Document and Entity Information
Document and Entity Information - USD ($) $ in Billions | 12 Months Ended | ||
Oct. 02, 2016 | Nov. 07, 2016 | Mar. 24, 2016 | |
Document and Entity Information | |||
Entity Registrant Name | TETRA TECH INC | ||
Entity Central Index Key | 831,641 | ||
Document Type | 10-K | ||
Document Period End Date | Oct. 2, 2016 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --10-02 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 1.4 | ||
Entity Common Stock, Shares Outstanding | 57,060,803 | ||
Document Fiscal Year Focus | 2,016 | ||
Document Fiscal Period Focus | FY |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Oct. 02, 2016 | Sep. 27, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 160,459 | $ 135,326 |
Accounts receivable - net | 714,336 | 636,030 |
Prepaid expenses and other current assets | 46,262 | 42,125 |
Income taxes receivable | 14,371 | 10,294 |
Total current assets | 935,428 | 823,775 |
Property and equipment - net | 67,827 | 64,906 |
Investments in and advances to unconsolidated joint ventures | 2,064 | 1,886 |
Goodwill | 717,988 | 601,379 |
Intangible assets - net | 48,962 | 40,332 |
Deferred income taxes | 630 | |
Other long-term assets | 27,880 | 26,964 |
Total assets | 1,800,779 | 1,559,242 |
Current liabilities: | ||
Accounts payable | 158,773 | 150,284 |
Accrued compensation | 129,184 | 103,866 |
Billings in excess of costs on uncompleted contracts | 88,223 | 93,989 |
Deferred income taxes | 20,787 | |
Current portion of long-term debt | 15,510 | 11,904 |
Current contingent earn-out liabilities | 4,296 | 609 |
Other current liabilities | 85,100 | 69,003 |
Total current liabilities | 481,086 | 450,442 |
Deferred income taxes | 60,348 | 34,759 |
Long-term debt | 331,501 | 180,972 |
Long-term contingent earn-out liabilities | 4,461 | 3,560 |
Other long-term liabilities | 53,980 | 32,711 |
Commitments and contingencies (Note 18) | ||
Equity: | ||
Preferred stock - Authorized, 2,000 shares of $0.01 par value; no shares issued and outstanding at October 2, 2016 and September 27, 2015 | ||
Common stock - Authorized, 150,000 shares of $0.01 par value; issued and outstanding, 57,042 and 59,381 shares at October 2, 2016 and September 27, 2015, respectively | 570 | 594 |
Additional paid-in capital | 260,340 | 326,593 |
Accumulated other comprehensive loss | (128,008) | (143,171) |
Retained earnings | 736,357 | 672,309 |
Tetra Tech stockholders' equity | 869,259 | 856,325 |
Noncontrolling interests | 144 | 473 |
Total equity | 869,403 | 856,798 |
Total liabilities and equity | $ 1,800,779 | $ 1,559,242 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares shares in Thousands | Oct. 02, 2016 | Sep. 27, 2015 |
Consolidated Balance Sheets | ||
Preferred stock, Authorized shares | 2,000 | 2,000 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, Authorized shares | 150,000 | 150,000 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares issued | 57,042 | 59,381 |
Common stock, shares outstanding | 57,042 | 59,381 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Oct. 02, 2016 | Sep. 27, 2015 | Sep. 28, 2014 | |
Consolidated Statements of Income | |||
Revenue | $ 2,583,469 | $ 2,299,321 | $ 2,483,814 |
Subcontractor costs | (654,264) | (580,606) | (623,896) |
Other costs of revenue | (1,598,994) | (1,402,925) | (1,577,481) |
Gross profit | 330,211 | 315,790 | 282,437 |
Selling, general and administrative expenses | (171,985) | (170,456) | (187,298) |
Acquisition and integration expenses | (19,548) | ||
Contingent consideration - fair value adjustments | (2,823) | 3,113 | 58,694 |
Impairment of goodwill and other intangible assets | (60,763) | ||
Operating income | 135,855 | 87,684 | 153,833 |
Interest income | 996 | 680 | 804 |
Interest expense | (12,385) | (8,043) | (10,294) |
Income before income tax expense | 124,466 | 80,321 | 144,343 |
Income tax expense | (40,613) | (41,093) | (35,668) |
Net income including noncontrolling interests | 83,853 | 39,228 | 108,675 |
Net income from noncontrolling interests | (70) | (154) | (409) |
Net income attributable to Tetra Tech | $ 83,783 | $ 39,074 | $ 108,266 |
Earnings per share attributable to Tetra Tech: | |||
Basic (in dollars per share) | $ 1.44 | $ 0.64 | $ 1.68 |
Diluted (in dollars per share) | $ 1.42 | $ 0.64 | $ 1.66 |
Weighted-average common shares outstanding: | |||
Basic (in shares) | 58,186 | 60,913 | 64,379 |
Diluted (in shares) | 58,966 | 61,532 | 65,146 |
Cash dividends paid per share | $ 0.34 | $ 0.30 | $ 0.14 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 02, 2016 | Sep. 27, 2015 | Sep. 28, 2014 | |
Consolidated Statements of Comprehensive Income (Loss) | |||
Net income including noncontrolling interests | $ 83,853 | $ 39,228 | $ 108,675 |
Other comprehensive income (loss), net of tax: | |||
Foreign currency translation adjustments | 14,392 | (98,287) | (45,480) |
Gain (loss) on cash flow hedge valuations | 774 | (2,489) | 1,029 |
Other comprehensive income (loss), net of tax | 15,166 | (100,776) | (44,451) |
Comprehensive income (loss) including noncontrolling interests | 99,019 | (61,548) | 64,224 |
Net income attributable to noncontrolling interests | (70) | (154) | (409) |
Foreign currency translation adjustments, net of tax | (3) | 143 | 55 |
Comprehensive income attributable to noncontrolling interests | (73) | (11) | (354) |
Comprehensive income (loss) attributable to Tetra Tech | $ 98,946 | $ (61,559) | $ 63,870 |
Consolidated Statements of Equi
Consolidated Statements of Equity - USD ($) shares in Thousands, $ in Thousands | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Total Tetra Tech Equity | Non-Controlling Interests | Total |
BALANCE at Sep. 29, 2013 | $ 641 | $ 443,099 | $ 1,858 | $ 552,165 | $ 997,763 | $ 1,040 | $ 998,803 |
BALANCE (in shares) at Sep. 29, 2013 | 64,134 | ||||||
Comprehensive income, net of tax: | |||||||
Net income | 108,266 | 108,266 | 409 | 108,675 | |||
Foreign currency translation adjustments | (45,425) | (45,425) | (55) | (45,480) | |||
Gain (loss) on cash flow hedge valuations | 1,029 | 1,029 | 1,029 | ||||
Comprehensive income (loss), net of tax | 63,870 | 354 | 64,224 | ||||
Distributions paid to noncontrolling interests | (417) | (417) | |||||
Cash dividends of $0.14, $0.30 and $0.34 per common share for years ended September 28, 2014, September 27, 2015 and October 2, 2016 respectively. | (8,956) | (8,956) | (8,956) | ||||
Stock-based compensation | 10,374 | 10,374 | 10,374 | ||||
Stock options exercised | $ 13 | 22,956 | 22,969 | 22,969 | |||
Stock options exercised (in shares) | 1,263 | ||||||
Shares issued for Employee Stock Purchase Plan | $ 2 | 5,597 | 5,599 | 5,599 | |||
Shares issued for Employee Stock Purchase Plan (in shares) | 246 | ||||||
Stock repurchases | $ (30) | (79,970) | (80,000) | (80,000) | |||
Stock repurchases (in shares) | (3,052) | ||||||
Tax expense (benefit) for stock options | 460 | 460 | 460 | ||||
BALANCE at Sep. 28, 2014 | $ 626 | 402,516 | (42,538) | 651,475 | 1,012,079 | 977 | 1,013,056 |
BALANCE (in shares) at Sep. 28, 2014 | 62,591 | ||||||
Comprehensive income, net of tax: | |||||||
Net income | 39,074 | 39,074 | 154 | 39,228 | |||
Foreign currency translation adjustments | (98,144) | (98,144) | (143) | (98,287) | |||
Gain (loss) on cash flow hedge valuations | (2,489) | (2,489) | (2,489) | ||||
Comprehensive income (loss), net of tax | (61,559) | 11 | (61,548) | ||||
Distributions paid to noncontrolling interests | (515) | (515) | |||||
Cash dividends of $0.14, $0.30 and $0.34 per common share for years ended September 28, 2014, September 27, 2015 and October 2, 2016 respectively. | (18,240) | (18,240) | (18,240) | ||||
Stock-based compensation | 10,926 | 10,926 | 10,926 | ||||
Stock options exercised | $ 5 | 8,985 | 8,990 | 8,990 | |||
Stock options exercised (in shares) | 510 | ||||||
Shares issued for Employee Stock Purchase Plan | $ 3 | 5,200 | 5,203 | 5,203 | |||
Shares issued for Employee Stock Purchase Plan (in shares) | 243 | ||||||
Stock repurchases | $ (40) | (100,460) | (100,500) | (100,500) | |||
Stock repurchases (in shares) | (3,963) | ||||||
Tax expense (benefit) for stock options | (574) | (574) | (574) | ||||
BALANCE at Sep. 27, 2015 | $ 594 | 326,593 | (143,171) | 672,309 | 856,325 | 473 | 856,798 |
BALANCE (in shares) at Sep. 27, 2015 | 59,381 | ||||||
Comprehensive income, net of tax: | |||||||
Net income | 83,783 | 83,783 | 70 | 83,853 | |||
Foreign currency translation adjustments | 14,389 | 14,389 | 3 | 14,392 | |||
Gain (loss) on cash flow hedge valuations | 774 | 774 | 774 | ||||
Comprehensive income (loss), net of tax | 98,946 | 73 | 99,019 | ||||
Distributions paid to noncontrolling interests | (402) | (402) | |||||
Cash dividends of $0.14, $0.30 and $0.34 per common share for years ended September 28, 2014, September 27, 2015 and October 2, 2016 respectively. | (19,735) | (19,735) | (19,735) | ||||
Stock-based compensation | 12,964 | 12,964 | 12,964 | ||||
Stock options exercised | $ 9 | 15,814 | 15,823 | 15,823 | |||
Stock options exercised (in shares) | 920 | ||||||
Shares issued for Employee Stock Purchase Plan | $ 2 | 4,705 | 4,707 | 4,707 | |||
Shares issued for Employee Stock Purchase Plan (in shares) | 209 | ||||||
Stock repurchases | $ (35) | (99,465) | (99,500) | (99,500) | |||
Stock repurchases (in shares) | (3,468) | ||||||
Tax expense (benefit) for stock options | (271) | (271) | (271) | ||||
BALANCE at Oct. 02, 2016 | $ 570 | $ 260,340 | $ (128,008) | $ 736,357 | $ 869,259 | $ 144 | $ 869,403 |
BALANCE (in shares) at Oct. 02, 2016 | 57,042 |
Consolidated Statements of Equ7
Consolidated Statements of Equity (Parenthetical) - $ / shares | 12 Months Ended | ||
Oct. 02, 2016 | Sep. 27, 2015 | Sep. 28, 2014 | |
Consolidated Statements of Equity | |||
Cash dividends paid per share | $ 0.34 | $ 0.30 | $ 0.14 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 02, 2016 | Sep. 27, 2015 | Sep. 28, 2014 | |
Cash flows from operating activities: | |||
Net income including noncontrolling interests | $ 83,853 | $ 39,228 | $ 108,675 |
Adjustments to reconcile net income to net cash from operating activities: | |||
Depreciation and amortization | 45,588 | 44,201 | 54,540 |
Equity in income of unconsolidated joint ventures | (1,652) | (5,131) | (2,804) |
Distributions of earnings from unconsolidated joint ventures | 2,796 | 5,252 | 2,724 |
Stock-based compensation | 12,964 | 10,926 | 10,374 |
Excess tax benefits from stock-based compensation | (918) | (172) | (904) |
Deferred income taxes | 6,051 | 8,412 | (145) |
Provision for doubtful accounts | 8,082 | (1,034) | 1,467 |
Impairment of goodwill and other intangible assets | 60,763 | ||
Fair value adjustments to contingent consideration | 2,823 | (3,113) | (58,694) |
Lease termination costs and related asset impairment | 2,946 | 342 | 2,416 |
(Gain) loss on disposal of property and equipment | (537) | (6,014) | 58 |
Changes in operating assets and liabilities, net of effects of business acquisitions: | |||
Accounts receivable | 9,062 | 40,345 | (32,020) |
Prepaid expenses and other assets | 3,720 | 12,970 | (4,481) |
Accounts payable | (3,002) | (26,901) | 31,772 |
Accrued compensation | 8,434 | (7,676) | (4,728) |
Billings in excess of costs on uncompleted contracts | (13,874) | (10,319) | 23,833 |
Other liabilities | (19,321) | (7,143) | (9,419) |
Income taxes receivable/payable | (4,995) | 7,911 | 4,712 |
Net cash provided by operating activities | 142,020 | 162,847 | 127,376 |
Cash flows from investing activities: | |||
Capital expenditures | (11,945) | (24,296) | (19,404) |
Payments for business acquisitions, net of cash acquired | (81,259) | (11,680) | (30,251) |
Changes in restricted cash | (2,519) | 4,530 | |
Proceeds from sale of property and equipment | 3,076 | 10,426 | 4,594 |
Payment received on note from sale of operation | 3,900 | ||
Investments in unconsolidated joint ventures | (1,368) | ||
Net cash used in investing activities | (94,015) | (21,020) | (41,161) |
Cash flows from financing activities: | |||
Payments on long-term debt | (148,485) | (75,459) | (4,379) |
Proceeds from borrowings | 229,049 | 64,794 | |
Payments of contingent earn-out liabilities | (3,251) | (3,199) | (18,663) |
Debt pre-payment costs | (1,935) | (1,457) | |
Distributions paid to noncontrolling interests | (402) | (515) | (417) |
Excess tax benefits from stock-based compensation | 918 | 172 | 904 |
Repurchases of common stock | (99,500) | (100,500) | (80,000) |
Net proceeds from issuance of common stock | 17,953 | 10,825 | 23,834 |
Dividends paid | (19,735) | (18,240) | (8,956) |
Net cash used in financing activities | (25,388) | (123,579) | (87,677) |
Effect of foreign exchange rate changes on cash | 2,516 | (5,301) | (5,464) |
Net increase (decrease) in cash and cash equivalents | 25,133 | 12,947 | (6,926) |
Cash and cash equivalents at beginning of year | 135,326 | 122,379 | 129,305 |
Cash and cash equivalents at end of year | 160,459 | 135,326 | 122,379 |
Cash paid during the period for: | |||
Interest | 12,575 | 7,323 | 8,293 |
