that have similar economic characteristics. The impairment test for goodwill involves the comparison of the estimated fair value of each reporting unit to the reporting unit's carrying value, including goodwill. We estimate the fair value of reporting units based on a comparison and weighting of the income approach, specifically the discounted cash flow method and the market approach, which estimates the fair value of our reporting units based upon comparable market prices and recent transactions and also validates the reasonableness of the multiples from the income approach. If the fair value of a reporting unit exceeds its carrying amount, the goodwill of that reporting unit is not considered impaired. However, if its carrying value exceeds its fair value, our goodwill is impaired, and we are required to record a non-cash charge that could have a material adverse effect on our consolidated financial statements. An impairment loss recognized, if any, should not exceed the total amount of goodwill allocated to the reporting unit. |
Contingent Consideration | Contingent Consideration. Most of our acquisition agreements include contingent earn-out arrangements, which are generally based on the achievement of future operating income thresholds. The contingent earn-out arrangements are based upon our valuations of the acquired companies and reduce the risk of overpaying for acquisitions if the projected financial results are not achieved. The fair values of these earn-out arrangements are included as part of the purchase price of the acquired companies on their respective acquisition dates. For each transaction, we estimate the fair value of contingent earn-out payments as part of the initial purchase price and record the estimated fair value of contingent consideration as a liability in "Current contingent earn-out liabilities" and "Long-term contingent earn-out liabilities" on the consolidated balance sheets. We consider several factors when determining that contingent earn-out liabilities are part of the purchase price, including the following: (1) the valuation of our acquisitions is not supported solely by the initial consideration paid, and the contingent earn-out formula is a critical and material component of the valuation approach to determining the purchase price; and (2) the former owners of acquired companies that remain as key employees receive compensation other than contingent earn-out payments at a reasonable level compared with the compensation of our other key employees. The contingent earn-out payments are not affected by employment termination. We measure our contingent earn-out liabilities at fair value on a recurring basis using significant unobservable inputs classified within Level 3 of the fair value hierarchy. We use a probability weighted discounted income approach as a valuation technique to convert future estimated cash flows to a single present value amount. The significant unobservable inputs used in the fair value measurements are operating income projections over the earn-out period (generally two or three years), and the probability outcome percentages we assign to each scenario. Significant increases or decreases to either of these inputs in isolation would result in a significantly higher or lower liability with a higher liability capped by the contractual maximum of the contingent earn-out obligation. Ultimately, the liability will be equivalent to the amount paid, and the difference between the fair value estimate and amount paid will be recorded in earnings. The amount paid that is less than or equal to the liability on the acquisition date is reflected as cash used in financing activities in our consolidated statements of cash flows. Any amount paid in excess of the liability on the acquisition date is reflected as cash used in operating activities. We review and re-assess the estimated fair value of contingent consideration on a quarterly basis, and the updated fair value could differ materially from the initial estimates. Changes in the estimated fair value of our contingent earn-out liabilities related to the time component of the present value calculation are reported in interest expense. Adjustments to the estimated fair value related to changes in all other unobservable inputs are reported in operating income. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments. We determine the fair values of our financial instruments, including short-term investments, debt instruments and derivative instruments based on inputs or assumptions that market participants would use in pricing an asset or a liability. We categorize our instruments using a valuation hierarchy for disclosure of the inputs used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument; and Level 3 inputs are unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value. The classification of a financial asset or liability within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximate fair values based on their short-term nature. The carrying amounts of our revolving credit facility approximates fair value because the interest rates are based upon variable reference rates. Certain other assets and liabilities, such as contingent earn-out liabilities, assets held for sale and amounts related to cash-flow hedges, are required to be carried in our consolidated financial statements at fair value. Our fair value measurement methods may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Although we believe our valuation methods are appropriate and consistent with those used by other market participants, the use of different methodologies or assumptions to determine fair value could result in a different fair value measurement at the reporting date. |
Derivative Financial Instruments | Derivative Financial Instruments. We account for our derivative instruments as either assets or liabilities and carry them at fair value. For derivative instruments that hedge the exposure to variability in expected future cash flows that are designated as cash flow hedges, the effective portion of the gain or loss on the derivative instrument is reported as a component of accumulated other comprehensive income (loss) in stockholders' equity and reclassified into income in the same period or periods during which the hedged transaction affects earnings. The ineffective portion of the gain or loss on the derivative instrument, if any, is recognized in current income. To receive hedge accounting treatment, cash flow hedges must be highly effective in offsetting changes to expected future cash flows on hedged transactions. The net gain or loss on the effective portion of a derivative instrument that is designated as an economic hedge of the foreign currency translation exposure generated by the re-measurement of certain assets and liabilities denominated in a non-functional currency in a foreign operation is reported in the same manner as a foreign currency translation adjustment. Accordingly, any gains or losses related to these derivative instruments are recognized in current income. Derivatives that do not qualify as hedges are adjusted to fair value through current income. |
Deferred Compensation | Deferred Compensation. We maintain a non-qualified defined contribution supplemental retirement plan for certain key employees and non-employee directors that is accounted for in accordance with applicable authoritative guidance on accounting for deferred compensation arrangements where amounts earned are held in a rabbi trust and invested. Employee deferrals and our match are deposited into a rabbi trust, and the funds are generally invested in individual variable life insurance contracts that we own and are specifically designed to informally fund savings plans of this nature. Our consolidated balance sheets reflect our investment in variable life insurance contracts in "Other long-term assets." Our obligation to participating employees is reflected in "Other long-term liabilities." All income and expenses related to the rabbi trust are reflected in our consolidated statements of income. |
Income Taxes | Income Taxes. We file a consolidated U.S. federal income tax return. In addition, we file other returns that are required in the states, foreign jurisdictions and other jurisdictions in which we do business. We account for certain income and expense items differently for financial reporting and income tax purposes. Deferred tax assets and liabilities are computed for the difference between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to reverse. In determining the need for a valuation allowance, management reviews both positive and negative evidence, including current and historical results of operations, future income projections and potential tax planning strategies. Based on our assessment, we have concluded that a portion of the deferred tax assets at September 30, 2018 will not be realized. According to the authoritative guidance on accounting for uncertainty in income taxes, we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. This guidance also addresses de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and disclosure requirements for uncertain tax positions. |
Concentration of Credit Risk | Concentration of Credit Risk. Financial instruments that subject us to credit risk consist primarily of cash and cash equivalents and net accounts receivable. In the event that we have surplus cash, we place our temporary cash investments with lower risk financial institutions and, by policy, limit the amount of investment exposure to any one financial institution. Approximately 26% of accounts receivable were due from various agencies of the U.S. federal government at fiscal 2018 year-end. The remaining accounts receivable are generally diversified due to the large number of organizations comprising our client base and their geographic dispersion. We perform ongoing credit evaluations of our clients and maintain an allowance for potential credit losses. |
Foreign Currency Translation | Foreign Currency Translation. We determine the functional currency of our foreign operating units based upon the primary currency in which they operate. These operating units maintain their accounting records in their local currency, primarily Canadian and Australian dollars. Where the functional currency is not the U.S. dollar, translation of assets and liabilities to U.S. dollars is based on exchange rates at the balance sheet date. Translation of revenue and expenses to U.S. dollars is based on the average rate during the period. Translation gains or losses are reported as a component of other comprehensive income (loss). Gains or losses from foreign currency transactions are included in income from operations. |
