Tetra Tech (TTEK) 10-Q 2002 Q1 Quarterly report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

/x/
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 30, 2001

OR

/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                            to                            

Commission File Number 0-19655

TETRA TECH, INC.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization) 95-4148514
(I.R.S. Employer
Identification number)

670 N. Rosemead Boulevard, Pasadena, California 91107
(Address of principal executive offices)

(626) 351-4664
(Registrant's telephone number, including area code)

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes /x/    No / /

        As of February 4, 2002, the total number of outstanding shares of the Registrant's common stock was 52,403,738.

TETRA TECH, INC.

INDEX

			PAGE NO.
PART I.    FINANCIAL INFORMATION
	Item 1.	Financial Statements
		Condensed Consolidated Balance Sheets	3
		Condensed Consolidated Statements of Income	4
		Condensed Consolidated Statements of Cash Flows	5
		Notes to Condensed Consolidated Financial Statements	6
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	12
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	16
		Risk Factors	17
PART II.    OTHER INFORMATION
	Item 2.	Changes in Securities and Use of Proceeds	22
	Item 6.	Exhibits and Reports on Form 8-K	22
Signatures			25

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PART I.    FINANCIAL INFORMATION

Item 1.

Tetra Tech, Inc.
Condensed Consolidated Balance Sheets

In thousands, except share data			December 30, 2001			September 30, 2001
			(Unaudited)
ASSETS
CURRENT ASSETS:
	Cash and cash equivalents		$	19,404		$	16,240
	Accounts receivable—net			159,483			152,761
	Unbilled receivables—net			124,385			120,925
	Contract retentions			5,666			5,103
	Prepaid expenses and other current assets			16,421			13,927
	Income taxes receivable			—			3,608
	Deferred income taxes			3,723			3,723
		Total Current Assets		329,082			316,287
PROPERTY AND EQUIPMENT:
	Equipment, furniture and fixtures			70,757			69,077
	Leasehold improvements			6,950			6,715
		Total		77,707			75,792
	Accumulated depreciation and amortization			(38,760	)		(35,856	)
PROPERTY AND EQUIPMENT—NET				38,947			39,936
INTANGIBLE ASSETS—NET				242,518			245,019
OTHER ASSETS				6,424			5,979
TOTAL ASSETS			$	616,971		$	607,221
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
	Accounts payable		$	46,979		$	53,977
	Accrued compensation			23,368			29,738
	Billings in excess of costs on uncompleted contracts			12,059			10,354
	Other current liabilities			15,317			14,899
	Current portion of long-term obligations			22,019			14,328
	Income taxes payable			2,153			—
		Total Current Liabilities		121,895			123,296
LONG-TERM OBLIGATIONS				110,000			111,779
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
	Preferred stock—authorized, 2,000,000 shares of $.01 par value; issued and outstanding 0 shares at December 30, 2001 and September 30, 2001			—			—
	Exchangeable stock of a subsidiary			13,239			13,239
	Common stock—authorized, 85,000,000 shares of $.01 par value; issued and outstanding 52,383,340 and 52,247,777 shares at December 30, 2001 and September 30, 2001, respectively			524			522
	Additional paid-in capital			196,640			195,126
	Accumulated other comprehensive loss			(1,570	)		(1,641	)
	Retained earnings			176,243			164,900
TOTAL STOCKHOLDERS' EQUITY				385,076			372,146
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY			$	616,971		$	607,221

See accompanying Notes to Condensed Consolidated Financial Statements.

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Tetra Tech, Inc.
Condensed Consolidated Statements of Income
(Unaudited)

		Three Months Ended
In thousands, except per share data		December 30, 2001		December 31, 2000
Gross Revenue		$	253,028	$	229,330
	Subcontractor Costs		68,139		62,192
Net Revenue			184,889		167,138
Cost of Net Revenue			139,977		128,405
Gross Profit			44,912		38,733
Selling, General and Administrative Expenses			21,450		18,559
Amortization of Intangibles			2,661		2,024
Income From Operations			20,801		18,150
Interest Expense			2,241		2,155
Interest Income			36		161
Income Before Income Tax Expense			18,596		16,156
Income Tax Expense			7,253		6,786
Net Income		$	11,343	$	9,370
Basic Earnings Per Share		$	0.22	$	0.19
Diluted Earnings Per Share		$	0.21	$	0.17
Weighted Average Common Shares Outstanding:
	Basic		52,351		50,017
	Diluted		55,233		53,855

See accompanying Notes to Condensed Consolidated Financial Statements.

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Tetra Tech, Inc.
Condensed Consolidated Statements of Cash Flow
(Unaudited)

				Three Months Ended
In thousands				December 30, 2001			December 31, 2000
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income				$	11,343		$	9,370
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
		Depreciation and amortization			5,773			4,828
		Provision for losses on receivables			1,403			(9	)
Changes in operating assets and liabilities, net of effects of acquisitions:
		Accounts receivable			(8,095	)		(1,618	)
		Unbilled receivables			(3,490	)		(4,356	)
		Contract retentions			(563	)		(100	)
		Prepaid expenses and other assets			(2,679	)		(4,921	)
		Accounts payable			(6,998	)		(12,118	)
		Accrued compensation			(6,370	)		(4,779	)
		Billings in excess of costs on uncompleted contracts			1,705			10,332
		Other current liabilities			975			1,651
		Income taxes payable			5,761			3,748
			Net Cash (Used In) Provided By Operating Activities		(1,235	)		2,028
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures					(2,383	)		(2,549	)
Payments for business acquisitions, net of cash acquired					(160	)		(3,474	)
			Net Cash Used In Investing Activities		(2,543	)		(6,023	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term obligations					(11,088	)		(19,955	)
Proceeds from issuance of long-term obligations					17,000			23,000
Net proceeds from issuance of common stock					959			1,245
			Net Cash Provided By Financing Activities		6,871			4,290
EFFECT OF EXCHANGE RATE CHANGES ON CASH					71			(11	)
NET INCREASE IN CASH AND CASH EQUIVALENTS					3,164			284
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD					16,240			7,557
CASH AND CASH EQUIVALENTS AT END OF PERIOD				$	19,404		$	7,841
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for:
		Interest		$	4,533		$	2,248
		Income taxes, net of refunds received		$	1,492		$	3,038
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES:
	In December 2000, the Company purchased all of the capital stock of Rocky Mountain Consultants, Inc. In conjunction with this acquisition, liabilities were assumed as follows:
		Fair value of assets acquired					$	21,388
		Cash paid						(5,800	)
		Issuance of common stock						(8,700	)
		Other acquisition costs						(70	)
			Liabilities assumed				$	6,818

See accompanying Notes to Condensed Consolidated Financial Statements.