Income taxes, net of refunds of $3.2 million, $5.4 million and $14.7 million | $ 35,273 | $ 23,268 | $ 28,092 |
Consolidated Statements of Cas9
Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 02, 2016 | Sep. 27, 2015 | Sep. 28, 2014 | |
Consolidated Statements of Cash Flows | |||
Income taxes, net of refunds received | $ 3.2 | $ 5.4 | $ 14.7 |
Description of Business
Description of Business | 12 Months Ended |
Oct. 02, 2016 | |
Description of Business | |
Description of Business | 1. Description of Business We are a leading provider of consulting and engineering services that focuses on water, environment, infrastructure, resource management, energy, and international development. We are a global company that 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. In fiscal 2016, we managed our continuing operations under two reportable segments. We report our water resources, water and wastewater treatment, environment, and infrastructure engineering activities in the Water, Environment and Infrastructure ("WEI") reportable segment. Our Resource Management and Energy ("RME") reportable segment includes our oil and gas, energy, international development, waste management, remediation, and utilities services. In addition, we report the results of the wind-down of our non-core construction activities in the Remediation and Construction Management ("RCM") reportable segment. |
Basis of Presentation and Prepa
Basis of Presentation and Preparation | 12 Months Ended |
Oct. 02, 2016 | |
Basis of Presentation and Preparation | |
Basis of Presentation and Preparation | 2. 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. Certain prior year amounts have been revised to conform to the current year presentation. Fiscal Year. We report results of operations based on 52 or 53-week periods ending on the Sunday nearest September 30. Fiscal years 2016, 2015 and 2014 contained 53, 52 and 52 weeks, respectively. Use of Estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("U.S. 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 for most of our contracts using the percentage-of-completion method, primarily based on contract costs incurred to date compared to total estimated contract costs. We generally utilize the cost-to-cost approach to estimate the progress towards completion in order to determine the amount of revenue and profit to recognize. Revenue and cost estimates for each significant contract are reviewed and reassessed quarterly. Changes in those estimates could result in 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. Changes in revenue and cost estimates could also result in a projected loss that would be recorded immediately in earnings. For fiscal years 2016, 2015 and 2014, we recognized net unfavorable operating income adjustments of $2.3 million, $8.9 million and $35.9 million, respectively, due to changes in estimates. As of October 2, 2016 and September 27, 2015, we recorded a liability for anticipated losses of $6.7 million and $10.5 million, respectively. The estimated cost to complete the related contracts as of October 2, 2016 was $23.6 million. Certain of our contracts are service-related contracts, such as providing operations and maintenance services or a variety of technical assistance services. Our service contracts are accounted for using the proportional performance method under which revenue is recognized in proportion to the number of service activities performed, in proportion to the direct costs of performing the service activities, or evenly across the period of performance depending upon the nature of the services provided. We recognize revenue for work performed under three major types of contracts: fixed-price, time-and-materials and cost-plus. Fixed-Price. We enter into two major types of fixed-price contracts: firm fixed-price ("FFP") and fixed-price per unit ("FPPU"). Under FFP contracts, our clients pay us an agreed fixed-amount negotiated in advance for a specified scope of work. We generally recognize revenue on FFP 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. Under our FPPU contracts, clients pay us a set fee for each service or production transaction that we complete. Accordingly, we recognize revenue under FPPU contracts as we complete the related service or production transactions, generally using the proportional performance method. 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 generally 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. The 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 all highly liquid investments with maturities of 90 days or less at the date of purchase. Restricted cash of $2.5 million was included in "Prepaid expenses and other current assets" on the consolidated balance sheet at fiscal 2016 year-end. For cash held by our consolidated joint ventures, see Note 17, "Joint Ventures." 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. We include any adjustments to these liabilities in our consolidated results of operations. 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 October 2, 2016 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 June 27, 2016 (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 (See Note 6, "Goodwill and Intangible Assets" for further discussion). 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 is a two-step process involving 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 the reporting unit is not considered impaired; therefore, the second step of the impairment test is unnecessary. If the carrying amount of a reporting unit exceeds its fair value, we perform the second step of the goodwill impairment test to measure the amount of impairment loss to be recorded. If our goodwill is impaired, we are required to record a non-cash charge that could have a material adverse effect on our consolidated financial statements. 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 (see Note 9, "Long-Term Debt" and Note 14, "Derivative Financial Instruments" for additional disclosure). 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 and a combined California franchise 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 October 2, 2016 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 22% of accounts receivable were due from various agencies of the U.S. federal government at fiscal 2016 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 42.4%, 29.5% and 28.1% of our fiscal 2016 revenue was generated from our U.S government, U.S. commercial and international clients, respectively (see Note 19, "Reportable Segments" for more information). 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 results of operations, with the exception of intercompany foreign transactions that are considered long-term investments, which are recorded in "Accumulated other comprehensive income (loss)" on the consolidated balance sheets. Recently Adopted and Pending Accounting Guidance. In November 2015, the Financial Accounting Standards Board ("FASB") issued updated guidance as a part of its ongoing Simplification Initiative, with the objective of reducing complexity in accounting standards. The updated guidance requires that all deferred tax assets and liabilities, along with any related valuation allowance, be classified as noncurrent on the balance sheet. This guidance does not change the offsetting requirements for deferred tax liabilities and assets, which results in the presentation of one amount on the balance sheet. We adopted this guidance prospectively as of October 2, 2016, and our consolidated balance sheet reflects the new guidance for classification of deferred taxes. In February 2015, the FASB issued updated guidance which changes the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. The updated guidance is effective for interim and annual reporting periods in years beginning after December 15, 2015, with early adoption permitted. We adopted this guidance, which did not have an impact on our consolidated financial statements. In April 2015, the FASB issued updated guidance intended to simplify, and provide consistency to, the presentation of debt issuance costs. The new standard requires that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of the debt liability, consistent with debt discounts. The updated guidance is effective for interim and annual reporting periods in years beginning after December 15, 2015, with early adoption permitted. We adopted this guidance, which did not have a material impact on our consolidated financial statements. We had $2.6 million of unamortized debt issuance costs at October 2, 2016. In August 2015, the FASB issued updated guidance relating to the SEC Staff Announcement at the June 18, 2015 Emerging Issues Task Force meeting on the presentation and subsequent measurement of debt issuance costs associated with line-of-credit arrangements. The updated guidance allows for the deferral and presentation of debt issuance costs as an asset which may be amortized ratably over the term of the line-of-credit arrangement, regardless of whether there are any related outstanding borrowings. The updated guidance is effective for interim and annual reporting periods in years beginning after December 15, 2015, with early adoption permitted. We adopted this guidance, which did not have a material impact on our consolidated financial statements. In September 2015, the FASB issued updated guidance to simplify measurement-period adjustments in business combinations. The updated guidance eliminated the requirement that an acquirer in a business combination account for measurement-period adjustments retrospectively. Instead, an acquirer will recognize a measurement-period adjustment during the period in which it determines the amount of the adjustment. The updated guidance was effective for interim and annual reporting periods beginning after December 15, 2015, with early adoption permitted. We adopted this guidance, which did not have a material impact on our consolidated financial statements. In May 2014, the FASB issued an accounting standard that will supersede existing revenue recognition guidance under current U.S. GAAP. The new standard is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods and services. The accounting standard is effective for us in the first quarter of fiscal 2019. Companies may use either a full retrospective or a modified retrospective approach to adopt this standard. We are currently evaluating the impact and method of the adoption of this guidance on our consolidated financial statements. In January 2015, the FASB issued an amendment to the accounting guidance related to the income statement presentation of extraordinary and unusual items. The amendment eliminates from U.S. GAAP the concept of extraordinary items. The guidance is effective for us in the first quarter of fiscal 2017. We do not expect the adoption of this guidance to have an impact on our consolidated financial statements. In January 2016, the FASB issued guidance that generally requires |
Stock Repurchase and Dividends
Stock Repurchase and Dividends | 12 Months Ended |
Oct. 02, 2016 | |
Stock Repurchase and Dividends | |
Stock Repurchase and Dividends | 3. Stock Repurchase and Dividends On November 10, 2014, the Board of Directors authorized a stock repurchase program under which we could repurchase up to $200 million of our common stock over the succeeding two years. In fiscal 2016, we repurchased through open market purchases under this program a total of 3,468,062 shares at an average price of $28.69, for a total cost of $99.5 million. On November 9, 2015, the Board of Directors declared a quarterly cash dividend of $0.08 per share payable on December 11, 2015 to stockholders of record as of the close of business on November 30, 2015. On January 25, 2016, the Board of Directors declared a quarterly cash dividend of $0.08 per share payable on February 26, 2016 to stockholders of record as of the close of business on February 12, 2016. On April 25, 2016, the Board of Directors declared a quarterly cash dividend of $0.09 per share payable on May 27, 2016 to stockholders of record as of the close of business on May 13, 2016. On July 25, 2016, the Board of Directors declared a quarterly cash dividend of $0.09 per share payable on August 31, 2016 to stockholders of record as of the close of business on August 12, 2016. Dividends totaling $19.7 million and $18.2 million were paid in fiscal 2016 and fiscal 2015, respectively. Subsequent Events. On November 7, 2016, the Board of Directors declared a quarterly cash dividend of $0.09 per share payable on December 14, 2016 to stockholders of record as of the close of business on December 1, 2016. The Board also authorized a new stock repurchase program under which we could repurchase up to $200 million of our common stock. |
Accounts Receivable - Net and R
Accounts Receivable - Net and Revenue Recognition | 12 Months Ended |
Oct. 02, 2016 | |
Accounts Receivable - Net and Revenue Recognition | |