Recently Adopted and Pending Accounting Guidance | Recently Adopted and Pending Accounting Guidance. In January 2016, the Financial Accounting Standards Board (“FASB”) issued guidance that generally requires companies to measure investments in other entities, except those accounted for under the equity method, at fair value and recognize any changes in fair value in net income. The guidance is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2017 (first quarter of fiscal 2019 for us). We do not expect the adoption of this guidance to have an impact on our consolidated financial statements. In February 2016, the FASB issued guidance that requires the rights and obligations associated with leasing arrangements be reflected on the balance sheet in order to increase transparency and comparability among organizations. Under the guidance, lessees will be required to recognize a right-of-use asset and a liability to make lease payments and disclose key information about leasing arrangements. The guidance is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2018 (first quarter of fiscal 2020 for us). Early adoption is permitted. While we are currently evaluating the impact that this guidance will have on our consolidated financial statements, we currently expect that the adoption of the new guidance will result in a significant increase in the assets and liabilities on our consolidated balance sheets and will likely have an immaterial impact on our consolidated statements of income and statements of cash flows. In June 2016, the FASB issued updated guidance which requires entities to estimate all expected credit losses for certain types of financial instruments, including trade receivables, held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The updated guidance also expands the disclosure requirements to enable users of financial statements to understand the entity’s assumptions, models and methods for estimating expected credit losses. This guidance is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2019 (first quarter of fiscal 2021 for us). Early adoption is permitted. We are currently evaluating the impact that this guidance will have on our consolidated financial statements. In August 2016, the FASB issued guidance to address eight specific cash flow issues to reduce the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. This guidance is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2017 (first quarter of fiscal 2019 for us). Early adoption is permitted. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements. In October 2016, the FASB issued updated guidance which requires entities to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. This guidance is effective for fiscal reporting periods and interim reporting periods within those fiscal reporting periods, beginning after December 15, 2017 (first quarter of fiscal 2019 for us). Early adoption is permitted. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements. In November 2016, the FASB issued updated guidance which provides amendments to address the classification and presentation of changes in restricted cash in the statement of cash flows. This guidance is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2017 (first quarter of fiscal 2019 for us). We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements. In January 2017, the FASB issued updated guidance to simplify the test for goodwill impairment. This guidance eliminates step two from the goodwill impairment test. Under the updated guidance, an entity should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to the reporting unit. This guidance is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019 (first quarter of fiscal 2021 for us), on a prospective basis. Earlier adoption is permitted for goodwill impairment tests performed on testing dates after January 1, 2017. We adopted this guidance in the first quarter of our fiscal 2018, and the adoption of this guidance had no impact on our consolidated financial statements. In May 2017, the FASB issued updated guidance to clarify when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. Under the updated guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award changes as a result of a change in terms or conditions. This guidance is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2017 (first quarter of fiscal 2019 for us), on a prospective basis. Early adoption is permitted. We do not expect the adoption of this guidance to have an impact on our consolidated financial statements. In August 2017, the FASB issued accounting guidance on hedging activities. The amendment better aligns an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. This guidance is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2018 (first quarter of fiscal 2020 for us). Early adoption is permitted. We are currently evaluating the impact that this guidance will have on our consolidated financial statements. In February 2018, the FASB issued guidance on reclassification of certain tax effects from accumulated comprehensive income, which allows for a reclassification of stranded tax effects from the Tax Cuts and Jobs Act ("TCJA") from accumulated other comprehensive income to retained earnings. This guidance is effective for fiscal years beginning after December 15, 2018 (first quarter of fiscal 2020 for us). We are currently evaluating the impact that this guidance will have on our consolidated financial statements. Revenue Recognition In May 2014, the FASB issued Accounting Standards Update ("ASU") 2014-09, "Revenue from Contracts with Customers", which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. ASU 2014-09 outlines a five-step process for revenue recognition that focuses on transfer of control, as opposed to transfer of risk and rewards, and also requires disclosures regarding the nature, amount, timing, and uncertainty of revenues and cash flows from contracts with customers. Major provisions include determining which goods and services are distinct and represent separate performance obligations, how variable consideration (which may include change orders and claims) is recognized, whether revenue should be recognized at a point in time or over a period of time, and ensuring the time value of money is considered in the transaction price. As a result of the deferral of the effective date in ASU 2015-14, "Revenue from Contracts with Customers - Deferral of the Effective Date," we will now be required to adopt ASU 2014-09 for interim and annual reporting periods beginning after December 15, 2017. ASU 2014-09 can be applied either retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. In 2016, the FASB issued several amendments to ASU 2014-09. ASU 2016-08, "Principal versus Agent Considerations" contains amendments that clarify the implementation guidance on principal versus agent considerations. ASU 2016-10, "Identifying Performance Obligations and Licensing" clarifies the guidance on identifying performance obligations and licenses of intellectual property. The FASB also issued ASU 2016-12, "Narrow-Scope Improvements and Practical Expedients", which further clarifies accounting for collectability, non-cash consideration, presentation of sales tax, and transition. The FASB also issued ASU 2016-20, "Technical Corrections and Improvements to Topic 606", which provides numerous improvements related to ASU 2014-09. All amendments are effective with the same date ASU 2014-09. We will adopt ASU 2014-09 during the first quarter of fiscal 2019 using the modified retrospective method that will result in a cumulative effect adjustment as of the date of adoption. We have a cross-functional implementation team which includes representatives from our two operating segments, corporate accounting, and information technology. The implementation team has evaluated the impact of adopting the new standard on our uncompleted contracts as of October 1, 2018 (the date of adoption). The evaluation included reviewing our accounting policies and practices to identify differences that would result from applying the requirements of the new standard. We have identified and made changes to our processes and controls to support recognition and disclosure under the new standard. The implementation team has closely followed the conclusions of various industry groups on certain interpretive issues. We continue to evaluate the impact of adopting ASU 2014-09 and all related amendments on our financial position, results of operations, and related disclosures. Under the new standard, we will continue to recognize fixed-price, time-and-materials, and cost-plus contract revenue over time on a percentage-of-completion basis because of the continuous transfer of control to the customer. However, in a limited number of circumstances, adoption of the new standard will affect the manner in which we determine the unit of account for our projects (i.e. performance obligation). In some cases, contracts treated as more than one unit of account (multiple performance obligations) for revenue and margin recognition under existing guidance will be combined into one unit of account upon adoption. Conversely, in fewer cases, contracts treated as one unit of account (a single performance obligation) under existing guidance will be segmented into two or more units of account upon adoption. Based on our most recent assessment of existing contracts, the adoption of ASU 2014-09 is expected to result in a cumulative effect adjustment to decrease retained earnings by less than two percent as of October 1, 2018. |
Stock Repurchase and Dividends
Stock Repurchase and Dividends (Tables) | 12 Months Ended |
Sep. 30, 2018 | |
Stock Repurchase And Dividends [Abstract] | |
Summary of dividends declared | The following table summarizes dividends declared and paid in fiscal 2018 and 2017 : Declaration Date Dividend Paid Per Share Record Date Payment Date Dividends Paid (in thousands, except per share data) November 6, 2017 $ 0.10 November 30, 2017 December 15, 2017 $ 5,589 January 29, 2018 $ 0.10 February 14, 2018 March 2, 2018 5,583 April 30, 2018 $ 0.12 May 16, 2018 June 1, 2018 6,664 July 30, 2018 $ 0.12 August 16, 2018 August 31, 2018 6,641 Total dividend paid as of September 30, 2018 $ 24,477 November 7, 2016 $ 0.09 December 1, 2016 December 14, 2016 $ 5,144 January 30, 2017 $ 0.09 February 17, 2017 March 3, 2017 5,157 May 1, 2017 $ 0.10 May 18, 2017 June 2, 2017 5,738 July 31, 2017 $ 0.10 August 17, 2017 September 1, 2017 5,633 Total dividend paid as of October 1, 2017 $ 21,672 |
Accounts Receivable and Reven_2
Accounts Receivable and Revenue Recognition (Tables) | 12 Months Ended |
Sep. 30, 2018 | |
Accounts Receivable - Net and Revenue Recognition | |
Net accounts receivable and billings in excess of costs on uncompleted contracts | Net accounts receivable and billings in excess of costs on uncompleted contracts consisted of the following at September 30, 2018 and October 1, 2017 : September 30, October 1, (in thousands) Billed $ 464,062 $ 376,287 Unbilled 397,200 404,899 Contract retentions 13,421 39,840 Total accounts receivable – gross 874,683 821,026 Allowance for doubtful accounts (37,580 ) (32,259 ) Total accounts receivable – net $ 837,103 $ 788,767 Billings in excess of costs on uncompleted contracts $ 143,270 $ 117,499 |
Acquisitions and Divestitures (
Acquisitions and Divestitures (Tables) | 12 Months Ended |
Sep. 30, 2018 | |
Business Combinations [Abstract] | |
Summary of changes in the carrying value of estimated contingent earn-out liabilities | The following table summarizes the changes in the carrying value of estimated contingent earn-out liabilities: Fiscal Year Ended September 30, October 1, October 2, (in thousands) Beginning balance (at fair value) $ 2,438 $ 8,757 $ 4,169 Estimated earn-out liabilities for acquisitions during the fiscal year 32,210 1,604 4,745 Increases due to re-measurement of fair value reported in interest expense 1,005 260 271 Net increase (decrease) due to re-measurement of fair value reported as losses (gains) in operating income 4,252 (6,923 ) 2,823 Foreign exchange impact (854 ) 59 — Earn-out payments: Reported as cash used in operating activities (2,349 ) — — Reported as cash used in financing activities (1,412 ) (1,319 ) (3,251 ) Ending balance (at fair value) $ 35,290 $ 2,438 $ 8,757 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Sep. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of carrying value of goodwill | The following table summarizes the changes in the carrying value of goodwill: GSG CIG Total (in thousands) Balance at October 2, 2016 $ 357,050 $ 360,938 $ 717,988 Acquisition activity — 7,055 7,055 Translation and other 4,711 11,132 15,843 Balance at October 1, 2017 361,761 379,125 740,886 Acquisition activity 27,526 58,353 85,879 Divestiture activity — (12,160 ) (12,160 ) Translation and other 454 (16,239 ) (15,785 ) Balance at September 30, 2018 $ 389,741 $ 409,079 $ 798,820 |