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TETRA TECH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.Basis of Presentation

        The accompanying condensed consolidated balance sheet as of December 30, 2001, the condensed consolidated statements of income and the condensed consolidated statements of cash flows for the three months ended December 30, 2001 and December 31, 2000 are unaudited, and in the opinion of management include all adjustments, consisting of only normal and recurring adjustments, necessary for a fair presentation of the financial position and the results of operations for the periods presented.

        The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2001.

        The results of operations for the three months ended December 30, 2001 are not necessarily indicative of the results to be expected for the fiscal year ending September 29, 2002.

        All share and per share amounts reflect, on a retroactive basis, the 5-for-4 stock split effected in the form of a 25% stock dividend, wherein one additional share of stock was issued on December 17, 2001 for each four shares outstanding as of the record date of November 28, 2001.

2.Accounting Pronouncements

        In July 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 141,Business Combinations, which supercedes Accounting Principles Board (APB) Opinion No. 16,Business Combinations. SFAS No. 141 eliminates the pooling-of-interest method of accounting for business combinations for combinations initiated after July 1, 2001. The statement also changes the criteria to recognize intangible assets apart from goodwill. The provisions of this statement are effective for any business combination accounted for by the purchase method that is completed after June 30, 2001.

        In July 2001, the FASB issued SFAS No. 142,Goodwill and Other Intangible Assets, which supercedes APB Opinion No. 17,Intangible Assets. Under SFAS No. 142, goodwill and other indefinite-lived intangible assets are no longer amortized but are reviewed, at a minimum, annually for impairment. Separable intangible assets that have finite lives will continue to be amortized over their useful lives. The amortization provisions of this statement are effective for goodwill and intangible assets acquired after June 30, 2001. The remaining provisions of this statement are effective for fiscal years beginning after December 15, 2001. The adoption of this statement will result in the Company's discontinuation of amortization of its goodwill; however, the Company will be required to test its goodwill for impairment under SFAS No. 142 in the first six months of fiscal 2003. The Company is currently analyzing the impact of this statement and will adopt this statement in fiscal 2003.

        In October 2001, the FASB issued SFAS No. 144,Accounting for the Impairment or Disposal of Long-Lived Assets, which supercedes SFAS No. 121,Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets To Be Disposed Of. SFAS No. 144 addresses financial accounting and reporting requirements for the impairment or disposal of long-lived assets. This statement also expands the scope of a discontinued operation to include a component of an entity, and eliminates the current exemption to consolidation when control over a subsidiary is likely to be temporary. The provisions of this statement are effective for fiscal years beginning after December 15, 2001 and interim periods within those fiscal years, although early adoption is permitted. The Company is currently analyzing the impact of this statement and has determined it will adopt this statement in fiscal 2003.

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3.Earnings Per Share

        Basic Earnings Per Share (EPS) excludes dilution and is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted EPS is computed by dividing net income by the weighted average number of common shares outstanding and dilutive potential common shares. The Company includes as potential common shares the weighted average number shares of exchangeable stock of a subsidiary and the weighted average dilutive effects of outstanding stock options. The exchangeable stock of a subsidiary is non-voting and is exchangeable on a one-to-one basis, as adjusted for stock splits and stock dividends subsequent to the original issuance, for the Company's common stock. The following table sets forth the computation of basic and diluted earnings per share:

				Three Months Ended
				December 30, 2001		December 31, 2000
Numerator—
	Net income			$	11,343,000	$	9,370,000
Denominator for basic earnings per share—
	Weighted average shares				52,351,000		50,017,000
Denominator for diluted earnings per share —
	Denominator for basic earnings per share				52,351,000		50,017,000
		Potential common shares:
			Stock options		1,738,000		2,567,000
			Exchangeable stock of a subsidiary		1,144,000		1,271,000
		Potential common shares			2,882,000		3,838,000
Denominator for diluted earnings per share					55,233,000		53,855,000
Basic earnings per share				$	0.22	$	0.19
Diluted earnings per share				$	0.21	$	0.17

4.Cash and Cash Equivalents

        The Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents. Cash and cash equivalents totaled $19.4 million and $16.2 million at December 30, 2001 and September 30, 2001, respectively.

5.Mergers and Acquisitions

        On December 21, 2000, the Company acquired 100% of the capital stock of Rocky Mountain Consultants, Inc. (RMC), a provider of water-related engineering and facility development services to state and local governments and private clients primarily in the western and midwestern United States. The purchase was valued at approximately $15.2 million and consisted of cash and 370,833 shares of Company common stock.

        On March 2, 2001, the Company acquired 100% of the capital stock of Wahco Construction, Inc. (WCI), a provider of network and field services to the utility and communications industries primarily in the northwestern region of the United States. The purchase was valued at approximately $0.8 million and consisted of cash and 64,977 shares of Company common stock and is subject to a purchase price and purchase allocation adjustment based upon the final determination of WCI's net asset value as of March 2, 2001.

        On March 30, 2001, the Company acquired 100% of the capital stock of Williams, Hatfield & Stoner, Inc. (WHS), a provider of civil engineering, planning and environmental services primarily in

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the southeastern region of the United States. The purchase was valued at approximately $9.1 million and consisted of cash and 181,173 shares of Company common stock. Simultaneously with the acquisition, WHS distributed to its former shareholders accounts receivable valued at approximately $3.8 million.

        On May 21, 2001, the Company acquired 100% of the capital stock of Vertex Engineering Services, Inc. (VES), a provider of environmental engineering, consulting and surety and insurance construction management services throughout the United States. The purchase was valued at approximately $10.4 million and consisted of cash and 386,437 shares of Company common stock.

        On May 25, 2001, the Company acquired 100% of the capital stock of Maxim Technologies, Inc. (MTI), a provider of environmental and engineering consulting services throughout the United States. The purchase was valued at approximately $14.0 million and consisted of cash and 296,995 shares of Company common stock.

        On June 1, 2001, the Company acquired certain assets of Commonwealth Technology, Inc. (CTI), a provider of environmental and infrastructure engineering and consulting services primarily in the southeastern region of the United States. The purchase was valued at approximately $3.6 million and consisted of cash and 103,715 shares of Company common stock.

        On June 27, 2001, the Company acquired 100% of the capital stock of The Design Exchange Architects, Inc. (DXA), a provider of architectural, planning and interior design services primarily in the eastern region of the United States. The purchase was valued at approximately $1.3 million and consisted of cash and is subject to a purchase price and purchase allocation adjustment based upon the final determination of DXA's net asset value as of June 27, 2001.

        On June 29, 2001, the Company acquired 100% of the capital stock of Western Utility Contractors, Inc. and Western Utility Cable, Inc. (collectively, WUC), providers of engineering, design and construction services primarily in the midwestern region of the United States. The purchase was valued at approximately $15.6 million and consisted of cash and is subject to a purchase price and purchase allocation adjustment based upon the final determination of WUC's net asset value as of June 29, 2001.