Accounts Receivable - Net and Revenue Recognition | 4. Accounts Receivable – Net and Revenue Recognition Net accounts receivable and billings in excess of costs on uncompleted contracts consisted of the following at October 2, 2016 and September 27, 2015: October 2, September 27, (in thousands) Billed $ $ Unbilled Contract retentions Total accounts receivable – gross Allowance for doubtful accounts ) ) Total accounts receivable – net $ $ Billings in excess of costs on uncompleted contracts $ $ 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 October 2, 2016 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 (or other third parties) 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 October 2, 2016 and September 27, 2015 included $45 million and $53 million, respectively, related to claims, including requests for equitable adjustment, on contracts that provide for price redetermination. During fiscal 2016, we collected $13.4 million to settle claims of $8.8 million, which resulted in gains in operating income of $4.6 million in the RCM reportable segment. 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. In fiscal 2016, we also recognized reductions to operating income in our RCM segment and a related increase in the allowance for doubtful accounts of $7.9 million as a result of our updated assessment of the collectability of certain accounts receivable, of which $4.6 million related to unsettled claims. In fiscal 2015, we settled two claims related to completed transportation projects in the RCM segment totaling $31 million for cash proceeds of $29 million and, as a result, recognized reduced revenue and operating income of $2.0 million. Billed accounts receivable related to U.S. federal government contracts were $47.4 million and $61.9 million at October 2, 2016 and September 27, 2015, respectively. U.S. federal government unbilled receivables were $92.2 million and $74.2 million at October 2, 2016 and September 27, 2015, respectively. Other than the U.S. federal government, no single client accounted for more than 10% of our accounts receivable at October 2, 2016 and September 27, 2015. |
Mergers and Acquisitions
Mergers and Acquisitions | 12 Months Ended |
Oct. 02, 2016 | |
Mergers and Acquisitions | |
Mergers and Acquisitions | 5. Mergers and Acquisitions In fiscal 2014, we made immaterial acquisitions that enhanced our service offerings and expanded our geographic presence in our WEI and RME segments. In fiscal 2015, we acquired Cornerstone Environmental Group, LLC ("CEG"), headquartered in Middletown, New York. CEG is an environmental engineering and consulting firm focused on solid waste markets in the United States, and is included in our RME segment. The fair value of the purchase price for CEG was $15.9 million. Of this amount, $11.8 million was paid to the former owners and $4.1 million was the estimated fair value of contingent earn-out obligations, with a maximum of $9.8 million, based upon the achievement of specified financial objectives. The results of this acquisition were included in the consolidated financial statements from the closing date. The acquisition was not considered material to our consolidated financial statements. As a result, no pro forma information has been provided. On January 18, 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, and is part of our RME segment. In addition to Australia, Coffey's international development business has operations supporting federal government agencies in the U.S. 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 the second quarter of 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 WEI 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. The following table summarizes the estimated fair values of assets acquired and liabilities assumed as of the respective acquisition dates for our acquisitions completed in fiscal 2016 (in thousands): Accounts receivable $ Other current assets Property and equipment Goodwill Backlog and trade name intangible assets Other assets Current liabilities ) Borrowings ) Other long-term liabilities ) Net assets acquired $ 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. Specifically, goodwill additions related to the fiscal 2016 acquisitions primarily represent the value of workforces with distinct expertise in the international development, geoscience, and software applications management markets. The goodwill addition related to the fiscal 2015 acquisition primarily represents the value of the workforce with distinct expertise in the solid waste market. 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. Backlog and trade name intangible assets include the fair value of existing contracts and the underlying customer relationships with lives ranging from 1 to 5 years (weighted average of approximately 3 years) and the fair value of trade names with lives ranging from 3 to 5 years. The purchase price allocation is preliminary and subject to adjustment based upon the final determination of the net assets acquired and information necessary to perform the final valuation. We have not yet completed our final assessment of the fair values of purchased receivables, intangible assets, tax balances, contingent liabilities or acquired contracts. The final purchase price allocations may result in adjustments to certain assets and liabilities, including the residual amount allocated to goodwill. Goodwill recognized largely results from a substantial and technically qualified assembled workforce, which does not qualify for separate recognition, as well as expected future synergies from combining operations. The table below presents summarized unaudited consolidated pro forma operating results including the related acquisition, integration and debt pre-payment charges, assuming we had acquired Coffey and INDUS at the beginning of fiscal 2015. These pro-forma operating results are presented for illustrative purposes only and are not indicative of the operating results that would have been achieved had the related events occurred at the beginning of fiscal 2015. Pro-Forma Fiscal Year Ended October 2, September 27, (in thousands, except per share data) Revenue $ $ Operating income Net income attributable to Tetra Tech Earnings per share attributable to Tetra Tech Basic $ $ Diluted $ $ Since their respective acquisition dates, Coffey and INDUS combined contributed $320.6 million in revenue and $13.6 million in operating income for fiscal 2016. Amortization of intangible assets since their respective acquisition dates was $6.7 million for 2016. Acquisition and integration expenses in the accompanying consolidated statements of income are comprised of the following: Fiscal Year Ended (in thousands) Severance including change in control payments $ Professional services Real estate-related Total $ As of October 2, 2016, all of the acquisition and integration expenses incurred to date have been paid. All acquisition and integration expenses are included in our Corporate reportable segment, as presented in Note 19. In addition, in the second quarter of fiscal 2016, we repaid Coffey's bank loans and corporate bonds in full, including $1.9 million in pre-payment charges that are included in interest expense. 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. 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. 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. This valuation included our updated projection of CEG's financial performance during the earn-out period, which exceeded our original estimate at the acquisition date. 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. During fiscal 2015, we decreased our contingent earn-out liabilities and reported a related gain in operating income of $3.1 million. This gain resulted from an updated valuation of the contingent consideration liability for Caber Engineering Inc. ("Caber"), which is part of our RME segment. The acquisition agreement for Caber included a contingent earn-out agreement based on the achievement of operating income thresholds (in Canadian dollars) in each of the first two years beginning on the acquisition date, which was in the first quarter of fiscal 2014. The maximum earn-out obligation over the two-year earn-out period was C$8.0 million (C$4.0 million in each year). These amounts could be earned on a pro-rata basis for operating income within a predetermined range in each year. Caber was required to meet a minimum operating income threshold in each year to earn any contingent consideration. These thresholds were C$4.0 million and C$4.6 million in years one and two, respectively. In order to earn the maximum contingent consideration, Caber needed to generate operating income of C$4.4 million in year one and C$5.1 million in year two. The determination of the fair value of the purchase price for Caber on the acquisition date included our estimate of the fair value of the related contingent earn-out obligation. This initial valuation was primarily based on probability-weighted internal estimates of Caber's operating income during each earn-out period. As a result of these estimates, we calculated an initial fair value at the acquisition date of Caber's contingent earn-out liability of C$6.5 million in the first quarter of fiscal 2014. In determining that Caber would earn 81% of the maximum potential earn-out, we considered several factors including Caber's recent historical revenue and operating income levels and growth rates. We also considered the recent trend in Caber's backlog level and the prospects for the oil and gas industry in Western Canada. Caber's actual financial performance in the first earn-out period exceeded our original estimate at the acquisition date. As a result, in the fourth quarter of fiscal 2014, we increased the related contingent consideration liability and recognized a loss of $1.0 million. This updated valuation included our assumption that Caber would earn the maximum amount of contingent consideration of $4.0 million in the first earn-out period. In the second quarter of fiscal 2015, we completed our final calculation of the contingent consideration for the first earn-out period and paid contingent consideration of C$4.0 million (USD$3.2 million). At that time we also evaluated our estimate of Caber's contingent consideration liability for the second earn-out period. This assessment included a review of the status of ongoing projects in Caber's backlog, and the inventory of prospective new contract awards. We also considered the status of the oil and gas industry in Western Canada, particularly in light of the decline in oil prices at the time. As a result of this assessment, we concluded that Caber's operating income in the second earn-out period would be lower than our original estimate at the acquisition date and our subsequent estimates through the first quarter of fiscal 2015. We also concluded that Caber's operating income for the second earn-out period would be lower than the minimum requirement of C$4.6 million to earn any contingent consideration. Accordingly, in the second quarter of fiscal 2015, we reduced the Caber contingent earn-out liability to $0, which resulted in a gain of $3.1 million. The second earn-out period ended in the first quarter of fiscal 2016 with no further adjustments. The fiscal 2014 net gains primarily resulted from updated valuations of the contingent consideration liabilities for Parkland Pipeline ("Parkland") and American Environmental Group ("AEG"), which are both part of our RME segment. The acquisition agreement for Parkland included a contingent earn-out agreement based on the achievement of operating income thresholds (in Canadian dollars) in each of the first three years beginning on the acquisition date, which was in the second quarter of fiscal 2013. The maximum earn-out obligation over the three-year earn-out period was C$56.0 million (C$12.0 million, C$22.0 million and C$22.0 million in earn-out years one, two and three, respectively). These amounts could be earned primarily on a pro-rata basis for operating income within a predetermined range in each year. To a lesser extent, additional earn-out consideration could be earned for operating income above the high-end of the range up to the contractual maximum of C$56.0 million. Parkland was required to meet a minimum operating income threshold in each year in order to earn any contingent consideration. These thresholds were C$34.7 million, C$38.2 million and C$41.9 million in years one, two and three, respectively. In order to earn the maximum contingent consideration, Parkland would need to generate operating income of C$42.5 million in year one, C$46.4 million in year two, and C$50.6 million in year three. The determination of the fair value of the purchase price for Parkland on the acquisition date included our estimate of the fair value of the related contingent earn-out obligation. This initial valuation was primarily based on probability-weighted internal estimates of Parkland's operating income during each earn-out period. As a result of these estimates, we calculated an initial fair value