Summary of acquired identifiable intangible assets with finite useful lives | The gross amount and accumulated amortization of our acquired identifiable intangible assets with finite useful lives included in "Intangible assets – net" on the consolidated balance sheets, were as follows: Fiscal Year Ended September 30, 2018 October 1, 2017 Weighted- Average Remaining Life (in years) Gross Amount Accumulated Amortization Gross Amount Accumulated Amortization ($ in thousands) Non-compete agreements 0.0 $ 83 $ (83 ) $ 495 $ (493 ) Client relations 2.6 54,639 (46,449 ) 90,297 (75,074 ) Backlog 0.5 23,371 (20,007 ) 21,518 (13,301 ) Technology and trade names 3.2 8,144 (3,575 ) 6,685 (3,439 ) Total $ 86,237 $ (70,114 ) $ 118,995 $ (92,307 ) |
Estimated amortization expense for the succeeding five years and beyond | Estimated amortization expense for the succeeding five years and beyond is as follows: Amount (in thousands) 2019 $ 9,016 2020 3,366 2021 2,271 2022 1,037 2023 433 Total $ 16,123 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Sep. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Schedule of components of property and equipment | Property and equipment consisted of the following: Fiscal Year Ended September 30, October 1, (in thousands) Equipment, furniture and fixtures $ 131,521 $ 150,026 Leasehold improvements 31,430 27,689 Land and buildings 413 3,680 Total property and equipment 163,364 181,395 Accumulated depreciation (120,086 ) (124,560 ) Property and equipment, net $ 43,278 $ 56,835 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of income before income taxes, by geographical area | The income before income taxes, by geographic area, was as follows: Fiscal Year Ended September 30, October 1, October 2, (in thousands) Income before income taxes: United States $ 180,034 $ 166,074 $ 113,576 Foreign (5,472 ) 5,687 10,890 Total income before income taxes $ 174,562 $ 171,761 $ 124,466 |
Schedule of components of income tax expense | Income tax expense consisted of the following: Fiscal Year Ended September 30, October 1, October 2, (in thousands) Current: Federal $ 46,840 $ 45,604 $ 22,277 State 9,228 8,860 5,634 Foreign 10,897 9,337 6,651 Total current income tax expense 66,965 63,801 34,562 Deferred: Federal (22,072 ) (4,251 ) 6,231 State (1,471 ) (945 ) (16 ) Foreign (5,817 ) (4,761 ) (164 ) Total deferred income tax expense (29,360 ) (9,957 ) 6,051 Total income tax expense $ 37,605 $ 53,844 $ 40,613 |
Schedule of reconciliation of income tax expense and effective income tax rates | Total income tax expense was different from the amount computed by applying the U.S. federal statutory rate to pre-tax income as follows: Fiscal Year Ended September 30, October 1, October 2, Tax at federal statutory rate 24.5% 35.0% 35.0% State taxes, net of federal benefit 4.2 3.4 3.1 Research and Development ("R&D") credit (1.4) (1.8) (3.4) Domestic production deduction (0.2) (0.7) (0.7) Tax differential on foreign earnings 0.5 — (1.6) Non-taxable foreign interest income (2.0) (2.9) (3.9) Non-deductible executive compensation — — 2.0 Goodwill 1.7 — — Stock compensation (2.7) (2.8) 0.3 Valuation allowance (0.5) (0.5) 2.4 Change in uncertain tax positions 1.9 1.8 (2.0) Revaluation of deferred taxes (8.4) — — Deferred tax adjustments 2.1 — — Other 1.8 (0.2) 1.4 Total income tax expense 21.5% 31.3% 32.6% |
Schedule of temporary differences comprising the net deferred income tax liability | Temporary differences comprising the net deferred income tax liability shown on the accompanying consolidated balance sheets were as follows: Fiscal Year Ended September 30, October 1, (in thousands) Deferred Tax Assets: State taxes $ 1,220 $ 598 Reserves and contingent liabilities 2,646 2,941 Allowance for doubtful accounts 4,259 4,273 Accrued liabilities 19,611 22,466 Stock-based compensation 6,338 10,069 Loss carry-forwards 23,492 28,261 Valuation allowance (21,479 ) (25,326 ) Total deferred tax assets 36,087 43,282 Deferred Tax Liabilities: Unbilled revenue (25,819 ) (46,408 ) Prepaid expense (3,524 ) (6,253 ) Intangibles (23,319 ) (24,328 ) Property and equipment (4,984 ) (8,311 ) Total deferred tax liability (57,646 ) (85,300 ) Net deferred tax liabilities $ (21,559 ) $ (42,018 ) |
Reconciliation of the beginning and ending amounts of unrecognized tax benefits | A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: Fiscal Year Ended September 30, October 1, October 2, (in thousands) Beginning balance $ 9,337 $ 22,786 $ 21,618 Additions for current year tax positions 1,108 1,060 2,802 Additions for prior year tax positions 3,478 2,365 1,466 Reductions for prior year tax positions — (6,875 ) (3,100 ) Settlements (4,496 ) (9,999 ) — Ending balance $ 9,427 $ 9,337 $ 22,786 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 12 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt | Long-term debt consisted of the following: Fiscal Year Ended September 30, October 1, (in thousands) Credit facilities $ 277,127 $ 356,438 Other 184 433 Total long-term debt 277,311 356,871 Less: Current portion of long-term debt (12,599 ) (15,588 ) Long-term debt, less current portion $ 264,712 $ 341,283 |
Schedule of maturities of long-term debt | The following table presents scheduled maturities of our long-term debt: Amount (in thousands) 2019 $ 12,599 2020 12,585 2021 12,500 2022 12,500 2023 227,127 Total $ 277,311 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Sep. 30, 2018 | |
Leases [Abstract] | |
Schedule of amounts payable under non-cancelable capital lease commitments | The following are amounts payable under non-cancelable operating and capital lease commitments for the next five fiscal years and beyond: Operating Capital (in thousands) 2019 $ 84,442 $ 92 2020 65,119 85 2021 46,003 — 2022 29,846 — 2023 19,078 — Beyond 18,253 — Total $ 262,741 $ 177 Net present value $ 177 |
Schedule of amounts payable under non-cancelable operating lease commitments | The following are amounts payable under non-cancelable operating and capital lease commitments for the next five fiscal years and beyond: Operating Capital (in thousands) 2019 $ 84,442 $ 92 2020 65,119 85 2021 46,003 — 2022 29,846 — 2023 19,078 — Beyond 18,253 — Total $ 262,741 $ 177 Net present value $ 177 |
Schedule of reconciliation of the beginning and ending balances of liabilities related to lease contract termination costs | The following is a reconciliation of the beginning and ending balances of these liabilities related to lease contract termination costs: GSG CIG RCM Total (in thousands) Balance at October 2, 2016 $ 674 $ 2,391 $ 39 $ 3,104 Adjustments (1) (415 ) (959 ) (36 ) (1,410 ) Balance at October 1, 2017 259 1,432 3 1,694 Adjustments (1) (259 ) (512 ) (3 ) (774 ) Balance at September 30, 2018 $ — $ 920 $ — $ 920 (1) Adjustments of the actual timing and potential termination costs or realization of sublease income. |
Stockholders' Equity and Stoc_2
Stockholders' Equity and Stock Compensation Plans (Tables) | 12 Months Ended |
Sep. 30, 2018 | |
Stockholders' Equity Note [Abstract] | |
Schedule of the stock-based compensation and related income tax benefits | The stock-based compensation and related income tax benefits were as follows: Fiscal Year Ended September 30, October 1, October 2, (in thousands) Total stock-based compensation $ 19,582 $ 13,450 $ 12,964 Income tax benefit related to stock-based compensation (5,288 ) (4,715 ) (4,656 ) Stock-based compensation, net of tax benefit $ 14,294 $ 8,735 $ 8,308 |
Schedule of stock option activity | Stock option activity for the fiscal year ended September 30, 2018 was as follows: Number of Options (in thousands) Weighted- Average Exercise Price per Share Weighted- Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (in thousands) Outstanding on October 1, 2017 1,753 $ 27.18 Granted 171 48.01 Exercised (549 ) 50.85 Forfeited (20 ) 26.90 Outstanding at September 30, 2018 1,355 30.87 5.17 $ 50,689 Vested or expected to vest at September 30, 2018 1,330 30.94 5.13 49,694 Exercisable on September 30, 2018 929 27.21 3.93 38,152 |
Schedule of assumptions used in the calculation of the fair value of stock options using the Black-Scholes option pricing model | The fair value of our stock options was estimated on the date of grant using the Black-Scholes option pricing model. The following assumptions were used in the calculation: Fiscal Year Ended September 30, October 1, October 2, Dividend yield 1.0% 1.0% 1.2% Expected stock price volatility 36.1% - 38.8% 36.1% - 38.8% 36.1% - 38.8% Risk-free rate of return, annual 1.7% - 2.9% 1.7% - 1.9% 1.6% - 1.8% |
Schedule of RSU and PSU activity | A summary of the RSU and PSU activity under our stock plans is as follows: RSU PSU Number of Weighted- per Share Number of Shares (in thousands) Weighted- Average Grant Date Fair Value per Share Nonvested balance at September 27, 2015 483 $ 26.75 139 $ 31.66 Granted 217 27.14 138 31.63 Vested (180 ) 26.03 — — Forfeited (21 ) 27.11 — — Nonvested balance at October 2, 2016 499 27.16 277 31.65 Granted 226 41.00 99 48.36 Vested (186 ) 26.98 — — Forfeited (28 ) 30.15 — — Nonvested balance at October 1, 2017 511 33.19 376 36.05 Granted 199 48.16 99 57.40 Vested (184 ) 31.85 (139 ) 31.66 Forfeited (38 ) 36.39 (13 ) 41.80 Nonvested balance at September 30, 2018 488 39.56 323 44.27 |
Summary of shares purchased, weighted-average purchase price, cash received, and the aggregate intrinsic value for shares purchased under the ESPP | The following table summarizes shares purchased, weighted-average purchase price, cash received and the aggregate intrinsic value for shares purchased under the ESPP: Fiscal Year Ended September 30, October 1, October 2, (in thousands, except for purchase price) Shares purchased 141 190 209 Weighted-average purchase price $ 40.38 $ 26.02 $ 22.54 Cash received from exercise of purchase rights $ 5,727 $ 4,940 $ 4,707 Aggregate intrinsic value $ 337 $ — $ 710 |
Schedule of the assumptions used in the Black-Scholes option pricing model in estimating the grant date fair value of each award granted under the ESPP | The grant date fair value of each award granted under the ESPP was estimated using the Black-Scholes option pricing model with the following assumptions: Fiscal Year Ended September 30, October 1, October 2, Dividend yield 1.0% 1.0% 1.3% Expected stock price volatility 24.0% 22.4% 23.7% Risk-free rate of return, annual 1.8% 0.9% 0.2% Expected life (in years) 1 1 1 |
Earnings per Share (Tables)
Earnings per Share (Tables) | 12 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of number of weighted-average shares used to compute basic and diluted EPS | The following table sets forth the number of weighted-average shares used to compute basic and diluted EPS: Fiscal Year Ended September 30, October 1, October 2, (in thousands, except per share data) Net income attributable to Tetra Tech $ 136,883 $ 117,874 $ 83,783 Weighted-average common shares outstanding – basic 55,670 56,911 58,186 Effect of diluted stock options and unvested restricted stock 928 1,002 780 Weighted-average common stock outstanding – diluted 56,598 57,913 58,966 Earnings per share attributable to Tetra Tech: Basic $ 2.46 $ 2.07 $ 1.44 Diluted $ 2.42 $ 2.04 $ 1.42 |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 12 Months Ended |