        On September 26, 2001, the Company acquired, through its wholly-owned subsidiary, MFG, Inc., certain assets of Shepherd Miller, Inc. (SMI), a provider of environmental and engineering consulting services to the mining industry throughout the United States. The purchase was valued at approximately $2.5 million and consisted of cash and 53,005 shares of Company common stock and is subject to a purchase price and purchase allocation adjustment based upon the final determination of SMI's net asset value as of September 26, 2001.

        On September 26, 2001, the Company acquired Sciences International, Inc. (SII), a provider of health and environmental risk assessment services to private industries, governments and law firms throughout the United States. The purchase was valued at approximately $5.1 million and consisted of cash and 137,508 shares of Company common stock and is subject to a purchase price and purchase allocation adjustment based upon the final determination of SII's net asset value as of September 26, 2001.

        All of the acquisitions above have been accounted for as purchases and, accordingly, the purchase prices of the businesses acquired have been allocated to the assets and liabilities acquired based upon their fair values. The excess of the purchase cost of the acquisitions over the fair value of the net assets acquired was recorded as goodwill and is included in Intangible Assets—Net in the accompanying condensed consolidated balance sheets. The results of operations of each of the companies acquired have been included in the Company's financial statements from the effective acquisition dates.

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6.Accounts Receivable

        Accounts receivable are presented net of a valuation allowance to provide for doubtful accounts and for the potential disallowance of billed and unbilled costs. The allowance for doubtful accounts as of December 30, 2001 and September 30, 2001 was $46.4 million and $45.1 million, respectively. The allowance for doubtful accounts at December 30, 2001 and September 30, 2001 includes a reserve of $38.3 million for an account debtor that has filed for Chapter 11 protection under the U.S. Bankruptcy Code. The allowance for disallowed costs as of December 30, 2001 and September 30, 2001 was $0.7 million and $0.8 million, respectively. Disallowance of billed and unbilled costs is primarily associated with contracts with the Federal government which contain clauses that subject contractors to several levels of audit. The Company establishes reserves on contract receivables where collectibility is not assured plus a general allowance for which some potential loss is determined to be probable based on current events and circumstances. Management believes that resolution of these matters will not have a material adverse impact on the Company's financial position or results of operations.

7.Unaudited Pro Forma Operating Results

        The table below presents summarized unaudited pro forma operating results assuming that the Company had acquired RMC, WHS, VES, MTI, CTI and WUC on October 2, 2000. The effect of unaudited pro forma results of WCI, DXA, SMI and SII had they been acquired on October 2, 2000 is not material. These amounts are based on unaudited historical results and assumptions and estimates which the Company believes to be reasonable. The pro forma results do not reflect anticipated cost savings and do not necessarily represent results which would have occurred if these acquisitions had actually taken place on October 2, 2000.

		Pro Forma Three Months Ended
		December 31, 2000
Gross revenue		$	254,033,000
Net revenue			183,843,000
Income before income tax expense			17,547,000
Net income			10,177,000
Basic earnings per share		$	0.20
Diluted earnings per share		$	0.19
Weighted average common shares outstanding:
	Basic		50,321,000
	Diluted		54,159,000

8.Operating Segments

        The Company's management has organized its operations into three operating segments: Resource Management, Infrastructure, and Communications. The Resource Management operating segment provides specialized environmental engineering and consulting services primarily relating to water quality and water availability to both public and private organizations. The Infrastructure operating segment provides engineering services to provide additional development, as well as upgrading and replacement of existing infrastructure to both public and private organizations. The Communications operating segment provides a comprehensive set of services including engineering, consulting and operational services to communications companies, wireless service providers and cable operators. Management has established these operating segments based upon the services provided, the different marketing strategies, and the specialized needs of the clients. The Company accounts for inter-segment sales and transfers as if the sales and transfers were to third parties; that is, by applying a negotiated fee onto the cost of the services performed. Management evaluates the performance of these operating

9

segments based upon their respective income from operations before the effect of any acquisition-related amortization.

        The following tables set forth (in thousands) summarized financial information on the Company's reportable segments:

Reportable Segments:

		Resource Management		Infrastructure		Communications		Total
Three months ended Dec. 30, 2001
	Gross Revenue	$	128,813	$	73,285	$	53,522	$	255,620
	Net Revenue		83,932		61,307		38,233		183,472
	Income from Operations		9,179		8,474		5,494		23,147
	Depreciation Expense		872		1,109		1,023		3,004

		Resource Management		Infrastructure		Communications		Total
Three months ended Dec. 31, 2000
	Gross Revenue	$	91,975	$	71,305	$	74,733	$	238,013
	Net Revenue		61,752		55,683		48,587		166,022
	Income from Operations		6,715		5,574		7,589		19,878
	Depreciation Expense		416		1,150		1,109		2,675

Reconciliations:

			Three Months Ended
			Dec. 30, 2001			Dec. 31, 2000
Gross Revenue
	Gross revenue from reportable segments		$	255,620		$	238,013
	Elimination of inter-segment revenue			(4,009	)		(9,799	)
	Other revenue			1,417			1,116
		Total consolidated gross revenue	$	253,028		$	229,330
Net Revenue
	Net revenue from reportable segments		$	183,472		$	166,022
	Other revenue			1,417			1,116
		Total consolidated net revenue	$	184,889		$	167,138
Income from Operations
	Income from operations of reportable segments		$	23,147		$	19,878
	Other income			315			296
	Amortization of intangibles			(2,661	)		(2,024	)
		Total consolidated income from operations	$	20,801		$	18,150

Major Clients

        The Company's net revenue attributable to the U.S. government was approximately $48.4 million and $41.2 million for the three months ended December 30, 2001 and December 31, 2000, respectively. Both the Resource Management and Infrastructure operating segments report net revenue from the U.S. government.

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9.Comprehensive Income

        Comprehensive income is the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. These sources include net income and other revenues, expenses, gains and losses incurred. The Company includes as other comprehensive income translation gains and losses from subsidiaries with functional currencies different than that of the Company. For the three months ended December 30, 2001 and December 31, 2000, comprehensive income was approximately $11.4 million and $9.4 million, respectively. For the three months ended December 30, 2001 and December 31, 2000, the Company incurred net translation gains of $0.1 million and net translation losses of $0.0 million, respectively.

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Item 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Except for the historical information contained below, the matters discussed in this section are forward-looking statements that involve a number of risks and uncertainties. Our actual liquidity needs, capital resources and operating results may differ materially from the discussion set forth below in these forward-looking statements. For additional information, refer to Notes to Condensed Consolidated Financial Statements.

Overview

        Tetra Tech, Inc. is a leading provider of specialized management consulting and technical services in three principal business areas: resource management, infrastructure and communications. As a specialized management consultant, we assist our clients in defining problems and developing innovative and cost-effective solutions. Our management consulting services are complemented by our technical services. These technical services, which implement solutions, include research and development, applied science, engineering and architectural design, construction management, and operations and maintenance. Our clients include a diverse base of public and private organizations located in the United States and internationally.