at the acquisition date of Parkland's contingent earn-out liability of C$46.8 million in the second quarter of fiscal 2013. In determining that Parkland would attain 84% of the maximum potential earn-out, we considered several factors including Parkland's recent historical revenue and operating income levels and growth rates, the recent trend in Parkland's backlog, and the prospects for the midstream oil and gas industry in Western Canada. As discussed below, in fiscal 2014, we recorded decreases in our contingent earn-out liability for Parkland and reported related net gains in operating income of $44.6 million. These gains resulted from Parkland's actual and projected post-acquisition performance falling below our initial expectations concerning the likelihood and timing of achieving the relevant operating income thresholds. The remaining difference compared to the initial value was due to currency translation, and the related liability was $0 at the end of fiscal 2014. In the second quarter of fiscal 2014, we updated the estimated cost to complete a large fixed-price contract at Parkland, and determined that the project would be break-even compared to the significant profit estimated the previous quarter when the project was initiated. As a result, during the second quarter of fiscal 2014 we reversed $5.3 million of profit previously recognized on the project. This variance, and our updated estimate that the revenue for the remainder of the project would produce no operating income, resulted in our conclusion that Parkland's operating income in the first and second earn-out periods would fall below the minimum operating income thresholds in each such year. As a result, we reduced the contingent earn-out liability for the first and second earn-out periods to $0, which resulted in gains totaling $24.7 million ($5.6 million and $19.1 million in the first and second quarters of fiscal 2014, respectively). In the fourth quarter of fiscal 2014, we updated our projection of Parkland's operating income for the third earn-out period. This assessment included a review of the projects in Parkland's backlog, the inventory of prospective new contract awards, and the forecast for economic activity in the Western Canada oil and gas sector. As a result of this assessment, we concluded that Parkland's operating income in the third earn-out period would be lower than our original estimate at the acquisition date and would fall below the minimum operating income threshold. As a result, we reduced the remaining contingent earn-out liability balance for the third earn-out period to $0, which resulted in a gain of $19.9 million. The acquisition agreement for AEG 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. The maximum earn-out obligation over the two-year earn-out period was $27.1 million ($11.3 million annually plus a $4.5 million one-time payment based on minimum operating income in each year). The annual amounts could be earned primarily on a pro-rata basis for operating income within a predetermined range in each year. To a lesser extent, additional earn-out consideration could be earned for operating income above the high-end of the range up to the contractual maximum of $27.1 million. AEG was required to meet a minimum operating income threshold in each year in order to earn any contingent consideration. These minimum thresholds were $10.0 million and $11.0 million in years one and two, respectively. In order to earn the maximum contingent consideration, AEG would need to achieve operating income of $17.5 million in year one and $18.5 million in year two. In addition, if AEG achieved operating income of at least $9.0 million during both earn-out periods, AEG would receive $4.5 million at the end of the second earn-out period. The determination of the fair value of the purchase price for AEG on the acquisition date included our estimate of the fair value of the related contingent earn-out obligation. This initial valuation was primarily based on probability-weighted internal estimates of AEG's operating income during each earn-out period. As a result of these estimates, we calculated an initial fair value at the acquisition date of AEG's contingent earn-out liability of $21.5 million in the second quarter of fiscal 2013. In determining that AEG would attain 79% of the maximum potential earn-out we considered several factors including AEG's recent historical revenue and operating income levels and growth rates. We also considered the recent trend in AEG's backlog level and the prospects for the solid waste industry in the United States. AEG's first earn-out period ended on the last day of the first quarter of fiscal 2014. As a result, during the first quarter of fiscal 2014, we performed a preliminary calculation of the contingent consideration for the first earn-out period and concluded that AEG's operating income in that period would be higher than both our original estimate at the acquisition date and our previous quarterly estimates. As a result, we increased the contingent earn-out liability for the first earn-out period, which resulted in an additional expense of $1.0 million. The contingent consideration of $9.1 million for the first earn-out period was paid in the second quarter of fiscal 2014. During calendar 2014, which corresponds to AEG's second earn-out period, adverse weather conditions hindered AEG's ability to complete its project field work. As a result, in the third quarter of fiscal 2014, we updated our projection of AEG's operating income for its second earn-out period. This assessment included a review of the status of on-going projects in AEG's backlog, and the inventory of prospective new contract awards. As a result of this assessment, we concluded that AEG's operating income in the second earn-out period would be significantly lower than our original estimate at the acquisition date, would fall below the minimum operating income threshold, but would still exceed $9.0 million of operating income in order to earn the additional tranche. As a result, we reduced the contingent earn-out liability, which resulted in a gain of $8.9 million in the third quarter of fiscal 2014. During the fourth quarter of fiscal 2014, we performed an updated projection of AEG's operating income for its second earn-out period based on actual results and the forecast for the remainder of the second earn-out period. Based on this analysis, we concluded that AEG's operating income in the second earn-out period would be lower than the $9.0 million needed to receive the $4.5 million of contingent consideration that remained accrued for performance in both earn-out years. As a result, we reduced the contingent earn-out liability to $0, which resulted in a gain of $4.5 million in the fourth quarter of fiscal 2014, and net gains of $13.2 million for all of fiscal 2014. Each time we determined that Caber's, AEG's and Parkland's operating income would be lower than our original estimate at the acquisition date, we also evaluated the related goodwill for potential impairment. In each case, we determined that the lower income projections were the result of temporary events, and did not negatively impact the reporting unit's longer term performance or result in a goodwill impairment. At October 2, 2016, there was a total maximum of $15.5 million of outstanding contingent consideration related to acquisitions. Of this amount, $8.8 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 October 2, September 27, September 28, (in thousands) Beginning balance (at fair value) $ $ $ Estimated earn-out liabilities for acquisitions during the fiscal year Increases due to re-measurement of fair value reported in interest expense Net increase (decrease) due to re-measurement of fair value reported as losses (gains) in operating income ) ) Foreign exchange impact – ) ) Earn-out payments: Reported as cash used in operating activities – – ) Reported as cash used in financing activities ) ) ) Ending balance (at fair value) $ $ $ |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Oct. 02, 2016 | |
Goodwill and Intangible Assets | |
Goodwill and Intangible Assets | 6. Goodwill and Intangible Assets The following table summarizes the changes in the carrying value of goodwill: WEI RME Total (in thousands) Balance at September 28, 2014 $ $ $ Goodwill additions – Foreign exchange translation ) ) ) Goodwill impairment ) ) ) Balance at September 27, 2015 Goodwill additions Goodwill adjustment – Foreign exchange translation Balance at October 2, 2016 $ $ $ We perform our annual goodwill impairment review at the beginning of our fiscal fourth quarter. Our last review at June 27, 2016 (i.e. the first day of our fourth quarter in fiscal 2016), 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. We had no reporting units that had estimated fair values that exceeded their carrying values by less than 20%, excluding the impact of acquisitions completed within the last two fiscal years. 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. In the fourth quarter of fiscal 2015, the mining sector continued to contract in response to lower global growth expectations driven in large part by China's actual and projected slower economic growth. Consistent with this trend, our mining customers continued their curtailment of capital spending for new mining projects. As a result, our Global Mining Practice ("GMP") reporting unit experienced a 25% decline in revenue in the fourth quarter of fiscal 2015 compared to the same period of fiscal 2014. This negative trend was compared to the expected revenue growth of approximately 3% in the previous goodwill impairment test, performed as of June 30, 2014. In response to these results, we performed a strategic review of GMP in the fourth quarter of fiscal 2015, and determined that our mining activities would likely decline further in fiscal 2016, and that revenue and profits would not return to acceptable levels of performance in the foreseeable future. We also decided to redeploy a significant portion of our mining resources into other operational areas that have better growth and profitability prospects. Consequently, as of the first day of fiscal 2016, GMP was no longer a reporting unit. We considered GMP's financial performance and prospects in our goodwill impairment analysis in the fourth quarter of fiscal 2015 and determined that GMP's fair value had fallen significantly below its carrying value, including goodwill. As required, we performed further analysis to measure the amount of the impairment loss and, as a result, we wrote-off all of GMP's goodwill and identifiable intangible assets and recorded a related impairment charge of $60.8 million ($57.3 million after-tax) in the fourth quarter of fiscal 2015. The related goodwill and identifiable intangible assets that were determined not to be recoverable totaled $58.1 million and $2.7 million, respectively. Our fourth quarter 2016 and 2015 goodwill impairment reviews indicated that we had no other 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 impact relates to our foreign subsidiaries with functional currencies that are different than our reporting currency. The gross amounts of goodwill for WEI were $304.4 million and $293.1 million at October 2, 2016 and September 27, 2015, respectively, excluding $82.4 million of accumulated impairment. The gross amounts of goodwill for RME were $529.2 million and $423.8 million at October 2, 2016 and September 27, 2015, respectively, excluding $33.2 million of accumulated impairment. The gross amount and accumulated amortization of our acquired identifiable intangible assets with finite useful lives included in "Intangible assets – net" on the consolidated balance sheets, were as follows: Fiscal Year Ended October 2, 2016 September 27, 2015 Weighted- Gross Accumulated Gross Accumulated ($ in thousands) Non-compete agreements $ $ ) $ $ ) Client relations ) ) Backlog ) ) Technology and trade names ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total $ $ ) $ $ ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign currency translation adjustments reduced net identifiable intangible assets by $1.1 million in fiscal 2016. Amortization expense for the identifiable intangible assets for fiscal 2016, 2015 and 2014 was $22.1 million, $20.2 million and $27.3 million, respectively. Estimated amortization expense for the succeeding five years and beyond is as follows: Amount (in thousands) 2017 $ 2018 2019 2020 2021 Beyond Total $ |
Property and Equipment
Property and Equipment | 12 Months Ended |
Oct. 02, 2016 | |
Property and Equipment | |