Sep. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of notional principal, fixed rates and related expiration dates of outstanding interest rate swap agreements | As of September 30, 2018 , the notional principal, fixed rates and related expiration dates of our outstanding interest rate swap agreements are as follows: Notional Amount (in thousands) Fixed Rate Expiration Date $50,000 2.79% July 2023 50,000 2.79% July 2023 50,000 2.79% July 2023 50,000 2.79% July 2023 50,000 2.79% July 2023 |
Schedule of fair values of the entity's outstanding derivatives designated as hedging instruments | The fair values of our outstanding derivatives designated as hedging instruments were as follows: Fair Value of Derivative Instruments as of Balance Sheet Location September 30, October 1, (in thousands) Interest rate swap agreements Other current assets $ 1,244 $ 49 |
Reclassifications Out of Accu_2
Reclassifications Out of Accumulated Other Comprehensive Income (Loss) (Tables) | 12 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
Summary of reclassifications out of accumulated other comprehensive income (loss) | The accumulated balances and reporting period activities for fiscal 2018 and 2017 related to reclassifications out of accumulated other comprehensive income (loss) are summarized as follows: Foreign Currency Translation Adjustments Gain (Loss) on Derivative Instruments Accumulated Other Comprehensive Income (Loss) (in thousands) Balances at October 2, 2016 $ (126,840 ) $ (1,168 ) $ (128,008 ) Other comprehensive income before reclassifications 27,894 2,363 30,257 Amounts reclassified from accumulated other comprehensive income Interest rate contracts, net of tax (1) — (749 ) (749 ) Net current-period other comprehensive income 27,894 1,614 29,508 Balances at October 1, 2017 $ (98,946 ) $ 446 $ (98,500 ) Other comprehensive income (loss) before reclassifications (29,656 ) 1,215 (28,441 ) Amounts reclassified from accumulated other comprehensive income Interest rate contracts, net of tax (1) — (409 ) (409 ) Net current-period other comprehensive income (loss) (29,656 ) 806 (28,850 ) Balances at September 30, 2018 $ (128,602 ) $ 1,252 $ (127,350 ) (1) This accumulated other comprehensive component is reclassified to "Interest expense" in our consolidated statements of income. |
Reportable Segments (Tables)
Reportable Segments (Tables) | 12 Months Ended |
Sep. 30, 2018 | |
Segment Reporting [Abstract] | |
Summarized financial information of reportable segments | The following tables set forth summarized financial information concerning our reportable segments: Reportable Segments Fiscal Year Ended September 30, October 1, October 2, (in thousands) Revenue GSG $ 1,694,871 $ 1,487,611 $ 1,289,506 CIG 1,323,142 1,326,020 1,297,209 RCM 14,199 18,207 52,150 Elimination of inter-segment revenue (68,064 ) (78,478 ) (55,396 ) Total revenue $ 2,964,148 $ 2,753,360 $ 2,583,469 Income from operations GSG $ 168,211 $ 138,199 $ 101,595 CIG 74,451 90,817 106,602 RCM (4,573 ) (14,712 ) (11,834 ) Corporate (1) (48,003 ) (30,962 ) (60,508 ) Total operating income $ 190,086 $ 183,342 $ 135,855 (1) Includes goodwill and intangible assets impairment charges, amortization of intangibles, other costs and other income not allocable to segments. The intangible asset amortization expense for fiscal 2018 , 2017 and 2016 was $18.2 million , $22.8 million and $22.1 million , respectively. Corporate results also included income (loss) for fair value adjustments to contingent consideration liabilities of $(4.3) million , $6.9 million and $(2.8) million for fiscal 2018 , 2017 and 2016 , respectively. Fiscal 2016 also included $19.5 million of acquisition and integration related expenses recorded at Corporate. September 30, October 1, (in thousands) Total Assets GSG $ 468,010 $ 378,839 CIG 478,197 518,697 RCM 25,683 33,620 Corporate (1) 987,531 971,589 Total assets $ 1,959,421 $ 1,902,745 (1) Corporate assets consist of intercompany eliminations and assets not allocated to reportable segments including goodwill, intangible assets, deferred income taxes and certain other assets. |
Schedule of geographic information | Geographic Information Fiscal Year Ended September 30, 2018 October 1, 2017 October 2, 2016 Revenue Long-Lived Assets (2) Revenue Long-Lived Assets (2) Revenue Long-Lived Assets (2) United States $ 2,232,013 $ 59,164 $ 2,018,841 $ 58,965 $ 1,858,551 $ 59,334 Foreign countries (1) 732,135 34,934 734,519 34,183 724,918 39,067 (1) Includes revenue generated from our foreign operations, primarily in Canada and Australia, and revenue generated from non-U.S. clients. Long-lived assets consist primarily of amounts from our Canadian operations. (2) Excludes goodwill and intangible assets. |
Summary of revenue by client sector | The following table presents our revenue by client sector: Fiscal Year Ended September 30, October 1, October 2, (in thousands) Client Sector U.S. state and local government $ 469,231 $ 353,062 $ 310,740 U.S. federal government (1) 974,384 901,136 784,368 U.S commercial 788,398 764,643 763,443 International (2) 732,135 734,519 724,918 Total $ 2,964,148 $ 2,753,360 $ 2,583,469 (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. |
Quarterly Financial Informati_2
Quarterly Financial Information-Unaudited (Tables) | 12 Months Ended |
Sep. 30, 2018 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of unaudited quarterly data | First Quarter Second Quarter Third Quarter Fourth Quarter (in thousands, except per share data) Fiscal Year 2018 Revenue $ 759,749 $ 700,262 $ 764,795 $ 739,343 Income from operations 48,589 42,716 55,496 43,285 Net income attributable to Tetra Tech 46,034 28,725 33,322 28,802 Earnings per share attributable to Tetra Tech: Basic $ 0.82 $ 0.51 $ 0.60 $ 0.52 Diluted $ 0.81 $ 0.51 $ 0.59 $ 0.51 Weighted-average common shares outstanding: Basic 55,855 55,841 55,537 55,341 Diluted 56,875 56,673 56,390 56,349 Fiscal Year 2017 Revenue $ 668,851 $ 663,781 $ 685,539 $ 735,188 Income from operations 39,855 42,956 45,884 54,647 Net income attributable to Tetra Tech 26,562 26,862 29,983 34,467 Earnings per share attributable to Tetra Tech: Basic $ 0.47 $ 0.47 $ 0.52 $ 0.61 Diluted $ 0.46 $ 0.46 $ 0.52 $ 0.60 Weighted-average common shares outstanding: Basic 57,099 57,270 57,184 56,338 Diluted 58,145 58,270 58,161 57,326 |
Description of Business (Detail
Description of Business (Details) | 12 Months Ended |
Sep. 30, 2018segment | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of renamed reportable segments | 2 |
Basis of Presentation and Pre_3
Basis of Presentation and Preparation - Fiscal Year (Details) | 12 Months Ended | ||
Sep. 30, 2018 | Oct. 01, 2017 | Oct. 02, 2016 | |
Principles of Consolidation and Presentation | |||
Number of weeks in a fiscal year, low end of range | 364 days | ||
Number of weeks in a fiscal year, high end of range | 371 days | ||
Number of weeks in a fiscal year | 364 days | 364 days | 371 days |
Basis of Presentation and Pre_4
Basis of Presentation and Preparation - Revenue Recognition and Contract Costs (Details) | 12 Months Ended |
Sep. 30, 2018Contract | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of types of contracts under which revenue is recognized | 3 |
Basis of Presentation and Pre_5
Basis of Presentation and Preparation - Cash and Cash Equivalents and Accounts Receivable (Details) - USD ($) $ in Millions | 12 Months Ended | |
Sep. 30, 2018 | Oct. 01, 2017 | |
Cash and Cash Equivalents | ||
Maximum term of original maturity to classify instrument as cash equivalent | 90 days | |
Restricted cash included in "Prepaid expenses and other current assets" | $ 2.7 | $ 2.7 |
Accounts Receivable - Net | ||
Period for billing and collecting unbilled receivables | 12 months | |
Period for earning majority of billings in excess of costs | 12 months |
Basis of Presentation and Pre_6
Basis of Presentation and Preparation - Property and Equipment (Details) | 12 Months Ended |
Sep. 30, 2018 | |
Equipment | Minimum | |
Estimated useful lives | |
Estimated useful lives | 3 years |
Equipment | Maximum | |
Estimated useful lives | |
Estimated useful lives | 10 years |
Furniture and fixtures | Minimum | |
Estimated useful lives | |
Estimated useful lives | 3 years |
Furniture and fixtures | Maximum | |
Estimated useful lives | |
Estimated useful lives | 10 years |
Buildings | Maximum | |
Estimated useful lives | |
Estimated useful lives | 40 years |
Basis of Presentation and Pre_7
Basis of Presentation and Preparation - Goodwill and Intangible Assets (Details) | 12 Months Ended |
Sep. 30, 2018Level | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of levels below reportable segments at which goodwill impairment testing is performed | 1 |
Basis of Presentation and Pre_8
Basis of Presentation and Preparation - Contingent Consideration, Concentration of Credit Risk, and Revenue Recognition (Details) | 12 Months Ended | |
Sep. 30, 2018segmentInstitution | Oct. 01, 2018 | |
Concentration of Credit Risk | ||
Financial institutions, in any such number of which investment exposure is limited | Institution | 1 | |
Accounts receivable due from various agencies of the U.S. federal government (as a percent) | 26.00% | |
Number of operating segments | segment | 2 | |
Retained Earnings | Scenario, Forecast | Accounting Standards Update 2014-09 | ||
Concentration of Credit Risk | ||
Cumulative effect adjustment, percentage decrease in retained earnings (less than) | 2.00% | |
Minimum | ||
Contingent Consideration | ||
Period for contingent earn-out payments | 2 years | |
Maximum | ||
Contingent Consideration | ||
Period for contingent earn-out payments | 3 years | |
U.S. government | ||
Concentration of Credit Risk | ||
Revenue from customers (as a percent) | 49.00% | |
U.S commercial | ||
Concentration of Credit Risk | ||
Revenue from customers (as a percent) | 26.00% | |
International | ||
Concentration of Credit Risk | ||
Revenue from customers (as a percent) | 25.00% |
Stock Repurchase and Dividend_2
Stock Repurchase and Dividends - Narrative (Details) - USD ($) | Nov. 05, 2018 | Sep. 30, 2018 | Oct. 01, 2017 | Nov. 07, 2016 |
Subsequent Event [Line Items] | ||||
Maximum repurchase amount under stock repurchase program | $ 200,000,000 | |||
Shares repurchased through open market purchases | 1,491,569 | 2,266,397 | ||
Average price of shares repurchased (in dollars per share) | $ 50.28 | $ 44.12 | ||
Cost of shares repurchased | $ 75,000,000 | $ 100,000,000 | ||
Subsequent Event | ||||
Subsequent Event [Line Items] | ||||
Maximum repurchase amount under stock repurchase program | $ 200,000,000 | |||
Quarterly cash dividend declared (in dollars per share) | $ 0.12 | |||
Remaining authorized repurchase amount | $ 25,000,000 |
Stock Repurchase and Dividend_3
Stock Repurchase and Dividends - Schedule of Dividends Declared and Paid (Details) - USD ($) $ / shares in Units, $ in Thousands | Aug. 31, 2018 | Jun. 01, 2018 | Mar. 02, 2018 | Dec. 15, 2017 | Sep. 01, 2017 | Jun. 02, 2017 | Mar. 03, 2017 | Dec. 14, 2016 | Sep. 30, 2018 | Oct. 01, 2017 | Oct. 02, 2016 |
Stock Repurchase And Dividends [Abstract] | |||||||||||
Dividends Paid Per Share (in dollars per share) | $ 0.12 | $ 0.12 | $ 0.1 | $ 0.1 | $ 0.1 | $ 0.1 | $ 0.09 | $ 0.09 | $ 0.44 | $ 0.38 | $ 0.34 |
Dividends Paid | $ 6,641 | $ 6,664 | $ 5,583 | $ 5,589 | $ 5,633 | $ 5,738 | $ 5,157 | $ 5,144 | $ 24,477 | $ 21,672 |
Accounts Receivable and Reven_3
Accounts Receivable and Revenue Recognition - Net Accounts Receivable and Billings in Excess of Costs on Uncompleted Contracts (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Oct. 01, 2017 |