        Since our initial public offering in December 1991, we have increased the size and scope of our business and have expanded our service offerings through a series of strategic acquisitions, leveraging our cross-selling capabilities and internal growth.

        We derive our revenue from fees from professional services. Our services are billed under various types of contracts with our clients, including:

•

Fixed-price;



•

Fixed-rate time and materials;



•

Cost-reimbursement plus fixed fee; and



•

Cost-reimbursement plus fixed and award fee.

        In the course of providing our services, we routinely subcontract services. These subcontractor costs are passed through to clients and, in accordance with industry practice, are included in gross revenue. Because subcontractor services can change significantly from project to project, we believe net revenue, which is gross revenue less the cost of subcontractor services, is a more appropriate measure of our performance.

        Our cost of net revenue includes professional compensation and certain direct and indirect overhead costs such as rents, utilities and travel. Professional compensation represents the majority of these costs. Our selling, general and administrative (SG&A) expenses are comprised primarily of our corporate headquarters' costs related to our executive offices, corporate finance and accounting, information technology, marketing, and bid and proposal costs. These costs are generally unrelated to specific client projects and can vary as expenses are incurred supporting corporate activities and initiatives.

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        We provide our services to a diverse base of Federal, state and local government agencies, and private and international clients. The following table presents, for the periods indicated, the approximate percentage of net revenue attributable to these client sectors:

	Percentage of Net Revenue
	Quarter Ended
Client Sector
	December 30, 2001		December 31, 2000
Federal government	26.2	%	24.7	%
State and local government	18.9		15.5
Private	52.9		55.7
International	2.0		4.1
	100.0	%	100.0	%

        We manage our business in three operating segments: Resource Management, Infrastructure and Communications. The following table presents, for the periods indicated, the approximate percentage of net revenue attributable to the operating segments:

	Percentage of Net Revenue
	Quarter Ended
Operating Segment
	December 30, 2001		December 31, 2000
Resource Management	45.4	%	36.9	%
Infrastructure	33.2		33.3
Communications	20.7		29.1
Other revenue	0.7		0.7
	100.0	%	100.0	%

Results of Operations

        The following table presents the percentage relationship of selected items to net revenue in our condensed consolidated statements of income:

	Percentage of Net Revenue
	Quarter Ended
	December 30, 2001		December 31, 2000
Net revenue	100.0	%	100.0	%
Cost of net revenue	75.7		76.8
Gross profit	24.3		23.2
Selling, general and administrative expenses	11.6		11.1
Amortization of intangibles	1.4		1.2
Income from operations	11.3		10.9
Net interest expense	1.2		1.2
Income before income tax expense	10.1		9.7
Income tax expense	4.0		4.1
Net income	6.1	%	5.6	%

        Revenue.    Net revenue increased $17.8 million, or 10.6%, to $184.9 million for the three months ended December 30, 2001 from $167.1 million for the comparable period last year. Our Resource Management business area recognized growth in its net revenue of $22.2 million, or 35.9%, primarily

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related to our water and waste management programs as well as our homeland security services. Net revenue in our Infrastructure business area grew $5.6 million, or 10.1%, primarily related to increased public sector work and revenue from the companies we acquired in fiscal 2001. Our Communications business area continued to be adversely affected by reductions in capital spending by information carriers, and net revenue in that area decreased $10.4 million, or 21.3%. We continued to show net revenue increases in actual dollars in our Federal, state and local government and private sectors. As a percentage of net revenue, increases were realized in the Federal and state and local government sectors. We segregate from our total revenue, revenue from companies acquired during the current fiscal year as well as revenue recognized from acquired companies during the first 12 months following their respective effective dates of acquisition. Revenue recognized from acquired companies during such first 12 months is referred to as acquisitive revenue. Organic revenue is measured as total revenue less any acquisitive revenue. Acquisitive net revenue for the three months ended December 30, 2001 totaled $18.9 million. Excluding this net revenue, we realized negative organic growth in our net revenue of 0.7% from the comparable period last year.

        Gross revenue increased $23.4 million, or 10.3%, to $253.0 million for the three months ended December 30, 2001 from $229.3 million for the comparable period last year. Our Resource Management business area recognized gross revenue growth of $36.8 million, or 40.1% from the comparable period last year. Our Infrastructure business area gross revenue grew by $2.0 million, or 2.8% from the comparable period last year. Our Communications business area gross revenue decreased by $21.2 million, or 28.4% from the comparable period last year. Acquisitive gross revenue for the three months ended December 30, 2001 totaled $32.1 million. Excluding this gross revenue, we realized negative organic growth in our gross revenue of 3.7%.

        Cost of Net Revenue.    Cost of net revenue increased $11.6 million, or 9.0%, to $140.0 million for the three months ended December 30, 2001 from $128.4 million for the comparable period last year. As a percentage of net revenue, cost of net revenue for the three months ended December 30, 2001 was 75.7% compared to 76.8% for the comparable period last year.

        Selling, General and Administrative Expenses.    SG&A expenses, excluding amortization of intangibles, increased $2.9 million, or 15.6%, to $21.5 million for the three months ended December 30, 2001 from $18.6 million for the comparable period last year. As a percent of net revenue, SG&A expenses increased to 11.6% for the three months ended December 30, 2001 from 11.1% for the comparable period last year. For the three months ended December 30, 2001, amortization of intangibles increased $0.6 million, or 31.5%, to $2.7 million from $2.0 million for the comparable period last year. Amortization expense relating to acquisitions increased to 1.4% of net revenue for the three months ended December 30, 2001 from 1.2% for the comparable period last year. The increase in expenses for the quarter was primarily related to the automation of our corporate business systems and processes, business development activities, timing of professional services expenses, as well as higher administrative costs associated with acquired companies.

        Net Interest Expense.    For the three months ended December 30, 2001, net interest expense increased $0.2 million, or 10.6%, to $2.2 million from $2.0 million for the comparable period last year. This increase was primarily attributable to borrowings on our line of credit for acquisitions and working capital needs. For the three months ended December 30, 2001, our weighted average interest rate was 6.7% compared to 7.8% for the comparable period last year.

        Income Tax Expense.    Income tax expense increased $0.5 million, or 6.9%, to $7.3 million for the three months ended December 30, 2001 from $6.8 million for the comparable period last year. Our effective tax rate for the three months ended December 30, 2001 was 39.0% as compared to 42.0% for the comparable period last year. This change is primarily attributable to our utilization of research and experimentation credits as provided under the Internal Revenue Code.