Property and Equipment | 7. Property and Equipment Property and equipment consisted of the following: Fiscal Year Ended October 2, September 27, (in thousands) Land and buildings $ $ Equipment, furniture and fixtures Leasehold improvements Total property and equipment Accumulated depreciation ) ) Property and equipment, net $ $ The depreciation expense related to property and equipment, including assets under capital leases, was $22.8 million, $23.1 million and $26.5 million for fiscal 2016, 2015 and 2014, respectively. In fiscal 2015, we sold assets with a net book value of $4.4 million for net proceeds of $10.4 million, and recognized a corresponding net gain of $6.0 million, which is included in "Other costs of revenue" in our consolidated statements of income. This equipment was primarily related to our RCM segment. |
Income Taxes
Income Taxes | 12 Months Ended |
Oct. 02, 2016 | |
Income Taxes | |
Income Taxes | 8. Income Taxes The income before income taxes, by geographic area, was as follows: Fiscal Year Ended October 2, September 27, September 28, (in thousands) Income (loss) before income taxes: United States $ $ $ Foreign ) Total income before income taxes $ $ $ Income tax expense consisted of the following: Fiscal Year Ended October 2, September 27, September 28, (in thousands) Current: Federal $ $ $ State Foreign Total current income tax expense Deferred: Federal State ) Foreign ) ) ) Total deferred income tax expense (benefit) ) Total income tax expense $ $ $ 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 October 2, September 27, September 28, Tax at federal statutory rate % % % State taxes, net of federal benefit Research and Development ("R&D") credits ) ) ) Domestic production deduction ) ) ) Tax differential on foreign earnings ) ) ) Non-deductible executive compensation – – Goodwill and contingent consideration – ) Stock compensation Valuation allowance Change in uncertain tax positions ) – – Other Total income tax expense % % % Our effective tax rates for fiscal 2016 and 2015 were 32.6% and 51.2%, respectively. In fiscal 2016, we incurred $13.3 million of acquisition and integration expenses and debt pre-payment fees for which no tax benefit was recognized. Of this amount, $6.4 million resulted from acquisition expenses that were not tax deductible, and $6.9 million resulted from integration expenses and debt pre-payment fees incurred in jurisdictions with current and historical net operating losses where the related deferred tax asset was fully reserved. Additionally, during the first quarter of fiscal 2016, the Protecting Americans from Tax Hikes Act of 2015 was signed into law which permanently extended the federal R&D credits retroactive to January 1, 2015. Our income tax expense for fiscal 2016 included a tax benefit of $2.0 million attributable to operating income during the last nine months of fiscal 2015, primarily related to the retroactive recognition of the R&D credits. Our income tax expense for fiscal 2015 included a similar retroactive tax benefit of $1.2 million attributable to operating income during the last nine months of fiscal 2014. Our effective tax rate in fiscal 2015 also reflected the impact of the $60.8 million goodwill and intangible asset impairment charge, of which most was not tax deductible. Excluding these items, our effective tax rates for fiscal 2016 and 2015 were 30.9% and 32.5%, respectively. The lower tax rate this year primarily reflects a measurement change in tax positions taken in prior years relating primarily to developments in our ongoing IRS examination that reduced our effective tax rate by 2.0% in fiscal 2016. We are currently under examination by the Internal Revenue Service for fiscal years 2010 through 2013, and by the California Franchise Tax Board for fiscal years 2004 through 2009. We are also subject to various other state audits. With a few exceptions, we are no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations for fiscal years before 2010. Temporary differences comprising the net deferred income tax liability shown on the accompanying consolidated balance sheets were as follows: Fiscal Year Ended October 2, September 27, (in thousands) Deferred Tax Asset: State taxes $ $ Reserves and contingent liabilities Allowance for doubtful accounts Accrued liabilities Stock-based compensation Intangibles – Loss carry-forwards Valuation allowance ) ) Total deferred tax asset Deferred Tax Liability: Unbilled revenue ) ) Prepaid expense ) ) Intangibles ) ) Property and equipment ) ) Total deferred tax liability ) ) Net deferred tax liability $ ) $ ) At October 2, 2016, undistributed earnings of our foreign subsidiaries, primarily in Canada, amounting to approximately $65.9 million are expected to be permanently reinvested. Accordingly, no provision for U.S. income taxes or foreign withholding taxes has been made. Upon distribution of those earnings, we would be subject to U.S. income taxes and foreign withholding taxes. Assuming the permanently reinvested foreign earnings were repatriated under the laws and rates applicable at October 2, 2016, the incremental federal tax applicable to those earnings would be approximately $5.9 million. At October 2, 2016, we had available unused state net operating loss ("NOL") carry forwards of $43.7 million that expire at various dates from 2022 to 2036; and available foreign NOL carry forwards of $74.2 million, of which $15.0 million expire at various dates from 2022 to 2036, and $59.2 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 $25.4 million has been provided. At October 2, 2016, we had $22.8 million of unrecognized tax benefits. Included in the balance of unrecognized tax benefits at the end of fiscal year 2016 were $22.8 million of tax benefits that, 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 October 2, September 27, September 28, (in thousands) Beginning balance $ $ $ Additions for current year tax positions Additions for prior year tax positions Reductions for prior year tax positions ) ) – Settlements – ) ) Ending balance $ $ $ We recognize potential interest and penalties related to unrecognized tax benefits in income tax expense. During fiscal years 2016 and 2015, we accrued additional interest income of $0.2 million and interest expense of $0.4 million, respectively, and recorded reductions in accrued interest of $0 million and $0.5 million, respectively, as a result of audit settlements and other prior-year adjustments. The amount of interest and penalties accrued at October 2, 2016 and September 27, 2015 was $1.0 million and $1.2 million, respectively. |
Long-Term Debt
Long-Term Debt | 12 Months Ended |
Oct. 02, 2016 | |
Long-Term Debt | |
Long-Term Debt | 9. Long-Term Debt Long-term debt consisted of the following: Fiscal Year Ended October 2, September 27, (in thousands) Credit facilities $ $ Other Total long-term debt Less: Current portion of long-term debt ) ) Long-term debt, less current portion $ $ On May 7, 2013, we entered into a credit agreement that provided for a $205 million term loan facility and a $460 million revolving credit facility both maturing in May 2018. On May 29, 2015, we entered into a third amendment to our credit agreement (as amended, the "Credit Agreement") that extended the maturity date for the term loan and the revolving credit facility to May 2020. The Credit Agreement is a $654.8 million senior secured, five-year facility that provides for a $194.8 million term loan facility ( the "Term Loan Facility") and a $460 million revolving credit facility (the "Revolving Credit Facility"). The Credit Agreement allows us to, among other things, finance certain permitted open market repurchases of our common stock, permitted acquisitions, and cash dividends and distributions. The Revolving Credit Facility includes a $150 million sublimit for the issuance of standby letters of credit, a $20 million sublimit for swingline loans, and a $150 million sublimit for multicurrency borrowings. The interest rate provisions of the term loan and the revolving credit facility did not materially change. The Term Loan Facility is subject to quarterly amortization of principal, with $10.3 million payable in year 1, and $15.4 million payable in years 2 through 5. The Term Loan may be prepaid at any time without penalty. We may borrow on the Revolving Credit Facility, at our option, at either (a) a Eurocurrency rate plus a margin that ranges from 1.15% to 2.00% 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 0.15% to 1.00% per annum. In each case, the applicable margin is based on our Consolidated Leverage Ratio, calculated quarterly. The Term Loan Facility is subject to the same interest rate provisions. The interest rate of the Term Loan Facility at the date of inception was 1.57%. The Credit Agreement expires on May 29, 2020, or earlier at our discretion upon payment in full of loans and other obligations. As of October 2, 2016, we had $346.8 million in outstanding borrowings under the Credit Agreement, which was comprised of $176.8 million under the Term Loan Facility and $170 million under the Revolving Credit Facility at a weighted-average interest rate of 1.92% per annum. In addition, we had $1.3 million in standby letters of credit under the Credit Agreement. Our effective weighted-average interest rate on borrowings outstanding at October 2, 2016 under the Credit Agreement, including the effects of interest rate swap agreements described in Note 14, "Derivative Financial Instruments", was 2.52%. At October 2, 2016, we had $288.7 million of available credit under the Revolving Credit Facility, of which $222.4 million could be borrowed without a violation of our debt covenants. In addition, we entered into agreements with three banks to issue up to $53 million in standby letters of credit. The aggregate amount of standby letters of credit outstanding under these additional facilities and other bank guarantees was $25.3 million, of which $6.0 million was issued in currencies other than the U.S. dollar. The 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 Credit Agreement) and a minimum Consolidated Fixed Charge Coverage Ratio of 1.25 to 1.00 (EBITDA, as defined in the Credit Agreement minus capital expenditures, cash interest plus taxes plus principal payments of indebtedness including capital leases, notes and post-acquisition payments). At October 2, 2016, we were in compliance with these covenants with a consolidated leverage ratio of 1.91x and a consolidated fixed charge coverage ratio of 2.82x. 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. At the time of the acquisition, Coffey had an existing secured credit facility with a bank, comprised of an overdraft facility, a term facility and a bank guaranty facility. This facility was amended in March 2016 to extend the term of the existing facility to April 8, 2016, and allow for the issuance of a parent guarantee and release of certain subsidiary guarantors. On April 8, 2016, the facility was amended again to provide for a secured AUD$30 million facility, which may be used by Coffey for bank overdrafts, short-term cash advances or bank guarantees. This facility expires in April 2017, is secured by assets of certain Australian and New Zealand subsidiaries, and is supported by a parent guarantee. At October 2, 2016, amounts outstanding under this facility consisted solely of bank guarantees of $5.6 million. The following table presents scheduled maturities of our long-term debt: Amount (in thousands) 2017 $ 2018 2019 2020 2021 and beyond – Total $ |
Leases
Leases | 12 Months Ended |
Oct. 02, 2016 | |
Leases | |
Leases | 10. Leases We lease office and field equipment, vehicles and buildings under various operating leases. In fiscal 2016, 2015 and 2014, we recognized $75.0 million, $66.4 million and $70.0 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) 2017 $ $ 2018 2019 2020 – 2021 – Beyond – Total $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less: Amounts representing interest ​ ​ ​ ​ ​ ​ ​ ​ Net present value $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ We vacated certain facilities under long-term non-cancelable leases and recorded contract termination costs of $2.9 million in fiscal 2016 and $0 million in fiscal 2015. 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 2025. 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: WEI RME RCM Total (in thousands) Balance at September 28, 2014 $ $ $ $ Adjustments (1) ) ) ) ) Balance at September 27, 2015 $ Cost transfer between groups ) – – Cost incurred and charged to expense – Adjustments (1) ) ) ) ) Balance as October 2, 2016 $ $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (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 |
Oct. 02, 2016 | |
Stockholders' Equity and Stock Compensation Plans | |