Accounts Receivable - Net and Revenue Recognition | ||
Billed | $ 464,062 | $ 376,287 |
Unbilled | 397,200 | 404,899 |
Contract retentions | 13,421 | 39,840 |
Total accounts receivable – gross | 874,683 | 821,026 |
Allowance for doubtful accounts | (37,580) | (32,259) |
Total accounts receivable – net | 837,103 | 788,767 |
Billings in excess of costs on uncompleted contracts | $ 143,270 | $ 117,499 |
Accounts Receivable and Reven_4
Accounts Receivable and Revenue Recognition - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2018 | Oct. 01, 2017 | Oct. 02, 2016 | |
Financial information concerning reportable segments | |||
Period for billing and collecting unbilled receivables | 12 months | ||
Period for earning majority of billings in excess of costs | 12 months | ||
Unbilled accounts receivable related to claims and requests for equitable adjustment on contracts | $ 74 | $ 59 | |
Billed accounts receivable related to U.S. federal government contracts | 81.5 | 45.4 | |
U.S. federal government unbilled receivables | 102.7 | 109.7 | |
Net unfavorable operating income adjustments | 8 | $ 2.3 | |
Liability for anticipated losses | 13.6 | 8.1 | |
Estimated cost to complete the related contracts | 16.4 | ||
CIG | |||
Financial information concerning reportable segments | |||
Reduction in the revenue related to the evaluation of the claims | 10.6 | ||
Loss from claim settlement | 12.5 | ||
Net unfavorable operating income adjustments | $ 11.2 | 2.3 | |
RCM | |||
Financial information concerning reportable segments | |||
Reduction in the revenue related to the evaluation of the claims | 4.9 | ||
Loss from claim settlement | 3.6 | ||
Net unfavorable operating income adjustments | $ 5.7 |
Acquisitions and Divestitures -
Acquisitions and Divestitures - Narrative (Details) | Jul. 02, 2018USD ($) | Sep. 30, 2018USD ($) | Jul. 01, 2018USD ($) | Apr. 01, 2018USD ($)employee | Dec. 31, 2017USD ($)employee | Oct. 01, 2017USD ($) | Apr. 02, 2017USD ($) | Mar. 27, 2016USD ($) | Sep. 30, 2018USD ($) | Oct. 01, 2017USD ($)employee | Oct. 02, 2016USD ($)employee | Sep. 27, 2015USD ($) |
Business acquisition | ||||||||||||
Contingent earn-out liability | $ 35,290,000 | $ 2,438,000 | $ 35,290,000 | $ 2,438,000 | $ 8,757,000 | $ 4,169,000 | ||||||
Aggregate maximum of contingent consideration | 50,600,000 | 50,600,000 | ||||||||||
Proceeds from divestiture of business | 35,348,000 | 905,000 | 3,076,000 | |||||||||
Increase (decrease) in contingent consideration | 4,300,000 | (6,900,000) | 2,800,000 | |||||||||
Gain (loss) on change in contingent consideration | $ (4,300,000) | 6,900,000 | $ (2,800,000) | |||||||||
Impairment of goodwill | $ 0 | $ 0 | 0 | |||||||||
Minimum | ||||||||||||
Business acquisition | ||||||||||||
Earn-out period | 2 years | |||||||||||
Maximum | ||||||||||||
Business acquisition | ||||||||||||
Earn-out period | 3 years | |||||||||||
Existing customer contracts | Minimum | ||||||||||||
Business acquisition | ||||||||||||
Useful life of intangible assets | 1 year | |||||||||||
Existing customer contracts | Maximum | ||||||||||||
Business acquisition | ||||||||||||
Useful life of intangible assets | 10 years | |||||||||||
Technology and trade names | Minimum | ||||||||||||
Business acquisition | ||||||||||||
Useful life of intangible assets | 3 years | |||||||||||
Technology and trade names | Maximum | ||||||||||||
Business acquisition | ||||||||||||
Useful life of intangible assets | 5 years | |||||||||||
Non-core field services business | Disposed of by Sale | ||||||||||||
Business acquisition | ||||||||||||
Proceeds from divestiture of business | $ 30,200,000 | |||||||||||
Disposal group revenue | $ 70,000,000 | |||||||||||
Loss on disposition of business | $ 3,400,000 | $ 3,400,000 | ||||||||||
Coffey | ||||||||||||
Business acquisition | ||||||||||||
Number of employees | employee | 3,300 | |||||||||||
Aggregate fair value of purchase prices | $ 76,100,000 | |||||||||||
Assumed debt | 65,100,000 | |||||||||||
Secured bank debt assumed | 37,100,000 | |||||||||||
Unsecured corporate bonds assumed | 28,000,000 | |||||||||||
INDUS | ||||||||||||
Business acquisition | ||||||||||||
Aggregate fair value of purchase prices | 18,700,000 | |||||||||||
Cash paid to the sellers | 14,000,000 | |||||||||||
Contingent earn-out liability | $ 0 | $ 4,700,000 | 4,900,000 | |||||||||
Aggregate maximum of contingent consideration | $ 8,000,000 | $ 8,000,000 | ||||||||||
Earn-out period | 2 years | 2 years | ||||||||||
Potential earn-out to be paid each year | $ 4,000,000 | |||||||||||
Estimated potential earn-out (as a percent) | 50.00% | 59.00% | ||||||||||
Minimum operating income threshold to earn contingent consideration during year one | 3,200,000 | $ 3,200,000 | ||||||||||
Minimum operating income threshold to earn contingent consideration during year two | 3,600,000 | 3,600,000 | ||||||||||
Operating income to earn maximum consideration during the first year | 3,600,000 | |||||||||||
Operating income to earn maximum consideration during the second year | $ 4,000,000 | |||||||||||
Gain (loss) on change in contingent consideration | 5,000,000 | |||||||||||
Impairment of goodwill | $ 0 | |||||||||||
ELA | ||||||||||||
Business acquisition | ||||||||||||
Number of employees | employee | 160 | |||||||||||
Aggregate fair value of purchase prices | $ 9,900,000 | |||||||||||
Cash paid to the sellers | 8,300,000 | |||||||||||
Contingent earn-out liability | 1,600,000 | 1,600,000 | ||||||||||
Aggregate maximum of contingent consideration | $ 1,700,000 | $ 1,700,000 | ||||||||||
Earn-out period | 2 years | |||||||||||
Glumac | ||||||||||||
Business acquisition | ||||||||||||
Number of employees | employee | 300 | |||||||||||
Aggregate fair value of purchase prices | $ 38,400,000 | |||||||||||
Cash paid to the sellers | 20,000,000 | |||||||||||
Contingent earn-out liability | 18,400,000 | |||||||||||
Aggregate maximum of contingent consideration | $ 20,000,000 | |||||||||||
Earn-out period | 3 years | |||||||||||
Cash settlement of earn-out liability | $ 1,500,000 | |||||||||||
NDY | ||||||||||||
Business acquisition | ||||||||||||
Number of employees | employee | 700 | |||||||||||
Aggregate fair value of purchase prices | $ 56,100,000 | |||||||||||
Cash paid to the sellers | 46,900,000 | |||||||||||
Contingent earn-out liability | 7,600,000 | |||||||||||
Aggregate maximum of contingent consideration | $ 20,200,000 | |||||||||||
Earn-out period | 3 years | |||||||||||
Escrow deposit | $ 1,600,000 | |||||||||||
CEG | ||||||||||||
Business acquisition | ||||||||||||
Increase (decrease) in contingent consideration | $ (1,800,000) | |||||||||||
Other Acquisitions | ||||||||||||
Business acquisition | ||||||||||||
Contingent earn-out liability | 0 | |||||||||||
Cash settlement of earn-out liability | $ 1,000,000 |
Acquisitions and Divestitures-
Acquisitions and Divestitures- Changes in the Carrying Value of Estimated Contingent Earn-Out Liabilities (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2018 | Oct. 01, 2017 | Oct. 02, 2016 | |
Estimated contingent earn-out liabilities | |||
Beginning balance (at fair value) | $ 2,438 | $ 8,757 | $ 4,169 |
Estimated earn-out liabilities for acquisitions during the fiscal year | 32,210 | 1,604 | 4,745 |
Increases due to re-measurement of fair value reported in interest expense | 1,005 | 260 | 271 |
Net increase (decrease) due to re-measurement of fair value reported as losses (gains) in operating income | 4,252 | (6,923) | 2,823 |
Foreign exchange impact | (854) | 59 | 0 |
Earn-out payments: | |||
Reported as cash used in operating activities | (2,349) | 0 | 0 |
Reported as cash used in financing activities | (1,412) | (1,319) | (3,251) |
Ending balance (at fair value) | $ 35,290 | $ 2,438 | $ 8,757 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Schedule of Carrying Value of Goodwill (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Sep. 30, 2018 | Oct. 01, 2017 | |
Goodwill [Roll Forward] | ||
Balance at beginning of the period | $ 740,886 | $ 717,988 |
Acquisition activity | 85,879 | 7,055 |
Divestiture activity | (12,160) | |
Translation and other | (15,785) | 15,843 |
Balance at end of the period | 798,820 | 740,886 |
GSG | ||
Goodwill [Roll Forward] | ||
Balance at beginning of the period | 361,761 | 357,050 |
Acquisition activity | 27,526 | 0 |
Divestiture activity | 0 | |
Translation and other | 454 | 4,711 |
Balance at end of the period | 389,741 | 361,761 |
CIG | ||
Goodwill [Roll Forward] | ||
Balance at beginning of the period | 379,125 | 360,938 |
Acquisition activity | 58,353 | 7,055 |
Divestiture activity | (12,160) | |
Translation and other | (16,239) | 11,132 |
Balance at end of the period | $ 409,079 | $ 379,125 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Narrative (Details) - USD ($) | Jul. 02, 2018 | Sep. 30, 2018 | Oct. 01, 2017 | Sep. 30, 2018 | Oct. 01, 2017 | Oct. 02, 2016 |
Goodwill [Line Items] | ||||||
Impairment of goodwill | $ 0 | $ 0 | $ 0 | |||
Percentage of excess of fair value over carrying value (more than) | 30.00% | 30.00% | ||||
Foreign currency translation adjustments | $ 900,000 | $ 100,000 | ||||
Amortization expense for intangible assets | 18,200,000 | 22,800,000 | $ 22,100,000 | |||
GSG | ||||||
Goodwill [Line Items] | ||||||
Gross amounts of goodwill | $ 407,400,000 | 379,500,000 | 407,400,000 | 379,500,000 | ||
Accumulated impairment | 17,700,000 | 17,700,000 | 17,700,000 | 17,700,000 | ||
CIG | ||||||
Goodwill [Line Items] | ||||||
Gross amounts of goodwill | 507,000,000 | 477,000,000 | 507,000,000 | 477,000,000 | ||
Accumulated impairment | $ 97,900,000 | $ 97,900,000 | $ 97,900,000 | $ 97,900,000 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Amortization (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Sep. 30, 2018 | Oct. 01, 2017 | |
Finite-lived intangible assets | ||
Gross Amount | $ 86,237 | $ 118,995 |
Accumulated Amortization | (70,114) | (92,307) |
Estimated amortization expense | ||
2,019 | 9,016 | |
2,020 | 3,366 | |
2,021 | 2,271 | |
2,022 | 1,037 | |
2,023 | 433 | |
Total | $ 16,123 | |
Non-compete agreements | ||
Finite-lived intangible assets | ||
Weighted- Average Remaining Life (in years) | 0 years | |
Gross Amount | $ 83 | 495 |
Accumulated Amortization | $ (83) | (493) |
Client relations | ||
Finite-lived intangible assets | ||
Weighted- Average Remaining Life (in years) | 2 years 7 months 6 days | |
Gross Amount | $ 54,639 | 90,297 |
Accumulated Amortization | $ (46,449) | (75,074) |
Backlog | ||
Finite-lived intangible assets | ||
Weighted- Average Remaining Life (in years) | 6 months | |
Gross Amount | $ 23,371 | 21,518 |
Accumulated Amortization | $ (20,007) | (13,301) |
Technology and trade names | ||
Finite-lived intangible assets | ||
Weighted- Average Remaining Life (in years) | 3 years 2 months 12 days | |
Gross Amount | $ 8,144 | 6,685 |
Accumulated Amortization | $ (3,575) | $ (3,439) |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Sep. 30, 2018 | Oct. 01, 2017 | Oct. 02, 2016 | Jul. 01, 2018 | |
Property and Equipment | ||||
Property and equipment, gross | $ 163,364 | $ 181,395 | ||
Accumulated depreciation | (120,086) | (124,560) | ||
Property and equipment, net | 43,278 | 56,835 | ||
Depreciation expense related to property and equipment | 19,600 | 22,200 | $ 22,800 | |
Equipment, furniture and fixtures | ||||
Property and Equipment | ||||
Property and equipment, gross | 131,521 | 150,026 | ||
Leasehold improvements | ||||
Property and Equipment | ||||
Property and equipment, gross | 31,430 | 27,689 | ||
Land and buildings | ||||
Property and Equipment | ||||