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Liquidity and Capital Resources

        As of December 30, 2001, our working capital was $207.2 million, an increase of $14.2 million from September 30, 2001, of which cash and cash equivalents totaled $19.4 million. In addition, we have a credit agreement (the "Credit Agreement") with various financial institutions which provides us with a revolving credit facility (the "Facility") of $140.0 million. Under our Credit Agreement, we may also request standby letters of credit up to the aggregate sum of $25.0 million outstanding at any given time. The Facility matures on March 17, 2005 or earlier at our discretion upon payment in full of loans and other obligations. As of December 30, 2001, borrowings and standby letters of credit on the Facility totaled $20.0 million and $1.9 million, respectively. Further, we have issued two series of senior secured notes in the aggregate amount of $110.0 million. The Series A Notes, totaling $92.0 million, bear interest at 7.28% and are payable at $13.1 million per year commencing fiscal 2005 through fiscal 2011. The Series B Notes, totaling $18.0 million, bear interest at 7.08% and are payable at $3.6 million per year commencing fiscal 2004 through fiscal 2008. At December 30, 2001, the outstanding principal balance was $110.0 million on these notes.

        In the three months ended December 30, 2001, cash used in operating activities was $1.2 million compared to cash provided by operating activities of $2.0 million for the comparable period last year. This change is primarily attributable to the increase in accounts receivable and the timing of payments for liabilities. For the three months ended December 30, 2001, cash used in investing activities was $2.5 million compared to $6.0 million for the comparable period last year. The decrease was primarily due to lower cash requirements for business acquisitions. For the three months ended December 30, 2001, cash provided by financing activities was $6.9 million compared to $4.3 million for the comparable period last year. This increase was primarily attributable to the increase in net borrowings to fund working capital needs.

        We expect that internally generated funds, our existing cash balances and availability under the Credit Agreement will be sufficient to meet our capital requirements through the end of fiscal 2002. However, should we pursue an acquisition or acquisitions in which the potential cash consideration exceeds the then current availability of cash, we may pursue additional financing.

        In conjunction with our investment strategy, we continuously evaluate the marketplace for strategic acquisition opportunities. Once an opportunity is identified, we examine the effect an acquisition may have on the business environment, as well as on our results of operations. We proceed with an acquisition if we determine that the acquisition is anticipated to have an accretive effect on future operations or could expand our service offerings. As successful integration and implementation are essential to achieve favorable results, no assurances can be given that all acquisitions will provide accretive results. Our strategy is to position ourselves to address existing and emerging markets. We view acquisitions as a key component of our growth strategy, and we intend to use both cash and our securities, as we deem appropriate, to fund such acquisitions.

        We believe our operations have not been and, in the foreseeable future, are not expected to be materially adversely affected by inflation or changing prices. However, current general economic conditions may impact our client base and as such, may impact their credit-worthiness and our ability to collect cash to meet our operating needs.

Recently Issued Financial Standards

        In July 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standard (SFAS) No. 141,Business Combinations, which supercedes Accounting Principles Board (APB) Opinion No. 16,Business Combinations. SFAS No. 141 eliminates the pooling-of-interest method of accounting for business combinations for combinations initiated after July 1, 2001. This statement also changes the criteria to recognize intangible assets apart from goodwill. The provisions of

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this statement are effective for any business combination accounted for by the purchase method that is completed after June 30, 2001.

        In July 2001, the FASB issued SFAS No. 142,Goodwill and Other Intangible Assets, which supercedes APB Opinion No. 17,Intangible Assets. Under SFAS No. 142, goodwill and other indefinite-lived intangible assets are no longer amortized but are reviewed, at a minimum, annually for impairment. Separable intangible assets that have finite lives will continue to be amortized over their useful lives. The amortization provisions of this statement are effective for goodwill and intangible assets acquired after June 30, 2001. The remaining provisions of this statement are effective for fiscal years beginning after December 15, 2001. The adoption of this statement will result in our discontinuation of amortization of our goodwill; however, we will be required to test our goodwill for impairment under SFAS No. 142 in the first six months of fiscal 2003. We are currently analyzing the impact of this statement and will adopt this statement in fiscal 2003.

        In October 2001, the FASB issued SFAS No. 144,Accounting for the Impairment or Disposal of Long-Lived Assets, which supercedes SFAS No. 121,Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets To Be Disposed Of. SFAS No. 144 addresses financial accounting and reporting requirements for the impairment or disposal of long-lived assets. This statement also expands the scope of a discontinued operation to include a component of an entity, and eliminates the current exemption to consolidation when control over a subsidiary is likely to be temporary. The provisions of this statement are effective for fiscal years beginning after December 15, 2001 and interim periods within those fiscal years, although early adoption is permitted. We are currently analyzing the impact of this statement and have determined that we will adopt this statement in fiscal 2003.

Market Risks

        We currently utilize no material derivative financial instruments which expose us to significant market risk. We are exposed to cash flow risk due to interest rate fluctuations with respect to our long-term obligations. At our option, we borrow on our Facility (a) at a base rate (the greater of the federal funds rate plus 0.50% or the bank's reference rate) or (b) at a eurodollar rate plus a margin which ranges from 0.75% to 1.50%. Borrowings at the base rate have no designated term and may be repaid without penalty any time prior to the Facility's maturity date. Borrowings at a eurodollar rate have a term no less than 30 days and no greater than 90 days. Typically, at the end of such term, such borrowings may be rolled over at our discretion into either a borrowing at the base rate or a borrowing at a eurodollar rate with similar terms, not to exceed the maturity date of the Facility. The Facility matures on March 17, 2005 or earlier at our discretion upon payment in full of loans and other obligations. Accordingly, we classify total outstanding obligations between current liabilities and long-term obligations based on anticipated payments within and beyond one year's period of time. We currently anticipate repaying $22.0 million of our outstanding indebtedness in the next 12 months. Assuming we repay $22.0 million ratably during the next 12 months, and our average interest rate increases or decreases by 1.0%, our annual interest expense could increase or decrease by approximately $0.1 million. However, there can be no assurance that we will, or will be able to, repay our debt in the prescribed manner or obtain alternate financing. We could incur additional debt under the Facility or our operating results could be worse than we expect. In addition, we have outstanding senior secured notes which bear interest at a fixed rate. The Series A Notes bear interest at 7.28% and are payable at $13.1 million per year commencing fiscal 2005 through fiscal 2011. The Series B Notes bear interest at 7.08% and are payable at $3.6 million per year commencing fiscal 2004 through fiscal 2008. If interest rates increased by 1.0%, the fair value of the senior secured notes could decrease by $5.1 million. If interest rates decreased by 1.0%, the fair value of the senior secured notes could increase by $5.5 million. We presently have no material contracts under which the currency is not denominated in U.S. dollars. Accordingly, foreign exchange rate fluctuations will not have a material impact on our financial statements.

Item 3.    Quantitative and Qualitative Disclosures About Market Risk.

        Please refer to the information we have included under the heading "Market Risks" inItem 2.Management's Discussion and Analysis of Financial Condition and Results of Operations.