Stockholders' Equity and Stock Compensation Plans | 11. Stockholders' Equity and Stock Compensation Plans At October 2, 2016, 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 and restricted stock and restricted stock units ("RSUs"). Options granted before March 6, 2006 vest 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 further awards will be made under the 2005 EIP. • 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. At October 2, 2016, there were 3.7 million shares available for future awards pursuant to the 2015 EIP. The stock-based compensation and related income tax benefits were as follows: Fiscal Year Ended October 2, September 27, September 28, (in thousands) Total stock-based compensation $ $ $ Income tax benefit related to stock-based compensation ) ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stock-based compensation, net of tax benefit $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stock Options Stock option activity for the fiscal year ended October 2, 2016 was as follows: Number of Weighted- Weighted- Aggregate Outstanding on September 27, 2015 $ Granted Exercised ) Forfeited ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Outstanding at October 2, 2016 $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Vested or expected to vest at October 2, 2016 $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Exercisable on October 2, 2016 $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 2016 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 October 2, 2016. This amount will change based on the fair market value of our stock. At October 2, 2016, we expect to recognize $3.5 million of unrecognized compensation cost related to stock option grants over a weighted-average period of 4 years. The weighted-average fair value of stock options granted during fiscal 2016, 2015 and 2014 was $8.05, $8.20 and $9.36, respectively. The aggregate intrinsic value of options exercised during fiscal 2016, 2015 and 2014 was $7.3 million, $2.3 million and $9.3 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 October 2, September 27, September 28, Dividend yield 1.2% 1.0% – Expected stock price volatility 36.1% – 38.8% 36.2% – 38.8% 36.1% – 38.8% Risk-free rate of return, annual 1.6% – 1.8% 1.5% – 1.7% 1.3% – 1.5% For purposes of the Black-Scholes model, forfeitures were estimated based on historical experience. For the fiscal 2016, 2015 and 2014 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 $18.0 million, $10.8 million and $23.8 million for fiscal 2016, 2015 and 2014, 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 2016, 2015 and 2014 was $5.3 million, $3.0 million and $4.6 million, respectively. Restricted Stock, PSUs and RSUs The fair value of the total compensation cost of each restricted stock award was determined at the date of grant using the market price of the underlying common stock as of the date of grant. For 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. Restricted stock activity for the fiscal year ended October 2, 2016 was as follows: Number of Weighted- Nonvested balance at September 27, 2015 $ Granted Vested ) Forfeited ) ​ ​ ​ ​ ​ ​ ​ ​ Nonvested balance at October 2, 2016 $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Vested or expected to vest at October 2, 2016 $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ In fiscal 2016, 2015 and 2014, we awarded 0 shares, 0 shares and 117,067 shares, respectively, of restricted stock to certain of our executive officers and non-employee directors. Vesting is performance-based, such that the percentage of awarded shares that ultimately vests, from 0% to 140%, is dependent on fiscal year EPS growth rates for the three fiscal years that end after the award date. In fiscal 2016 and 2015, an additional 13,932 shares and 15,605 shares, respectively, were awarded for performance-based adjustments in excess of 100% vesting. Restricted stock forfeitures resulted from performance-based vesting of less than 100%. Forfeited shares return to the pool of authorized shares available for award. PSU activity for the fiscal year ended October 2, 2016 was as follows: Number of Weighted- Nonvested balance at September 27, 2015 $ Granted ​ ​ ​ ​ ​ ​ ​ ​ Nonvested balance at October 2, 2016 $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ In fiscal 2016, we awarded 137,777 PSUs to our executive officers and non-employee directors at the weighted-average fair value of $31.63 per share on the award date. 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 50% on the growth in our EPS and 50% on our relative total shareholder return over the vesting period. RSU activity for the fiscal year ended October 2, 2016 was as follows: Number of Weighted- Nonvested balance at September 27, 2015 $ Granted Vested ) Forfeited ) ​ ​ ​ ​ ​ ​ ​ ​ Nonvested balance at October 2, 2016 $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ In fiscal 2016, we also awarded 216,539 RSUs to our employees at a weighted average fair value of $27.14 per share on the award date. All of the RSUs have time-based vesting over a four-year period, except that RSUs awarded to directors vest after one year. At October 2, 2016, there were 499,021 RSUs outstanding. RSU forfeitures result from employment terminations prior to vesting. Forfeited shares return to the pool of authorized shares available for award. In fiscal 2015, we awarded 234,685 RSUs to our employees at the weighted average fair value of $27.21 per share on the award date. All of the RSUs have time-based vesting over a four-year period, except that RSUs awarded to directors vest after one year. At September 27, 2015, there were 483,111 RSUs outstanding. RSU forfeitures result from employment terminations prior to vesting. Forfeited shares return to the pool of authorized shares available for award. The stock-based compensation expense related to restricted stock, PSUs and RSUs for fiscal years 2016, 2015 and 2014 was $10.3 million, $7.5 million and $4.6 million, respectively, and was included in the total stock-based compensation expense. At October 2, 2016, there was $13.5 million of unrecognized compensation costs related to restricted stock, PSUs and RSUs that will be substantially recognized by the end of fiscal 2019. 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 October 2, September 27, September 28, (in thousands, except for purchase price) Shares purchased Weighted-average purchase price $ $ $ Cash received from exercise of purchase rights $ $ $ Aggregate intrinsic value $ $ $ 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 October 2, September 27, September 28, Dividend yield % % – Expected stock price volatility % % % Risk-free rate of return, annual % % % Expected life (in years) For fiscal 2016, 2015 and 2014, 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. Included in stock-based compensation expense for fiscal 2016, 2015 and 2014 was $0.4 million, $0.6 million and $0.7 million, respectively, related to the ESPP. The unrecognized stock-based compensation costs for awards granted under the ESPP at October 2, 2016 and September 27, 2015 were $0.1 million. At October 2, 2016, ESPP participants had accumulated $2.8 million to purchase our common stock. |
Retirement Plans
Retirement Plans | 12 Months Ended |
Oct. 02, 2016 | |
Retirement Plans | |
Retirement Plans | 12. 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 2016, 2015 and 2014, employer contributions to the plans were $10.7 million, $9.8 million and $9.6 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 October 2, 2016 and September 27, 2015, the consolidated balance sheets reflect assets of $20.9 million and $19.5 million, respectively, related to the deferred compensation plan in "Other long-term assets," and liabilities of $20.8 million and $19.3 million, respectively, related to the deferred compensation plan in "Other long-term liabilities." |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Oct. 02, 2016 | |
Earnings Per Share | |
Earnings Per Share | 13. Earnings Per Share The following table sets forth the number of weighted-average shares used to compute basic and diluted EPS: Fiscal Year Ended October 2, September 27, September 28, (in thousands, except per share data) Net income attributable to Tetra Tech $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted-average common shares outstanding – basic Effect of diluted stock options and unvested restricted stock ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted-average common stock outstanding – diluted ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Earnings per share attributable to Tetra Tech: Basic $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Diluted $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For 2016, 2015 and 2014, 0, 1.0 million and 0 options were excluded from the calculation of dilutive potential common shares, respectively. 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 |
Oct. 02, 2016 | |
Derivative Financial Instruments | |
Derivative Financial Instruments | 14. 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 accounting hedges in our consolidated balance sheets as accumulated other comprehensive income (loss). In fiscal 2013, we entered into three interest rate swap agreements that we have 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. At October 2, 2016 and September 27, 2015, the effective portion of our interest rate swap agreements designated as cash flow hedges before tax effect was $1.6 million and $2.3 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 October 2, 2016, the notional principal, fixed rates and related expiration dates of our outstanding interest rate swap agreements are as follows: Notional Amount Fixed Expiration $ % May 2018 % May 2018 % May 2018 % May 2018 % May 2018 The fair values of our outstanding derivatives designated as hedging instruments were as follows: Fair Value of Derivative Balance Sheet Location October 2, September 27, (in thousands) Interest rate swap agreements Other current liabilities $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The impact of the effective portions of derivative instruments in cash flow hedging relationships on income and other comprehensive income from our interest rate swap agreements was immaterial for the fiscal years ended October 2, 2016 and September 27, 2015. Additionally, there were no ineffective portions of derivative instruments. Accordingly, no amounts were excluded from effectiveness testing for our foreign currency forward contracts and interest rate swap agreements. We had no derivative instruments that were not designated as hedging instruments for fiscal 2016, 2015 and 2014. |
Reclassifications Out of Accumu
Reclassifications Out of Accumulated Other Comprehensive Income (Loss) | 12 Months Ended |
Oct. 02, 2016 | |
Reclassifications Out of Accumulated Other Comprehensive Income (Loss) | |
Reclassifications Out of Accumulated Other Comprehensive Income (Loss) | 15. Reclassifications Out of Accumulated Other Comprehensive Income (Loss) The accumulated balances and reporting period activities for fiscal 2016 and 2015 related to reclassifications out of accumulated other comprehensive income (loss) are summarized as follows: Foreign Gain (Loss) Accumulated (in thousands) Balances at September 28, 2014 $ ) $ $ ) Other comprehensive loss before reclassifications ) ) ) Amounts reclassified from accumulated other comprehensive income Interest rate contracts, net of tax (1) – ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net current-period other comprehensive loss ) ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balances at September 27, 2015 $ ) $ ) $ ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other comprehensive loss before reclassifications Amounts reclassified from accumulated other comprehensive income Interest rate contracts, net of tax (1) – ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net current-period other comprehensive loss ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balances at October 2, 2016 $ ) $ ) $ ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (1) This accumulated other comprehensive component is reclassified in "Interest expense" in our consolidated statements of operations. See Note 14, "Derivative Financial Instruments", for more information. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Oct. 02, 2016 | |
Fair Value Measurements | |
Fair Value Measurements | 16. 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, "Mergers and Acquisitions" 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, as described in Note 2, "Basis of Presentation and Preparation – Fair Value of Financial Instruments"). The carrying value of our long-term debt approximated fair value at October 2, 2016 and September 27, 2015. At October 2, 2016, we had borrowings of $346.8 million outstanding under our Credit Agreement, which were used to fund our business acquisitions, working capital needs, share repurchases, dividends, capital expenditures and contingent earn-outs (see Note 9, "Long-Term Debt" for more information). |
Joint Ventures
Joint Ventures | 12 Months Ended |
Oct. 02, 2016 | |
Joint Ventures | |