Property and equipment, gross | $ 413 | $ 3,680 | ||
CIG | ||||
Property and Equipment | ||||
Disposal group, property and equipment | $ 7,000 | |||
CIG | Land and buildings | ||||
Property and Equipment | ||||
Disposal group, property and equipment | $ 3,000 |
Income Taxes - Summary (Details
Income Taxes - Summary (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2018 | Oct. 01, 2017 | Oct. 02, 2016 | |
Income before income taxes: | |||
United States | $ 180,034 | $ 166,074 | $ 113,576 |
Foreign | (5,472) | 5,687 | 10,890 |
Total income before income taxes | 174,562 | 171,761 | 124,466 |
Current: | |||
Federal | 46,840 | 45,604 | 22,277 |
State | 9,228 | 8,860 | 5,634 |
Foreign | 10,897 | 9,337 | 6,651 |
Total current income tax expense | 66,965 | 63,801 | 34,562 |
Deferred: | |||
Federal | (22,072) | (4,251) | 6,231 |
State | (1,471) | (945) | (16) |
Foreign | (5,817) | (4,761) | (164) |
Total deferred income tax expense | (29,360) | (9,957) | 6,051 |
Total income tax expense | $ 37,605 | $ 53,844 | $ 40,613 |
Reconciliation of effective income tax rate | |||
Tax at federal statutory rate | 24.50% | 35.00% | 35.00% |
State taxes, net of federal benefit | 4.20% | 3.40% | 3.10% |
Research and Development (R&D) credit | (1.40%) | (1.80%) | (3.40%) |
Domestic production deduction | (0.20%) | (0.70%) | (0.70%) |
Tax differential on foreign earnings | 0.50% | 0.00% | (1.60%) |
Non-taxable foreign interest income | (2.00%) | (2.90%) | (3.90%) |
Non-deductible executive compensation | 0.00% | 0.00% | 2.00% |
Goodwill | 1.70% | 0.00% | 0.00% |
Stock compensation | (2.70%) | (2.80%) | 0.30% |
Valuation allowance | (0.50%) | (0.50%) | 2.40% |
Change in uncertain tax positions | 1.90% | 1.80% | (2.00%) |
Revaluation of deferred taxes | (8.40%) | 0.00% | 0.00% |
Deferred tax adjustments | 2.10% | 0.00% | 0.00% |
Other | 1.80% | (0.20%) | 1.40% |
Total income tax expense | 21.50% | 31.30% | 32.60% |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||
Jul. 01, 2018 | Dec. 31, 2017 | Sep. 30, 2018 | Oct. 01, 2017 | Oct. 02, 2016 | Sep. 27, 2015 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Effective tax rate (as a percent) | 21.50% | 31.30% | 32.60% | |||
Tax at federal statutory rate | 24.50% | 35.00% | 35.00% | |||
Deferred tax benefit from tax reform remeasurement | $ 14,700 | $ 14,700 | ||||
Net deferred tax expense from other non-recurring adjustments | $ 3,600 | |||||
Effective income tax rate excluding revaluation of deferred taxes (as a percent) | 27.90% | |||||
Incremental tax expense, disposition of business | $ 2,600 | |||||
Goodwill written off related to sale of business | 12,160 | |||||
Tax expense (benefit) recognized based on IRS examination and settlement. | $ 1,600 | $ (1,200) | ||||
Payments made to tax authorities | $ 7,600 | $ 21,500 | ||||
Effective income tax rate excluding excess tax benefit and TCJA impact | 25.10% | 30.70% | ||||
Undistributed earnings of foreign subsidiaries | $ 11,800 | |||||
Incremental federal tax due to repatriation of foreign earnings | 1,000 | |||||
Valuation allowance | 21,479 | $ 25,326 | ||||
Unrecognized tax benefits | $ 9,427 | 9,337 | $ 22,786 | $ 21,618 | ||
Period during which unrecognized tax benefits would affect the effective tax rate | 12 months | |||||
Accrued additional interest expense | $ 600 | 400 | ||||
Reduction in accrued interest | 300 | 900 | ||||
Amount of interest and penalties accrued | 1,200 | 1,100 | ||||
Disposed of by Sale | Non-core field services business | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Loss on disposition of business | $ 3,400 | 3,400 | ||||
State | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Net operating loss carry forwards which expire at various dates | 43,700 | |||||
Foreign | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Reserve for uncertain tax position in connection with IRS examination | $ 2,300 | |||||
Net operating loss carry forwards which expire at various dates | 31,400 | |||||
Net operating loss carryforwards | 72,400 | |||||
Net operating loss carry forwards which have no expiration date | $ 41,000 |
Income Taxes - Schedule of temp
Income Taxes - Schedule of temporary differences comprising the net deferred income tax liability (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Oct. 01, 2017 |
Deferred Tax Assets: | ||
State taxes | $ 1,220 | $ 598 |
Reserves and contingent liabilities | 2,646 | 2,941 |
Allowance for doubtful accounts | 4,259 | 4,273 |
Accrued liabilities | 19,611 | 22,466 |
Stock-based compensation | 6,338 | 10,069 |
Loss carry-forwards | 23,492 | 28,261 |
Valuation allowance | (21,479) | (25,326) |
Total deferred tax assets | 36,087 | 43,282 |
Deferred Tax Liabilities: | ||
Unbilled revenue | (25,819) | (46,408) |
Prepaid expense | (3,524) | (6,253) |
Intangibles | (23,319) | (24,328) |
Property and equipment | (4,984) | (8,311) |
Total deferred tax liability | (57,646) | (85,300) |
Net deferred tax liabilities | $ (21,559) | $ (42,018) |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of unrecognized tax benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2018 | Oct. 01, 2017 | Oct. 02, 2016 | |
Reconciliation of unrecognized tax benefits [Roll Forward] | |||
Beginning balance | $ 9,337 | $ 22,786 | $ 21,618 |
Additions for current year tax positions | 1,108 | 1,060 | 2,802 |
Additions for prior year tax positions | 3,478 | 2,365 | 1,466 |
Reductions for prior year tax positions | 0 | (6,875) | (3,100) |
Settlements | (4,496) | (9,999) | 0 |
Ending balance | $ 9,427 | $ 9,337 | $ 22,786 |
Long-Term Debt - Schedule of Lo
Long-Term Debt - Schedule of Long-Term Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Oct. 01, 2017 |
Long-term debt | ||
Total long-term debt | $ 277,311 | $ 356,871 |
Less: Current portion of long-term debt | (12,599) | (15,588) |
Long-term debt, less current portion | 264,712 | 341,283 |
Credit facilities | ||
Long-term debt | ||
Total long-term debt | 277,127 | 356,438 |
Other | ||
Long-term debt | ||
Total long-term debt | $ 184 | $ 433 |
Long-Term Debt - Narrative (Det
Long-Term Debt - Narrative (Details) | Jul. 30, 2018USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2018AUD ($) |
Long-term debt | |||
Weighted-average rate including the effects of interest rate swap agreement (as a percent) | 3.28% | 3.28% | |
Amount outstanding under credit facility | $ 277,100,000 | ||
Standby Letters of Credit | |||
Long-term debt | |||
Maximum borrowing capacity | $ 30,000,000 | ||
Letters of credit outstanding | 29,800,000 | ||
Amount outstanding under credit facility | 0 | ||
Multicurrency borrowings and letter of credit | |||
Long-term debt | |||
Letters of credit outstanding | 4,300,000 | ||
Bank guarantees | |||
Long-term debt | |||
Amount outstanding under credit facility | 7,100,000 | ||
Amended Credit Agreement | |||
Long-term debt | |||
Accordion feature, higher borrowing capacity option | $ 1,000,000,000 | ||
Maximum borrowing capacity | $ 700,000,000 | ||
Debt instrument term | 5 years | ||
Accordion feature, increase limit | $ 300,000,000 | ||
Annual principal payment, amortization percentage | 5.00% | ||
Borrowings outstanding | $ 277,100,000 | ||
Weighted-average interest rate (as a percent) | 3.27% | 3.27% | |
Debt covenant, maximum consolidated leverage ratio | 3 | ||
Debt covenant, minimum consolidated interest coverage ratio | 3 | ||
Amended Credit Agreement | Federal Funds Effective Swap Rate | |||
Long-term debt | |||
Basis spread on variable rate | 0.50% | ||
Amended Credit Agreement | Term Loan Facility | |||
Long-term debt | |||
Maximum borrowing capacity | $ 250,000,000 | ||
Borrowings outstanding | $ 250,000,000 | ||
Amended Credit Agreement | Revolving Credit Facility | |||
Long-term debt | |||
Maximum borrowing capacity | $ 450,000,000 | ||
Borrowings outstanding | 27,100,000 | ||
Amount available for borrowing under facility | 422,000,000 | ||
Amended Credit Agreement | Revolving Credit Facility | Eurodollar | Minimum | |||
Long-term debt | |||
Basis spread on variable rate | 1.00% | ||
Amended Credit Agreement | Revolving Credit Facility | Eurodollar | Maximum | |||
Long-term debt | |||
Basis spread on variable rate | 1.75% | ||
Amended Credit Agreement | Revolving Credit Facility | Prime Rate or Eurodollar Rate | |||
Long-term debt | |||
Basis spread on variable rate | 1.00% | ||
Amended Credit Agreement | Revolving Credit Facility | Prime Rate or Eurodollar Rate | Minimum | |||
Long-term debt | |||
Basis spread on variable rate | 0.00% | ||
Amended Credit Agreement | Revolving Credit Facility | Prime Rate or Eurodollar Rate | Maximum | |||
Long-term debt | |||
Basis spread on variable rate | 0.75% | ||
Amended Credit Agreement | Standby Letters of Credit | |||
Long-term debt | |||
Maximum borrowing capacity | $ 100,000,000 | ||
Letters of credit outstanding | $ 900,000 | ||
Amended Credit Agreement | Bridge Loan | |||
Long-term debt | |||
Maximum borrowing capacity | 20,000,000 | ||
Amended Credit Agreement | Multicurrency borrowings and letter of credit | |||
Long-term debt | |||
Maximum borrowing capacity | $ 200,000,000 | ||
Credit Agreement | |||
Long-term debt | |||
Consolidated leverage ratio | 1.23 | 1.23 | |
Consolidated fixed charge coverage ratio | 15.42 | 15.42 |
Long-Term Debt - Scheduled Matu
Long-Term Debt - Scheduled Maturities of Long-Term Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Oct. 01, 2017 |
Debt Disclosure [Abstract] | ||
2,019 | $ 12,599 | |
2,020 | 12,585 | |
2,021 | 12,500 | |
2,022 | 12,500 | |
2,023 | 227,127 | |
Total long-term debt | $ 277,311 | $ 356,871 |
Leases - Narrative (Details)
Leases - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2018 | Oct. 01, 2017 | Oct. 02, 2016 | |
Leases [Abstract] | |||
Expense associated with operating leases | $ 77.8 | $ 71.3 | $ 75 |
Lease contract termination costs | $ 2.9 |
Leases - Commitments (Details)
Leases - Commitments (Details) $ in Thousands | Sep. 30, 2018USD ($) |
Operating | |
2,019 | $ 84,442 |
2,020 | 65,119 |
2,021 | 46,003 |
2,022 | 29,846 |
2,023 | 19,078 |
Beyond | 18,253 |
Total | 262,741 |
Capital | |
2,019 | 92 |
2,020 | 85 |
2,021 | 0 |
2,022 | 0 |
2,023 | 0 |
Beyond | 0 |
Total | 177 |
Net present value | $ 177 |
Leases - Reconciliation of Term
Leases - Reconciliation of Termination Costs (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Sep. 30, 2018 | Oct. 01, 2017 | |
Reconciliation of the beginning and ending balances of liabilities related to contract termination costs | ||
Balance at the beginning of the period | $ 1,694 | $ 3,104 |
Adjustments | (774) | (1,410) |
Balance at the end of the period | 920 | 1,694 |
GSG | ||
Reconciliation of the beginning and ending balances of liabilities related to contract termination costs | ||
Balance at the beginning of the period | 259 | 674 |
Adjustments | (259) | (415) |
Balance at the end of the period | 0 | 259 |
CIG | ||
Reconciliation of the beginning and ending balances of liabilities related to contract termination costs | ||
Balance at the beginning of the period | 1,432 | 2,391 |
Adjustments | (512) | (959) |
Balance at the end of the period | 920 | 1,432 |
RCM | ||
Reconciliation of the beginning and ending balances of liabilities related to contract termination costs | ||
Balance at the beginning of the period | 3 | 39 |
Adjustments | (3) | (36) |
Balance at the end of the period | $ 0 | $ 3 |
Stockholders' Equity and Stoc_3
Stockholders' Equity and Stock Compensation Plans - Summary (Details) - USD ($) | 12 Months Ended | ||
Sep. 30, 2018 | Oct. 01, 2017 | Oct. 02, 2016 | |
Stock-based compensation and related income tax benefits | |||
Total stock-based compensation | $ 19,582,000 | $ 13,450,000 | $ 12,964,000 |