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RISK FACTORS

Some of the information in this Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. You can identify these statements by forward-looking words such as "may," "will," "expect," "anticipate," "believe," "estimate" and "continue" or similar words. You should read statements that contain these words carefully because they: (1) discuss our future expectations; (2) contain projections of our future operating results or of our future financial condition; or (3) state other "forward-looking" information. We believe it is important to communicate our expectations to our investors. There may be events in the future, however, that we are not accurately able to predict or over which we have no control. The risk factors listed in this section, as well as any cautionary language in this Quarterly Report on Form 10-Q, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. You should be aware that the occurrence of any of the events described in these risk factors and elsewhere in this Quarterly Report on Form 10-Q could have a material adverse effect on our business, financial condition and results of operations and that upon the occurrence of any of these events, the trading price of our common stock could decline.

There are risks associated with our acquisition strategy that could adversely impact our business and operating results

        A significant part of our growth strategy is to acquire other companies that complement our lines of business or that broaden our geographic presence. During fiscal 2001, we purchased 11 companies in ten separate transactions. We expect to continue to acquire companies as an element of our growth strategy. Acquisitions involve certain risks that could cause our actual growth or operating results to differ from our expectations or the expectations of securities analysts. For example:

•

We may not be able to identify suitable acquisition candidates or to acquire additional companies on favorable terms;



•

We compete with others to acquire companies. Competition may increase and may result in decreased availability of or increased price for suitable acquisition candidates;



•

We may not be able to obtain the necessary financing, on favorable terms or at all, to finance any of our potential acquisitions;



•

We may ultimately fail to consummate an acquisition even if we announce that we plan to acquire a company;



•

We may not be able to retain key employees of an acquired company which could negatively impact these companies' future performance;



•

We may fail to successfully integrate or manage these acquired companies due to differences in business backgrounds or corporate cultures;



•

These acquired companies may not perform as we expect;



•

We may find it difficult to provide a consistent quality of service across our geographically diverse operations; and



•

If we fail to successfully integrate any acquired company, our reputation could be damaged. This could make it more difficult to market our services or to acquire additional companies in the future.

In addition, our acquisition strategy may divert management's attention away from our primary service offerings, result in the loss of key clients or personnel and expose us to unanticipated liabilities.

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        Finally, acquired companies that derive a significant portion of their revenues from the Federal government and that do not follow the same cost accounting policies and billing procedures as we do may be subject to larger cost disallowances for greater periods than we typically encounter. If we fail to determine the existence of unallowable costs and establish appropriate reserves in advance of an acquisition, we may be exposed to material unanticipated liabilities, which could have a material adverse effect on our business.

Our quarterly operating results may fluctuate significantly, which could have a negative effect on the price of our common stock

        Our quarterly revenues, expenses and operating results may fluctuate significantly because of a number of factors, including:

•

The seasonality of the spending cycle of our public sector clients and the spending patterns of our private sector clients;



•

Employee hiring and utilization rates;



•

The number and significance of client engagements commenced and completed during a quarter;



•

Credit-worthiness and solvency of clients;



•

The ability of our clients to terminate engagements without penalties;



•

Delays incurred in connection with an engagement;



•

The size and scope of engagements;



•

The timing of expenses incurred for corporate initiatives;



•

The timing and size of the return on investment capital; and



•

General economic or political conditions.

Variations in any of these factors could cause significant fluctuations in our operating results from quarter to quarter and could result in net losses.

The value of our common stock could continue to be volatile

        The trading price of our common stock has fluctuated widely. In addition, in recent years the stock market has experienced extreme price and volume fluctuations. The overall market and the price of our common stock may continue to fluctuate greatly. The trading price of our common stock may be significantly affected by various factors, including:

•

Quarter to quarter variations in our operating results;



•

Changes in environmental legislation;



•

Changes in investors' and analysts' perception of the business risks and conditions of our business;



•

Investors' and analysts' assessment of third party reports or conclusions;



•

Broader market fluctuations; and



•

General economic or political conditions.

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If we are not able to successfully manage our growth strategy, our business and results of operations may be adversely affected

        The growth of a company presents numerous managerial, administrative, operational and other challenges. Our ability to manage the growth of our operations will require us to continue to improve our operational, financial and human resource management information systems and our other internal systems and controls. In addition, our growth will increase our need to attract, develop, motivate and retain both our management and professional employees. The inability of our management to manage our growth effectively or the inability of our employees to achieve anticipated performance or utilization levels could have a material adverse effect on our business.

The loss of key personnel or our inability to attract and retain qualified personnel could significantly disrupt our business

        We depend upon the efforts and skills of our executive officers, senior managers and consultants. With limited exceptions, we do not have employment agreements with any of these individuals. The loss of the services of any of these key personnel could adversely affect our business. Although we have obtained non-compete agreements from certain principals and stockholders of companies we have acquired, we generally do not have non-compete or employment agreements with key employees who were not once equity holders of these companies. We do not maintain key-man life insurance policies on any of our executive officers or senior managers.

        Our future growth and success depends on our ability to attract and retain qualified scientists and engineers. The market for these professionals is competitive and we may not be able to attract and retain such professionals.

Changes in existing laws and regulations could reduce the demand for our services

        A significant amount of our resource management business is generated either directly or indirectly as a result of existing Federal and state governmental laws, regulations and programs. Any changes in these laws or regulations that reduce funding or affect the sponsorship of these programs could reduce the demand for our services and could have a material adverse effect on our business.

Our revenue from agencies of the Federal government is concentrated, and a reduction in spending by these agencies could adversely affect our business and operating results

        Agencies of the Federal government are among our most significant clients. During the three months ended December 30, 2001, approximately 26.2% of our net revenue was derived from Federal agencies, of which 11.6% was derived from the Department of Defense (DOD), 9.3% from the Environmental Protection Agency (EPA), 1.2% from the Department of Energy (DOE) and 4.1% from various other Federal agencies. Some contracts with Federal government agencies require annual funding approval and may be terminated at their discretion. A reduction in spending by Federal government agencies could limit the continued funding of our existing contracts with them and could limit our ability to obtain additional contracts. These limitations, if significant, could have a material adverse effect on our business.

Our revenue from commercial clients is significant, and the credit risks associated with certain of these clients could adversely affect our operating results

        During the three months ended December 30, 2001, approximately 52.9% of our net revenue was derived from commercial clients. We rely upon the financial stability and credit worthiness of these clients. To the extent the credit quality of these clients deteriorates or these clients seek bankruptcy protection, our ability to collect our receivables, and ultimately our operating results, may be adversely affected.

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        On July 2, 2001, our client, Metricom, Inc. ("Metricom"), filed for protection under Chapter 11 of the U.S. Bankruptcy Code. At the time of filing, we had outstanding accounts receivable with Metricom in the aggregate amount of $38.3 million. In the third quarter of fiscal 2001 we took a charge in that amount to provide a reserve for Metricom.

Our contracts with governmental agencies are subject to audit, which could result in the disallowance of certain costs

        Contracts with the Federal government and other governmental agencies are subject to audit. Most of these audits are conducted by the Defense Contract Audit Agency (DCAA), which reviews our overhead rates, operating systems and cost proposals. The DCAA may disallow costs if it determines that we accounted for these costs incorrectly or in a manner inconsistent with Cost Accounting Standards. A disallowance of costs by the DCAA, or other governmental auditors, could have a material adverse effect on our business.