Joint Ventures | 17. Joint Ventures Consolidated Joint Ventures The aggregate revenue of the consolidated joint ventures was $3.7 million, $7.5 million and $12.3 million for fiscal 2016, 2015 and 2014, respectively. The assets and liabilities of these consolidated joint ventures were immaterial at fiscal 2016, 2015 and 2014 year-ends. These assets are restricted for use only by those joint ventures and are not available for our general operations. Cash and cash equivalents maintained by the consolidated joint ventures at October 2, 2016 and September 27, 2015 were $0.2 million and $0.7 million, respectively. Unconsolidated Joint Ventures We account for our unconsolidated joint ventures using the equity method of accounting. Under this method, we recognize our proportionate share of the net earnings of these joint ventures within "Other costs of revenue" in our consolidated statements of income. For fiscal 2016, 2015 and 2014, we reported $1.7 million, $5.1 million and $2.8 million of equity in earnings of unconsolidated joint ventures, respectively. Our maximum exposure to loss as a result of our investments in unconsolidated variable interest entities is typically limited to the aggregate of the carrying value of the investment. Future funding commitments for the unconsolidated joint ventures are immaterial. The unconsolidated joint ventures are, individually and in aggregate, immaterial to our consolidated financial statements. The aggregate carrying values of the assets and liabilities of the unconsolidated joint ventures were $15.6 million and $13.5 million, respectively, at October 2, 2016, and $17.1 million and $15.2 million, respectively, at September 27, 2015. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Oct. 02, 2016 | |
Commitments and Contingencies | |
Commitments and Contingencies | 18. 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. |
Reportable Segments
Reportable Segments | 12 Months Ended |
Oct. 02, 2016 | |
Reportable Segments | |
Reportable Segments | 19. Reportable Segments Our reportable segments are described as follows: WEI: WEI provides consulting and engineering services worldwide for a broad range of water and infrastructure-related needs in both developed and emerging economies. WEI supports both public and private clients including federal, state/provincial, and local governments, and global and local commercial clients. The primary markets for WEI's services include water resources analysis and water management, environmental restoration, government consulting, and a broad range of civil infrastructure master planning and engineering design for facilities, transportation, and regional and local development. WEI's services span from early data collection and monitoring, to data analysis and information technology, to science and engineering applied research, to engineering design, to construction management and operations and maintenance. RME: RME provides consulting and engineering services worldwide for a broad range of resource management and energy needs. RME supports both private and public clients, including global industrial and commercial clients, U.S. federal agencies in large scale remediation, and major international development agencies. The primary markets for RME's services include natural resources, energy, international development, remediation, waste management and utilities. RME's services span from early data collection and monitoring, to data analysis and information technology, to science and engineering applied research, to engineering design, to construction management and operations and maintenance. RME also supports EPCM for full service implementation of commercial projects. RCM: We report the results of the wind-down of our non-core construction activities in the RCM reportable segment. The remaining work to be performed in this segment will be substantially completed in fiscal 2017. 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 sales and transfers as if the sales and transfers 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, as described in Note 5, "Mergers and Acquisitions". The following tables set forth summarized financial information concerning our reportable segments: Reportable Segments Fiscal Year Ended October 2, September 27, September 28, (in thousands) Revenue WEI $ $ $ RME RCM Elimination of inter-segment revenue ) ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total revenue $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating Income WEI $ $ $ RME RCM ) ) ) Corporate (1) ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total operating income $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Depreciation WEI $ $ $ RME RCM Corporate ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total depreciation $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (1) Includes goodwill and other intangible assets impairment charges, amortization of intangibles, other costs and other income not allocable to segments. The impairment charges of $60.8 million for fiscal 2015 was recorded at Corporate. The intangible asset amortization expense for fiscal 2016, 2015 and 2014 was $22.1 million, $20.2 million and $27.3 million, respectively. Corporate results also included income (loss) for fair value adjustments to contingent consideration liabilities of $(2.8) million, $3.1 million and $58.7 million for fiscal 2016, 2015 and 2014, respectively. Fiscal 2016 also included $19.5 million of acquisition and integration related expenses recorded at Corporate. October 2, September 27, (in thousands) Total Assets WEI $ $ RME RCM Corporate (1) ​ ​ ​ ​ ​ ​ ​ ​ Total assets $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (1) Corporate assets consist of intercompany eliminations and assets not allocated to segments including goodwill, intangible assets, deferred income taxes and certain other assets. Geographic Information Fiscal Year Ended October 2, 2016 September 27, 2015 September 28, 2014 Revenue Long-Lived (2) Revenue Long-Lived (2) Revenue Long-Lived (2) (in thousands) United States $ $ $ $ $ $ Foreign countries (1) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (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 other 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 October 2, September 27, September 28, (in thousands) Client Sector International (1) $ $ $ U.S commercial U.S. federal government (2) U.S. state and local government ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (1) Includes revenue generated from foreign operations, primarily in Canada and Australia, and revenue generated from non-U.S. clients. (2) Includes revenue generated under U.S. federal government contracts performed outside the United States. |
Quarterly Financial Information
Quarterly Financial Information-Unaudited | 12 Months Ended |
Oct. 02, 2016 | |
Quarterly Financial Information-Unaudited | |
Quarterly Financial Information-Unaudited | 20. Quarterly Financial Information – Unaudited In the opinion of management, the following unaudited quarterly data for the fiscal years ended October 2, 2016 and September 27, 2015 reflect all adjustments necessary for a fair statement of the results of operations. In fiscal 2016, we incurred Coffey-related acquisition and integration expenses totaling $19.5 million. These costs were recognized in the second, third, and fourth quarters of fiscal 2016 in the amounts of $15.9 million, $1.0 million, and $2.6 million, respectively. In addition, interest expense in fiscal 2016 includes Coffey-related debt pre-payment fees of $1.9 million that were incurred in the second quarter. As a result of GMP's financial performance and prospects, we wrote-off all of GMP's goodwill and intangible assets and recorded a related impairment charge of $60.8 million ($57.3 million after-tax) in the fourth quarter of fiscal 2015. First Second Third Fourth (in thousands, except per share data) Fiscal Year 2016 Revenue $ $ $ $ Operating income Net income attributable to Tetra Tech Earnings per share attributable to Tetra Tech (1) : Basic $ $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Diluted $ $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted-average common shares outstanding: Basic ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Diluted ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year 2015 Revenue $ $ $ $ Operating income (loss) ) Net income (loss) attributable to Tetra Tech ) Earnings (loss) per share attributable to Tetra Tech (1) : Basic $ $ $ $ ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Diluted $ $ $ $ ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted-average common shares outstanding: Basic ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Diluted ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (1) The sum of the quarterly EPS may not add up to the full-year EPS due to rounding. |
SCHEDULE II-VALUATION AND QUALI
SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS AND RESERVES | 12 Months Ended |
Oct. 02, 2016 | |
SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS AND RESERVES | |
SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS AND RESERVES | TETRA TECH, INC. For the Fiscal Years Ended Balance at Charged to Deductions (1) Other (2) Balance at Allowance for doubtful accounts: Fiscal 2014 $ $ $ ) $ ) $ Fiscal 2015 ) ) ) Fiscal 2016 ) Income tax valuation allowance: Fiscal 2014 $ $ $ – $ ) $ Fiscal 2015 – ) Fiscal 2016 – ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (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 Pre31
Basis of Presentation and Preparation (Policies) | 12 Months Ended |
Oct. 02, 2016 | |
Basis of Presentation and Preparation | |
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. Certain prior year amounts have been revised to conform to the current year presentation. |
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 2016, 2015 and 2014 contained 53, 52 and 52 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 ("U.S. 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 for most of our contracts using the percentage-of-completion method, primarily based on contract costs incurred to date compared to total estimated contract costs. We generally utilize the cost-to-cost approach to estimate the progress towards completion in order to determine the amount of revenue and profit to recognize. Revenue and cost estimates for each significant contract are reviewed and reassessed quarterly. Changes in those estimates could result in 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. Changes in revenue and cost estimates could also result in a projected loss that would be recorded immediately in earnings. For fiscal years 2016, 2015 and 2014, we recognized net unfavorable operating income adjustments of $2.3 million, $8.9 million and $35.9 million, respectively, due to changes in estimates. As of October 2, 2016 and September 27, 2015, we recorded a liability for anticipated losses of $6.7 million and $10.5 million, respectively. The estimated cost to complete the related contracts as of October 2, 2016 was $23.6 million. Certain of our contracts are service-related contracts, such as providing operations and maintenance services or a variety of technical assistance services. Our service contracts are accounted for using the proportional performance method under which revenue is recognized in proportion to the number of service activities performed, in proportion to the direct costs of performing the service activities, or evenly across the period of performance depending upon the nature of the services provided. We recognize revenue for work performed under three major types of contracts: fixed-price, time-and-materials and cost-plus. Fixed-Price. We enter into two major types of fixed-price contracts: firm fixed-price ("FFP") and fixed-price per unit ("FPPU"). Under FFP contracts, our clients pay us an agreed fixed-amount negotiated in advance for a specified scope of work. We generally recognize revenue on FFP 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. Under our FPPU contracts, clients pay us a set fee for each service or production transaction that we complete. Accordingly, we recognize revenue under FPPU contracts as we complete the related service or production transactions, generally using the proportional performance method. 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 generally 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. The 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 all highly liquid investments with maturities of 90 days or less at the date of purchase. Restricted cash of $2.5 million was included in "Prepaid expenses and other current assets" on the consolidated balance sheet at fiscal 2016 year-end. For cash held by our consolidated joint ventures, see Note 17, "Joint Ventures." |
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. We include any adjustments to these liabilities in our consolidated results of operations. |
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 October 2, 2016 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 June 27, 2016 (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 (See Note 6, "Goodwill and Intangible Assets" for further discussion). 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 is a two-step process involving 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 the reporting unit is not considered impaired; therefore, the second step of the impairment test is unnecessary. If the carrying amount of a reporting unit exceeds its fair value, we perform the second step of the goodwill impairment test to measure the amount of impairment loss to be recorded. If our goodwill is impaired, we are required to record a non-cash charge that could have a material adverse effect on our consolidated financial statements. |