Income tax benefit related to stock-based compensation | (5,288,000) | (4,715,000) | (4,656,000) |
Stock-based compensation, net of tax benefit | $ 14,294,000 | 8,735,000 | 8,308,000 |
RSUs | |||
Stockholder's equity and stock compensation plans | |||
Vesting period | 4 years | ||
ESPP | |||
Stockholder's equity and stock compensation plans | |||
Available for future awards (in shares) | 2,373,290 | ||
Maximum amount that an employee can contribute during a purchase right period | $ 5,000 | ||
Exercise price as percentage of fair market value on the first day of purchase right period | 100.00% | ||
Exercise price as percentage of fair market value on the last day of purchase right period | 85.00% | ||
Stock-based compensation and related income tax benefits | |||
Total stock-based compensation | $ 600,000 | $ 500,000 | $ 400,000 |
2005 EIP | Restricted Stock | |||
Stockholder's equity and stock compensation plans | |||
Vesting period | 3 years | ||
2015 EIP | |||
Stockholder's equity and stock compensation plans | |||
The number every share or unit issued counts against aggregate share limit (in shares) | 3 | ||
2018 EIP | |||
Stockholder's equity and stock compensation plans | |||
Available for future awards (in shares) | 3,000,000 | ||
Grant date prior to March 6, 2006 | 2005 EIP | Stock options | |||
Stockholder's equity and stock compensation plans | |||
Vesting period | 4 years | ||
Expiration period | 10 years | ||
Grant date prior to March 6, 2006 | 2005 EIP | Stock options | First anniversary of grant date and monthly thereafter | |||
Stockholder's equity and stock compensation plans | |||
Percentage of vesting rights after specified period | 25.00% | ||
Grant date on or after March 6, 2006 | 2005 EIP | Stock options | |||
Stockholder's equity and stock compensation plans | |||
Expiration period | 8 years | ||
Grant date on or after March 6, 2006 | 2005 EIP | Stock options | Each anniversary of grant date | |||
Stockholder's equity and stock compensation plans | |||
Percentage of vesting rights after specified period | 25.00% | ||
Grant date on or after March 6, 2006 | 2005 EIP | RSUs | Each anniversary of grant date | |||
Stockholder's equity and stock compensation plans | |||
Percentage of vesting rights after specified period | 25.00% |
Stockholders' Equity and Stoc_4
Stockholders' Equity and Stock Compensation Plans - Stock Options (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Sep. 30, 2018 | Oct. 01, 2017 | Oct. 02, 2016 | |
Number of Options (in thousands) | |||
Outstanding at the beginning of the year (in shares) | 1,753 | ||
Granted (in shares) | 171 | ||
Exercised (in shares) | (549) | ||
Forfeited (in shares) | (20) | ||
Outstanding at the end of the period (in shares) | 1,355 | 1,753 | |
Vested or expected to vest at the end of the period (in shares) | 1,330 | ||
Exercisable at the end of the period (in shares) | 929 | ||
Weighted- Average Exercise Price per Share | |||
Outstanding at the beginning of the year (in dollars per share) | $ 27.18 | ||
Granted (in dollars per share) | 48.01 | ||
Exercised (in dollars per share) | 50.85 | ||
Forfeited (in dollars per share) | 26.90 | ||
Outstanding at the end of the period (in dollars per share) | 30.87 | $ 27.18 | |
Vested or expected to vest at the end of the period (in dollars per share) | 30.94 | ||
Exercisable at the end of the period (in dollars per share) | $ 27.21 | ||
Weighted- Average Remaining Contractual Term (in years) | |||
Outstanding at the end of the period | 5 years 2 months 1 day | ||
Vested or expected to vest at the end of the period | 5 years 1 month 16 days | ||
Exercisable at the end of the period | 3 years 11 months 4 days | ||
Aggregate Intrinsic Value (in thousands) | |||
Outstanding at the end of the period | $ 50,689 | ||
Vested or expected to vest at the end of the period | 49,694 | ||
Exercisable at the end of the period | $ 38,152 | ||
Stock options | |||
Assumptions used in the Black-Scholes option-pricing model | |||
Dividend yield | 1.00% | 1.00% | 1.20% |
Expected stock price volatility, minimum (as a percent) | 36.10% | 36.10% | 36.10% |
Expected stock price volatility, maximum (as a percent) | 38.80% | 38.80% | 38.80% |
Risk-free rate of return, annual, minimum (as a percent) | 1.70% | 1.70% | 1.60% |
Risk-free rate of return, annual, maximum (as a percent) | 2.90% | 1.90% | 1.80% |
Unrecognized compensation cost | $ 3,800 | ||
Weighted-average period to recognize the unrecognized compensation cost | 2 years | ||
Weighted-average fair value of stock options granted (in dollars per share) | $ 14.82 | $ 12.35 | $ 8.05 |
Aggregate intrinsic value of options exercised | $ 14,400 | $ 16,400 | $ 7,300 |
Net cash proceeds from the exercise of stock options | 13,500 | 18,600 | 18,000 |
Income tax benefit realized from exercises of nonqualified stock options and disqualifying dispositions of qualified options | $ 5,100 | $ 4,900 | $ 5,300 |
Stockholders' Equity and Stoc_5
Stockholders' Equity and Stock Compensation Plans - RSU and PSU (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Sep. 30, 2018 | Oct. 01, 2017 | Oct. 02, 2016 | |
Weighted-Average Grant Date Fair Value | |||
Stock-based compensation expense | $ 19,582 | $ 13,450 | $ 12,964 |
RSUs | |||
Stockholder's equity and stock compensation plans | |||
Vesting period | 4 years | ||
Number of Shares | |||
Nonvested balance at the beginning of the period (in shares) | 511,000 | 499,000 | 483,000 |
Granted (in shares) | 198,960 | 226,241 | 216,539 |
Vested (in shares) | (184,000) | (186,000) | (180,000) |
Forfeited (in shares) | (38,000) | (28,000) | (21,000) |
Nonvested balance at the end of the period (in shares) | 488,139 | 511,000 | 499,000 |
Weighted-Average Grant Date Fair Value | |||
Nonvested balance at the beginning of the period (in dollars per share) | $ 33.19 | $ 27.16 | $ 26.75 |
Granted (in dollars per share) | 48.16 | 41 | 27.14 |
Vested (in dollars per share) | 31.85 | 26.98 | 26.03 |
Forfeited (in dollars per share) | 36.39 | 30.15 | 27.11 |
Nonvested balance at the end of the period (in dollars per share) | $ 39.56 | $ 33.19 | $ 27.16 |
PSUs | |||
Stockholder's equity and stock compensation plans | |||
Vesting period | 3 years | ||
Percentage of shares that ultimately vest depending on growth in diluted earnings per share | 50.00% | ||
Percentage of shares that ultimately vest based on relative total shareholder return over the vesting period | 50.00% | ||
Number of Shares | |||
Nonvested balance at the beginning of the period (in shares) | 376,000 | 277,000 | 139,000 |
Granted (in shares) | 99,217 | 99,180 | 137,777 |
Vested (in shares) | (139,000) | 0 | 0 |
Forfeited (in shares) | (13,000) | 0 | 0 |
Nonvested balance at the end of the period (in shares) | 323,000 | 376,000 | 277,000 |
Weighted-Average Grant Date Fair Value | |||
Nonvested balance at the beginning of the period (in dollars per share) | $ 36.05 | $ 31.65 | $ 31.66 |
Granted (in dollars per share) | 57.40 | 48.36 | 31.63 |
Vested (in dollars per share) | 31.66 | 0 | 0 |
Forfeited (in dollars per share) | 41.80 | 0 | 0 |
Nonvested balance at the end of the period (in dollars per share) | $ 44.27 | $ 36.05 | $ 31.65 |
RSUs and PSUs | |||
Weighted-Average Grant Date Fair Value | |||
Stock-based compensation expense | $ 15,500 | $ 10,600 | $ 10,300 |
Unrecognized compensation cost | $ 18,100 | ||
Director | RSUs | |||
Stockholder's equity and stock compensation plans | |||
Vesting period | 1 year |
Stockholders' Equity and Stoc_6
Stockholders' Equity and Stock Compensation Plans - ESPP (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Sep. 30, 2018 | Oct. 01, 2017 | Oct. 02, 2016 | |
Assumptions used in the Black-Scholes option-pricing model | |||
Stock-based compensation expense | $ 19,582 | $ 13,450 | $ 12,964 |
ESPP | |||
Stockholder's equity and stock compensation plans | |||
Shares purchased (in shares) | 141 | 190 | 209 |
Weighted-average purchase price (in dollars per share) | $ 40.38 | $ 26.02 | $ 22.54 |
Cash received from exercise of purchase rights | $ 5,727 | $ 4,940 | $ 4,707 |
Aggregate intrinsic value | $ 337 | $ 0 | $ 710 |
Assumptions used in the Black-Scholes option-pricing model | |||
Dividend yield | 1.00% | 1.00% | 1.30% |
Expected stock price volatility | 24.00% | 22.40% | 23.70% |
Risk-free rate of return, annual | 1.80% | 0.90% | 0.20% |
Expected life (in years) | 1 year | 1 year | 1 year |
Stock-based compensation expense | $ 600 | $ 500 | $ 400 |
Unrecognized compensation cost | 200 | $ 100 | |
Accumulated amount by participants to purchase the entity's common stock | $ 3,500 |
Retirement Plans (Details)
Retirement Plans (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2018 | Oct. 01, 2017 | Oct. 02, 2016 | |
Retirement Benefits [Abstract] | |||
Minimum service period for employee to participate in the defined contribution plans | 1 year | ||
Employer contributions to the plans | $ 22.4 | $ 11.4 | $ 10.7 |
Assets related to deferred compensation plans | 29.4 | 25 | |
Liabilities related to deferred compensation plans | $ 30.2 | $ 25.2 |
Earnings per Share - Calculatio
Earnings per Share - Calculation (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2018 | Jul. 01, 2018 | Apr. 01, 2018 | Dec. 31, 2017 | Oct. 01, 2017 | Jul. 02, 2017 | Apr. 02, 2017 | Jan. 01, 2017 | Sep. 30, 2018 | Oct. 01, 2017 | Oct. 02, 2016 | |
Number of weighted-average shares used to compute basic and diluted EPS: | |||||||||||
Net income attributable to Tetra Tech | $ 28,802 | $ 33,322 | $ 28,725 | $ 46,034 | $ 34,467 | $ 29,983 | $ 26,862 | $ 26,562 | $ 136,883 | $ 117,874 | $ 83,783 |
Weighted-average common shares outstanding – basic (in shares) | 55,341 | 55,537 | 55,841 | 55,855 | 56,338 | 57,184 | 57,270 | 57,099 | 55,670 | 56,911 | 58,186 |
Effect of diluted stock options and unvested restricted stock (in shares) | 928 | 1,002 | 780 | ||||||||
Weighted-average common stock outstanding – diluted (in shares) | 56,349 | 56,390 | 56,673 | 56,875 | 57,326 | 58,161 | 58,270 | 58,145 | 56,598 | 57,913 | 58,966 |
Earnings per share attributable to Tetra Tech: | |||||||||||
Basic (in dollars per share) | $ 0.52 | $ 0.60 | $ 0.51 | $ 0.82 | $ 0.61 | $ 0.52 | $ 0.47 | $ 0.47 | $ 2.46 | $ 2.07 | $ 1.44 |
Diluted (in dollars per share) | $ 0.51 | $ 0.59 | $ 0.51 | $ 0.81 | $ 0.60 | $ 0.52 | $ 0.46 | $ 0.46 | $ 2.42 | $ 2.04 | $ 1.42 |
Earnings per Share - Antidiluti
Earnings per Share - Antidilutive Securities (Details) - shares shares in Millions | 12 Months Ended | ||
Sep. 30, 2018 | Oct. 01, 2017 | Oct. 02, 2016 | |
Stock options | |||
Antidilutive securities | |||
Securities excluded from the calculation of dilutive potential common shares (in shares) | 0.1 | 0 | 0 |
Derivative Financial Instrume_3
Derivative Financial Instruments - General Information (Details) | 3 Months Ended | 12 Months Ended | ||||
Sep. 30, 2018USD ($)instrumentagreement | Dec. 29, 2013agreement | Sep. 30, 2018USD ($)instrument | Oct. 01, 2017USD ($)instrument | Sep. 29, 2013agreement | Oct. 02, 2016instrument | |
Not designated as hedging instruments | ||||||
Derivative financial instruments | ||||||
Number of derivative instruments | instrument | 0 | 0 | 0 | 0 | ||
Interest rate swap agreements | Designated as cash flow hedges | Derivatives designated as hedging instruments | ||||||
Derivative financial instruments | ||||||
Number of derivative agreements | agreement | 5 | 2 | 3 | |||
Amount of effective portion of derivatives before tax effect | $ (1,300,000) | $ (50,000) | ||||
Period of reclassification from accumulated other comprehensive income to interest expense | 12 months | |||||