Our business and operating results could be adversely affected by losses under fixed-price contracts or termination of contracts at the client's discretion

        We contract with Federal and state governments as well as with the commercial sector. These contracts are often subject to termination at the discretion of the client with or without cause. Additionally, we enter into various types of contracts with our clients, including fixed-price contracts. During the three months ended December 30, 2001, approximately 42.4% of our net revenue was derived from fixed-price contracts. Fixed-price contracts protect clients and expose us to a number of risks. These risks include underestimation of costs, problems with new technologies, unforeseen costs or difficulties, delays beyond our control and economic and other changes that may occur during the contract period. Losses under fixed-price contracts or termination of contracts at the discretion of the client could have a material adverse effect on our business.

Our inability to find qualified subcontractors could adversely affect the quality of our service and our ability to perform under certain contracts

        Under some of our contracts, we depend on the efforts and skills of subcontractors for the performance of certain tasks. Reliance on subcontractors varies from project to project. During the three months ended December 30, 2001, subcontractor costs comprised 26.9% of our gross revenue. The absence of qualified subcontractors with whom we have a satisfactory relationship could adversely affect the quality of our service and our ability to perform under some of our contracts.

Our industry is highly competitive and we may be unable to compete effectively

        We provide specialized management consulting and technical services to a broad range of public and private sector clients. The market for our services is highly competitive and we compete with many other firms. These firms range from small regional firms to large national firms which have greater financial and marketing resources than ours.

        We focus primarily on the resource management, infrastructure and communications business areas. We provide services to our clients which include Federal, state and local agencies, and organizations in the private sector.

        We compete for projects and engagements with a number of competitors which can vary from one to 100 firms. Historically, clients have chosen among competing firms based on the quality and timeliness of the firm's service. We believe, however, that price has become an increasingly important factor.

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        We believe that our principal competitors include, in alphabetical order, Black & Veatch LLP; Brown & Caldwell; Camp, Dresser & McKee Inc.; Castle Tower Corporation; CH2M Hill Companies Ltd.; Earth Tech, Inc.; IT Group, Inc.; Mastec, Inc.; Montgomery Watson Harza; o2 Wireless Solutions, Inc.; Quanta Services, Inc.; Roy F. Weston, Inc.; Science Applications International Corporation; URS Corporation and Wireless Facilities, Inc.

Our services expose us to significant risks of liability and our insurance policies may not provide adequate coverage

        Our services involve significant risks of professional and other liabilities which may substantially exceed the fees we derive from our services. Our business activities could expose us to potential liability under various environmental laws such as the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA). In addition, we sometimes contractually assume liability under indemnification agreements. We cannot predict the magnitude of such potential liabilities.

        We currently maintain comprehensive general liability, umbrella professional and pollution liability insurance policies. We believe that our insurance policies are adequate for our business operations. The professional and pollution liability policies are "claims made" policies. Only claims made during the term of the policy are covered. Should we terminate our professional and pollution liability policies and fail to obtain retroactive coverage, we would be uninsured for claims made after termination even if the claims were based on events or acts that occurred during the term of the policy. Additionally, our insurance policies may not protect us against potential liability due to various exclusions and retentions. In addition, if we expand into new markets, there can be no assurance that we will be able to obtain insurance coverage for the new activities or, if insurance is obtained, the dollar amount of any liabilities incurred could exceed our insurance coverage limits. Partially or completely uninsured claims, if successful and of significant magnitude, could have a material adverse affect on our business.

We may be precluded from providing certain services due to conflict of interest issues

        Many of our clients are concerned about potential or actual conflicts of interest in retaining management consultants. Federal government agencies have formal policies against continuing or awarding contracts that would create actual or potential conflicts of interest with other activities of a contractor. These policies, among other things, may prevent us from bidding for or performing contracts resulting from or relating to certain work we have performed for the government. In addition, services performed for a private client may create a conflict of interest that precludes or limits our ability to obtain work from other public or private organizations. We have, on occasion, declined to bid on projects because of these conflicts of interest issues.

Our international operations expose us to risks such as foreign currency fluctuations

        During the three months ended December 30, 2001, approximately 2.0% of our net revenue was derived from the international marketplace. Some contracts with our international clients are denominated in foreign currencies. As such, these contracts contain inherent risks including foreign currency exchange risk and the risk associated with expatriating funds from foreign countries. If our international revenue increases, our exposure to foreign currency fluctuations may also increase. We periodically enter into forward exchange contracts to address foreign currency fluctuations.

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PART II.    OTHER INFORMATION

Item 2.    Changes in Securities and Use of Proceeds.

        On March 30, 2001, we acquired 100% of the capital stock of Williams, Hatfield & Stoner, Inc., a Florida corporation (WHS). In connection with the purchase price adjustment provisions of this transaction, we issued an aggregate of 21,740 shares of Common Stock to the former shareholders of WHS on October 4, 2001. For purposes of this transaction, each share was valued at $15.68. The issuances of Common Stock were made by private placement in reliance on the exemption from the registration provisions of the Securities Act of 1933, as amended (the "Act"), provided for in Section 4(2) of the Act.

        On May 21, 2001, we acquired 100% of the capital stock of Vertex Engineering Services, Inc., a Massachusetts corporation (VES). In connection with the purchase price adjustment provisions of this transaction, we issued an aggregate of 12,020 shares of Common Stock to the former shareholders of VES on October 17, 2001. For purposes of this transaction, each share was valued at $21.37. The issuances of Common Stock were made by private placement in reliance on the exemption from the registration provisions of the Act, provided for in Section 4(2) of the Act.

Item 6.    Exhibits and Reports on Form 8-K.

(a)

Exhibits

3.1	Restated Certificate of Incorporation of the Company (incorporated herein by reference to Exhibit 3.1 to the Company's Annual Report on Form 10-K for the fiscal year ended October 1, 1995).
3.2	Bylaws of the Company as amended to date (incorporated herein by reference to Exhibit 3.2 to the Company's Registration Statement on Form S-1, No. 33-43723).
3.3	Certificate of Amendment of Certificate of Incorporation of the Company (incorporated herein by reference to Exhibit 3.4 to the Company's Annual Report on Form 10-K for the fiscal year ended October 4, 1998).
3.4	Certificate of Amendment of Certificate of Incorporation of the Company (incorporated herein by reference to Exhibit 3.4 to the Company's Quarterly Report on Form 10-Q as amended for the fiscal quarter ended April 1, 2001).
10.1	Credit Agreement dated as of March 17, 2000 among the Company and the financial institutions named therein (incorporated herein by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended April 2, 2000).
10.2	First Amendment dated as of April 9, 2001 to the Credit Agreement dated as of March 17, 2000 among the Company and the financial institutions named therein (incorporated herein by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended July 1, 2001).
10.3	Second Amendment dated as of August 13, 2001 to the Credit Agreement dated as of March 17, 2000 among the Company and the financial institutions named therein (incorporated herein by reference to Exhibit 10.3 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2001).
10.4	Note Purchase Agreement dated as of May 15, 2001 among the Company and the purchasers named therein (incorporated herein by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended July 1, 2001).