Amount expected to be reclassified from accumulated other comprehensive income to interest expense | (1,300,000) | $ (50,000) | ||||
Interest Rate Swap, Fixed Rate of 2.79%, Expiration July 2023, One | Designated as cash flow hedges | Derivatives designated as hedging instruments | ||||||
Derivative financial instruments | ||||||
Notional Amount (in thousands) | $ 50,000,000 | $ 50,000,000 | ||||
Fixed Rate | 2.79% | 2.79% | ||||
Interest Rate Swap, Fixed Rate of 2.79%, Expiration July 2023, Two | Designated as cash flow hedges | Derivatives designated as hedging instruments | ||||||
Derivative financial instruments | ||||||
Notional Amount (in thousands) | $ 50,000,000 | $ 50,000,000 | ||||
Fixed Rate | 2.79% | 2.79% | ||||
Interest Rate Swap, Fixed Rate of 2.79%, Expiration July 2023, Three | Designated as cash flow hedges | Derivatives designated as hedging instruments | ||||||
Derivative financial instruments | ||||||
Notional Amount (in thousands) | $ 50,000,000 | $ 50,000,000 | ||||
Fixed Rate | 2.79% | 2.79% | ||||
Interest Rate Swap, Fixed Rate of 2.79%, Expiration July 2023, Four | Designated as cash flow hedges | Derivatives designated as hedging instruments | ||||||
Derivative financial instruments | ||||||
Notional Amount (in thousands) | $ 50,000,000 | $ 50,000,000 | ||||
Fixed Rate | 2.79% | 2.79% | ||||
Interest Rate Swap, Fixed Rate of 2.79%, Expiration July 2023, Five | Designated as cash flow hedges | Derivatives designated as hedging instruments | ||||||
Derivative financial instruments | ||||||
Notional Amount (in thousands) | $ 50,000,000 | $ 50,000,000 | ||||
Fixed Rate | 2.79% | 2.79% | ||||
Foreign currency forward contracts and interest rate swap agreements | Derivatives designated as hedging instruments | ||||||
Derivative financial instruments | ||||||
Ineffective portion of derivative instruments | $ 0 | 0 | ||||
Amounts excluded from effectiveness testing | $ 0 | $ 0 |
Derivative Financial Instrume_4
Derivative Financial Instruments - Fair Value of Outstanding Derivatives (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Oct. 01, 2017 |
Interest rate swap agreements | Derivatives designated as hedging instruments | Designated as cash flow hedges | Other current assets | ||
Derivative financial instruments | ||
Fair Value of Derivative Asset | $ 1,244 | $ 49 |
Reclassifications Out of Accu_3
Reclassifications Out of Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2018 | Oct. 01, 2017 | Oct. 02, 2016 | |
Reclassifications out of accumulated other comprehensive income (loss) | |||
Balance at the beginning of the period | $ 928,453 | ||
Other comprehensive income (loss) before reclassifications | (28,441) | $ 30,257 | |
Amounts reclassified from accumulated other comprehensive income | |||
Amounts reclassified from accumulated other comprehensive income | (409) | (749) | |
Other comprehensive income (loss) attributable to Tetra Tech | (28,850) | 29,508 | $ 15,163 |
Balance at the end of the period | 966,971 | 928,453 | |
Foreign Currency Translation Adjustments | |||
Reclassifications out of accumulated other comprehensive income (loss) | |||
Balance at the beginning of the period | (98,946) | (126,840) | |
Other comprehensive income (loss) before reclassifications | (29,656) | 27,894 | |
Amounts reclassified from accumulated other comprehensive income | |||
Amounts reclassified from accumulated other comprehensive income | 0 | 0 | |
Other comprehensive income (loss) attributable to Tetra Tech | (29,656) | 27,894 | |
Balance at the end of the period | (128,602) | (98,946) | (126,840) |
Gain (Loss) on Derivative Instruments | |||
Reclassifications out of accumulated other comprehensive income (loss) | |||
Balance at the beginning of the period | 446 | (1,168) | |
Other comprehensive income (loss) before reclassifications | 1,215 | 2,363 | |
Amounts reclassified from accumulated other comprehensive income | |||
Amounts reclassified from accumulated other comprehensive income | (409) | (749) | |
Other comprehensive income (loss) attributable to Tetra Tech | 806 | 1,614 | |
Balance at the end of the period | 1,252 | 446 | (1,168) |
Accumulated Other Comprehensive Income (Loss) | |||
Reclassifications out of accumulated other comprehensive income (loss) | |||
Balance at the beginning of the period | (98,500) | (128,008) | |
Amounts reclassified from accumulated other comprehensive income | |||
Balance at the end of the period | $ (127,350) | $ (98,500) | $ (128,008) |
Fair Value Measurements (Detail
Fair Value Measurements (Details) $ in Millions | Sep. 30, 2018USD ($) |
Fair Value Disclosures [Abstract] | |
Net borrowing under credit agreement | $ 277.1 |
Commitments and Contingencies (
Commitments and Contingencies (Details) | Oct. 15, 2018action |
Subsequent Event | |
Subsequent Event [Line Items] | |
Number of qui tam actions | 3 |
Reportable Segments - Financial
Reportable Segments - Financial Information (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2018USD ($) | Jul. 01, 2018USD ($) | Apr. 01, 2018USD ($) | Dec. 31, 2017USD ($) | Oct. 01, 2017USD ($) | Jul. 02, 2017USD ($) | Apr. 02, 2017USD ($) | Jan. 01, 2017USD ($) | Sep. 30, 2018USD ($)segment | Oct. 01, 2017USD ($) | Oct. 02, 2016USD ($) | |
Financial information concerning reportable segments | |||||||||||
Number of renamed reportable segments | segment | 2 | ||||||||||
Revenue | $ 739,343 | $ 764,795 | $ 700,262 | $ 759,749 | $ 735,188 | $ 685,539 | $ 663,781 | $ 668,851 | $ 2,964,148 | $ 2,753,360 | $ 2,583,469 |
Income from operations | 43,285 | $ 55,496 | $ 42,716 | $ 48,589 | 54,647 | $ 45,884 | $ 42,956 | $ 39,855 | 190,086 | 183,342 | 135,855 |
Amortization expense for intangible assets | 18,200 | 22,800 | 22,100 | ||||||||
Fair value adjustments to contingent consideration liabilities | (4,252) | 6,923 | (2,823) | ||||||||
Acquisition and integration expenses | 0 | 0 | 19,548 | ||||||||
Total Assets | 1,959,421 | 1,902,745 | 1,959,421 | 1,902,745 | |||||||
Operating segments | GSG | |||||||||||
Financial information concerning reportable segments | |||||||||||
Revenue | 1,694,871 | 1,487,611 | 1,289,506 | ||||||||
Income from operations | 168,211 | 138,199 | 101,595 | ||||||||
Total Assets | 468,010 | 378,839 | 468,010 | 378,839 | |||||||
Operating segments | CIG | |||||||||||
Financial information concerning reportable segments | |||||||||||
Revenue | 1,323,142 | 1,326,020 | 1,297,209 | ||||||||
Income from operations | 74,451 | 90,817 | 106,602 | ||||||||
Total Assets | 478,197 | 518,697 | 478,197 | 518,697 | |||||||
Operating segments | RCM | |||||||||||
Financial information concerning reportable segments | |||||||||||
Revenue | 14,199 | 18,207 | 52,150 | ||||||||
Income from operations | (4,573) | (14,712) | (11,834) | ||||||||
Total Assets | 25,683 | 33,620 | 25,683 | 33,620 | |||||||
Elimination of inter-segment revenue | |||||||||||
Financial information concerning reportable segments | |||||||||||
Revenue | (68,064) | (78,478) | (55,396) | ||||||||
Corporate | |||||||||||
Financial information concerning reportable segments | |||||||||||
Income from operations | (48,003) | (30,962) | $ (60,508) | ||||||||
Total Assets | $ 987,531 | $ 971,589 | $ 987,531 | $ 971,589 |
Reportable Segments - Geographi
Reportable Segments - Geographic Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2018 | Jul. 01, 2018 | Apr. 01, 2018 | Dec. 31, 2017 | Oct. 01, 2017 | Jul. 02, 2017 | Apr. 02, 2017 | Jan. 01, 2017 | Sep. 30, 2018 | Oct. 01, 2017 | Oct. 02, 2016 | |
Reportable Segments | |||||||||||
Revenue | $ 739,343 | $ 764,795 | $ 700,262 | $ 759,749 | $ 735,188 | $ 685,539 | $ 663,781 | $ 668,851 | $ 2,964,148 | $ 2,753,360 | $ 2,583,469 |
United States | |||||||||||
Reportable Segments | |||||||||||
Revenue | 2,232,013 | 2,018,841 | 1,858,551 | ||||||||
Long-Lived Assets | 59,164 | 58,965 | 59,164 | 58,965 | 59,334 | ||||||
Foreign countries | |||||||||||
Reportable Segments | |||||||||||
Revenue | 732,135 | 734,519 | 724,918 | ||||||||
Long-Lived Assets | $ 34,934 | $ 34,183 | $ 34,934 | $ 34,183 | $ 39,067 |
Reportable Segments - Revenue b
Reportable Segments - Revenue by Sector (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2018 | Jul. 01, 2018 | Apr. 01, 2018 | Dec. 31, 2017 | Oct. 01, 2017 | Jul. 02, 2017 | Apr. 02, 2017 | Jan. 01, 2017 | Sep. 30, 2018 | Oct. 01, 2017 | Oct. 02, 2016 | |
Revenue by client sector | |||||||||||
Revenue | $ 739,343 | $ 764,795 | $ 700,262 | $ 759,749 | $ 735,188 | $ 685,539 | $ 663,781 | $ 668,851 | $ 2,964,148 | $ 2,753,360 | $ 2,583,469 |
U.S. state and local government | |||||||||||
Revenue by client sector | |||||||||||
Revenue | 469,231 | 353,062 | 310,740 | ||||||||
U.S. federal government | |||||||||||
Revenue by client sector | |||||||||||
Revenue | 974,384 | 901,136 | 784,368 | ||||||||
U.S commercial | |||||||||||
Revenue by client sector | |||||||||||
Revenue | 788,398 | 764,643 | 763,443 | ||||||||
International | |||||||||||
Revenue by client sector | |||||||||||
Revenue | $ 732,135 | $ 734,519 | $ 724,918 |
Quarterly Financial Informati_3
Quarterly Financial Information-Unaudited (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2018 | Jul. 01, 2018 | Apr. 01, 2018 | Dec. 31, 2017 | Oct. 01, 2017 | Jul. 02, 2017 | Apr. 02, 2017 | Jan. 01, 2017 | Sep. 30, 2018 | Oct. 01, 2017 | Oct. 02, 2016 | |
Business acquisition | |||||||||||
Deferred tax benefit from tax reform remeasurement | $ 14,700 | $ 14,700 | |||||||||
Decrease in revenue related to construction settlement | $ 10,600 | ||||||||||
Loss from construction settlement claim | 12,500 | ||||||||||
Revenue | 739,343 | $ 764,795 | $ 700,262 | 759,749 | $ 735,188 | $ 685,539 | $ 663,781 | $ 668,851 | 2,964,148 | $ 2,753,360 | $ 2,583,469 |
Income from operations | 43,285 | 55,496 | 42,716 | 48,589 | 54,647 | 45,884 | 42,956 | 39,855 | 190,086 | 183,342 | 135,855 |
Net income attributable to Tetra Tech | $ 28,802 | $ 33,322 | $ 28,725 | $ 46,034 | $ 34,467 | $ 29,983 | $ 26,862 | $ 26,562 | $ 136,883 | $ 117,874 | $ 83,783 |
Earnings per share attributable to Tetra Tech: | |||||||||||
Basic (in dollars per share) | $ 0.52 | $ 0.60 | $ 0.51 | $ 0.82 | $ 0.61 | $ 0.52 | $ 0.47 | $ 0.47 | $ 2.46 | $ 2.07 | $ 1.44 |
Diluted (in dollars per share) | $ 0.51 | $ 0.59 | $ 0.51 | $ 0.81 | $ 0.60 | $ 0.52 | $ 0.46 | $ 0.46 | $ 2.42 | $ 2.04 | $ 1.42 |
Weighted-average common shares outstanding: | |||||||||||
Basic (in shares) | 55,341 | 55,537 | 55,841 | 55,855 | 56,338 | 57,184 | 57,270 | 57,099 | 55,670 | 56,911 | 58,186 |
Diluted (in shares) | 56,349 | 56,390 | 56,673 | 56,875 | 57,326 | 58,161 | 58,270 | 58,145 | 56,598 | 57,913 | 58,966 |
Disposed of by Sale | Non-core field services business | |||||||||||
Business acquisition | |||||||||||
Loss on disposition of business | $ 3,400 | $ 3,400 |
SCHEDULE II-VALUATION AND QUA_2
SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS AND RESERVES (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2018 | Oct. 01, 2017 | Oct. 02, 2016 | |
Allowance for doubtful accounts | |||
Changes in valuation and qualifying accounts and reserves | |||
Balance at Beginning of Period | $ 32,259 | $ 35,233 | $ 31,490 |
Charged to Costs, Expenses and Revenue | 7,167 | 2,848 | 8,082 |
Deductions | (4,485) | (6,233) | (12,191) |
Other | 2,639 | 411 | 7,852 |
Balance at End of Period | 37,580 | 32,259 | 35,233 |
Income tax valuation allowance | |||
Changes in valuation and qualifying accounts and reserves | |||
Balance at Beginning of Period | 25,326 | 25,447 | 7,791 |
Charged to Costs, Expenses and Revenue | 900 | (121) | 3,856 |
Deductions | 0 | 0 | |
Other | (4,747) | 0 | 13,800 |
Balance at End of Period | $ 21,479 | $ 25,326 | $ 25,447 |