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10.5	First Amendment dated as of September 30, 2001 to the Note Purchase Agreement dated as of May 15, 2001 among the Company and the purchasers named therein (incorporated herein by reference to Exhibit 10.5 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2001).
10.6	1989 Stock Option Plan dated as of February 1, 1989 (incorporated herein by reference to Exhibit 10.13 to the Company's Registration Statement on Form S-1, No. 33-43723).
10.7	Form of Incentive Stock Option Agreement executed by the Company and certain individuals in connection with the Company's 1989 Stock Option Plan (incorporated herein by reference to Exhibit 10.14 to the Company's Registration Statement on Form S-1, No. 33-43723).
10.8	Executive Medical Reimbursement Plan (incorporated herein by reference to Exhibit 10.16 to the Company's Registration Statement on Form S-1, No. 33-43723).
10.9	1992 Incentive Stock Plan (incorporated herein by reference to Exhibit 10.18 to the Company's Annual Report on Form 10-K for the fiscal year ended October 3, 1993).
10.10	Form of Incentive Stock Option Agreement used by the Company in connection with the Company's 1992 Incentive Stock Plan (incorporated herein by reference to Exhibit 10.19 to the Company's Annual Report on Form 10-K for the fiscal year ended October 3, 1993).
10.11	1992 Stock Option Plan for Nonemployee Directors (incorporated herein by reference to Exhibit 10.20 to the Company's Annual Report on Form 10-K for the fiscal year ended October 3, 1993).
10.12	Form of Nonqualified Stock Option Agreement used by the Company in connection with the Company's 1992 Stock Option Plan for Nonemployee Directors (incorporated herein by reference to Exhibit 10.21 to the Company's Annual Report on Form 10-K for the fiscal year ended October 3, 1993).
10.13	1994 Employee Stock Purchase Plan (incorporated herein by reference to Exhibit 10.22 to the Company's Annual Report on Form 10-K for the fiscal year ended October 2, 1994).
10.14	Form of Stock Purchase Agreement used by the Company in connection with the Company's 1994 Employee Stock Purchase Plan (incorporated herein by reference to Exhibit 10.23 to the Company's Annual Report on Form 10-K for the fiscal year ended October 2, 1994).
10.15	2002 Stock Option Plan (incorporated herein by reference to Exhibit 10.15 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2001).
10.16	Form of Incentive Option Agreement used by the Company in connection with the 2002 Stock Option Plan (incorporated herein by reference to Exhibit 10.16 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2001).
10.17	Registration Rights Agreement dated as of March 31, 2000 among the Company and the parties listed on Schedule A attached thereto (incorporated herein by reference to Exhibit 10.22 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended July 2, 2000).
10.18	Registration Rights Agreement dated as of May 3, 2000 among the Company and the parties listed on Schedule A attached thereto (incorporated herein by reference to Exhibit 10.23 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended July 2, 2000).
10.19	Registration Rights Agreement dated as of May 17, 2000 among the Company and the parties listed on Schedule A attached thereto (incorporated herein by reference to Exhibit 10.24 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended July 2, 2000).

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10.20	Registration Rights Agreement dated as of May 24, 2000 among the Company and the parties listed on Schedule A attached thereto (incorporated herein by reference to Exhibit 10.25 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended July 2, 2000).
10.21	Registration Rights Agreement dated as of December 21, 2000 among the Company and the parties listed on Schedule A attached thereto (incorporated herein by reference to Exhibit 10.26 to the Company's Annual Report on Form 10-K for the fiscal year ended October 1, 2000).
10.22	Registration Rights Agreement dated as of March 2, 2001 among the Company and the parties listed on Schedule A attached thereto (incorporated herein by reference to Exhibit 10.27 to the Company's Quarterly Report on Form 10-Q as amended for fiscal quarter ended April 1, 2001).
10.23	Registration Rights Agreement dated as of March 30, 2001 among the Company and the parties listed on Schedule A attached thereto (incorporated herein by reference to Exhibit 10.28 to the Company's Quarterly Report on Form 10-Q as amended for fiscal quarter ended April 1, 2001).
10.24	Registration Rights Agreement dated as of May 21, 2001 among the Company and the parties listed on Schedule A attached thereto (incorporated herein by reference to Exhibit 10.31 to the Company's Quarterly Report on Form 10-Q for fiscal quarter ended July 1, 2001).
10.25	Registration Rights Agreement dated as of May 25, 2001 among the Company and the parties listed on Schedule A attached thereto (incorporated herein by reference to Exhibit 10.32 to the Company's Quarterly Report on Form 10-Q for fiscal quarter ended July 1, 2001).
10.26	Registration Rights Agreement dated as of June 1, 2001 among the Company and the parties listed on Schedule A attached thereto (incorporated herein by reference to Exhibit 10.33 to the Company's Quarterly Report on Form 10-Q for fiscal quarter ended July 1, 2001).
10.27	Registration Rights Agreement dated as of September 26, 2001 among the Company and the parties listed on Schedule A attached thereto (incorporated herein by reference to Exhibit 10.27 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2001).
10.28	Registration Rights Agreement dated as of September 26, 2001 among the Company and the parties listed on Schedule A attached thereto (incorporated herein by reference to Exhibit 10.28 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2001).

(b)

Reports on Form 8-K

        On January 16, 2002, we filed with the Securities and Exchange Commission a Current Report on Form 8-K. The items reported in the Form 8-K were Item 5 (Other Events) and Item 7 (Financial Statements and Exhibits), which related to the press release dated January 16, 2002, titled "Tetra Tech Reports First Quarter 2002 Results." The date of the Form 8-K was January 16, 2002.

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SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated: February 13, 2002		TETRA TECH, INC.
	By:	/s/ Li-San HwangLi-San Hwang Chairman of the Board of Directors, Chief Executive Officer (Principal Executive Officer)
	By:	/s/ James M. JaskaJames M. Jaska President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)

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QuickLinks

TETRA TECH, INC. INDEX
PART I. FINANCIAL INFORMATION

Item 1.

Tetra Tech, Inc. Condensed Consolidated Balance Sheets
Tetra Tech, Inc. Condensed Consolidated Statements of Income (Unaudited)
Tetra Tech, Inc. Condensed Consolidated Statements of Cash Flow (Unaudited)
TETRA TECH, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Item 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

RISK FACTORS
PART II. OTHER INFORMATION

Item 2. Changes in Securities and Use of Proceeds.
Item 6. Exhibits and Reports on Form 8-K.

SIGNATURES