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 (see Note 9, "Long-Term Debt" and Note 14, "Derivative Financial Instruments" for additional disclosure). 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 and a combined California franchise 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 October 2, 2016 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 22% of accounts receivable were due from various agencies of the U.S. federal government at fiscal 2016 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 42.4%, 29.5% and 28.1% of our fiscal 2016 revenue was generated from our U.S government, U.S. commercial and international clients, respectively (see Note 19, "Reportable Segments" for more information). |
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 results of operations, with the exception of intercompany foreign transactions that are considered long-term investments, which are recorded in "Accumulated other comprehensive income (loss)" on the consolidated balance sheets. |
Recently Adopted and Pending Accounting Guidance | Recently Adopted and Pending Accounting Guidance. In November 2015, the Financial Accounting Standards Board ("FASB") issued updated guidance as a part of its ongoing Simplification Initiative, with the objective of reducing complexity in accounting standards. The updated guidance requires that all deferred tax assets and liabilities, along with any related valuation allowance, be classified as noncurrent on the balance sheet. This guidance does not change the offsetting requirements for deferred tax liabilities and assets, which results in the presentation of one amount on the balance sheet. We adopted this guidance prospectively as of October 2, 2016, and our consolidated balance sheet reflects the new guidance for classification of deferred taxes. In February 2015, the FASB issued updated guidance which changes the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. The updated guidance is effective for interim and annual reporting periods in years beginning after December 15, 2015, with early adoption permitted. We adopted this guidance, which did not have an impact on our consolidated financial statements. In April 2015, the FASB issued updated guidance intended to simplify, and provide consistency to, the presentation of debt issuance costs. The new standard requires that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of the debt liability, consistent with debt discounts. The updated guidance is effective for interim and annual reporting periods in years beginning after December 15, 2015, with early adoption permitted. We adopted this guidance, which did not have a material impact on our consolidated financial statements. We had $2.6 million of unamortized debt issuance costs at October 2, 2016. In August 2015, the FASB issued updated guidance relating to the SEC Staff Announcement at the June 18, 2015 Emerging Issues Task Force meeting on the presentation and subsequent measurement of debt issuance costs associated with line-of-credit arrangements. The updated guidance allows for the deferral and presentation of debt issuance costs as an asset which may be amortized ratably over the term of the line-of-credit arrangement, regardless of whether there are any related outstanding borrowings. The updated guidance is effective for interim and annual reporting periods in years beginning after December 15, 2015, with early adoption permitted. We adopted this guidance, which did not have a material impact on our consolidated financial statements. In September 2015, the FASB issued updated guidance to simplify measurement-period adjustments in business combinations. The updated guidance eliminated the requirement that an acquirer in a business combination account for measurement-period adjustments retrospectively. Instead, an acquirer will recognize a measurement-period adjustment during the period in which it determines the amount of the adjustment. The updated guidance was effective for interim and annual reporting periods beginning after December 15, 2015, with early adoption permitted. We adopted this guidance, which did not have a material impact on our consolidated financial statements. In May 2014, the FASB issued an accounting standard that will supersede existing revenue recognition guidance under current U.S. GAAP. The new standard is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods and services. The accounting standard is effective for us in the first quarter of fiscal 2019. Companies may use either a full retrospective or a modified retrospective approach to adopt this standard. We are currently evaluating the impact and method of the adoption of this guidance on our consolidated financial statements. In January 2015, the FASB issued an amendment to the accounting guidance related to the income statement presentation of extraordinary and unusual items. The amendment eliminates from U.S. GAAP the concept of extraordinary items. The guidance is effective for us in the first quarter of fiscal 2017. We do not expect the adoption of this guidance to have an impact on our consolidated financial statements. In January 2016, the 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 annual and interim reporting periods beginning after December 15, 2017. We do not expect the adoption of this guidance to have a significant impact on our consolidated financial statements. In February 2016, the FASB issued guidance that primarily requires lessees to recognize most leases on their balance sheets but record expenses on their income statements in a manner similar to current accounting. For lessors, the guidance modifies the classification criteria and the accounting for sales-type and direct financing leases. The guidance is effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted. We are currently evaluating the impact that this guidance will have on our consolidated financial statements. In March 2016, the FASB issued updated guidance which requires excess tax benefits and deficiencies on share-based payments to be recorded as income tax expense or benefit in the income statement rather than being recorded in additional paid-in capital. This guidance is effective for annual and interim periods beginning after December 15, 2016, with early adoption permitted. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements. 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 annual and interim periods beginning after December 15, 2019, with early adoption 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 annual and interim periods beginning after December 15, 2017, with early adoption permitted. We are currently evaluating the impact that this guidance will have 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. The updated guidance also requires entities to disclose a comparison of income tax expense or benefit with statutory expectations and disclose the types of temporary differences and carryforwards that give rise to a significant portion of deferred income taxes. This guidance is effective for annual and interim periods beginning after December 15, 2017, with early adoption permitted. We are currently evaluating the impact that this guidance will have on our consolidated financial statements. |
Accounts Receivable - Net and32
Accounts Receivable - Net and Revenue Recognition (Tables) | 12 Months Ended |
Oct. 02, 2016 | |
Accounts Receivable - Net and Revenue Recognition | |
Net accounts receivable and billings in excess of costs on uncompleted contracts | October 2, September 27, (in thousands) Billed $ $ Unbilled Contract retentions Total accounts receivable – gross Allowance for doubtful accounts ) ) Total accounts receivable – net $ $ Billings in excess of costs on uncompleted contracts $ $ |
Mergers and Acquisitions (Table
Mergers and Acquisitions (Tables) | 12 Months Ended |
Oct. 02, 2016 | |
Mergers and Acquisitions | |
Summary of estimated fair values of assets acquired and liabilities assumed | The following table summarizes the estimated fair values of assets acquired and liabilities assumed as of the respective acquisition dates for our acquisitions completed in fiscal 2016 (in thousands): Accounts receivable $ Other current assets Property and equipment Goodwill Backlog and trade name intangible assets Other assets Current liabilities ) Borrowings ) Other long-term liabilities ) Net assets acquired $ |
Summary of consolidated pro forma operating results | Pro-Forma Fiscal Year Ended October 2, September 27, (in thousands, except per share data) Revenue $ $ Operating income Net income attributable to Tetra Tech Earnings per share attributable to Tetra Tech Basic $ $ Diluted $ $ |
Summary of acquisition and integration expenses | Fiscal Year Ended (in thousands) Severance including change in control payments $ Professional services Real estate-related Total $ |
Summary of changes in the carrying value of estimated contingent earn-out liabilities | Fiscal Year Ended October 2, September 27, September 28, (in thousands) Beginning balance (at fair value) $ $ $ Estimated earn-out liabilities for acquisitions during the fiscal year Increases due to re-measurement of fair value reported in interest expense Net increase (decrease) due to re-measurement of fair value reported as losses (gains) in operating income ) ) Foreign exchange impact – ) ) Earn-out payments: Reported as cash used in operating activities – – ) Reported as cash used in financing activities ) ) ) Ending balance (at fair value) $ $ $ |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Oct. 02, 2016 | |
Goodwill and Intangible Assets | |
Schedule of carrying value of goodwill | WEI RME Total (in thousands) Balance at September 28, 2014 $ $ $ Goodwill additions – Foreign exchange translation ) ) ) Goodwill impairment ) ) ) Balance at September 27, 2015 Goodwill additions Goodwill adjustment – Foreign exchange translation Balance at October 2, 2016 $ $ $ |
Summary of acquired identifiable intangible assets with finite useful lives | Fiscal Year Ended October 2, 2016 September 27, 2015 Weighted- Gross Accumulated Gross Accumulated ($ in thousands) Non-compete agreements $ $ ) $ $ ) Client relations ) ) Backlog ) ) Technology and trade names ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total $ $ ) $ $ ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Estimated amortization expense for the succeeding five years and beyond | Amount (in thousands) 2017 $ 2018 2019 2020 2021 Beyond Total $ |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Oct. 02, 2016 | |
Property and Equipment | |
Schedule of components of property and equipment | Fiscal Year Ended October 2, September 27, (in thousands) Land and buildings $ $ Equipment, furniture and fixtures Leasehold improvements Total property and equipment Accumulated depreciation ) ) Property and equipment, net $ $ |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Oct. 02, 2016 | |
Income Taxes | |
Schedule of income before income taxes, by geographical area | Fiscal Year Ended October 2, September 27, September 28, (in thousands) Income (loss) before income taxes: United States $ $ $ Foreign ) Total income before income taxes $ $ $ |
Schedule of components of income tax expense | Fiscal Year Ended October 2, September 27, September 28, (in thousands) Current: Federal $ $ $ State Foreign Total current income tax expense Deferred: Federal State ) Foreign ) ) ) Total deferred income tax expense (benefit) ) Total income tax expense $ $ $ |
Schedule of reconciliation of income tax expense and effective income tax rates | Fiscal Year Ended October 2, September 27, September 28, Tax at federal statutory rate % % % State taxes, net of federal benefit Research and Development ("R&D") credits ) ) ) Domestic production deduction ) ) ) Tax differential on foreign earnings ) ) ) Non-deductible executive compensation – – Goodwill and contingent consideration – ) Stock compensation Valuation allowance Change in uncertain tax positions ) – – Other Total income tax expense % % % |
Schedule of temporary differences comprising the net deferred income tax liability | Fiscal Year Ended October 2, September 27, (in thousands) Deferred Tax Asset: State taxes $ $ Reserves and contingent liabilities Allowance for doubtful accounts Accrued liabilities Stock-based compensation Intangibles – Loss carry-forwards Valuation allowance ) ) Total deferred tax asset Deferred Tax Liability: Unbilled revenue ) ) Prepaid expense ) ) Intangibles ) ) Property and equipment ) ) Total deferred tax liability ) ) Net deferred tax liability $ ) $ ) |
Reconciliation of the beginning and ending amounts of unrecognized tax benefits | Fiscal Year Ended October 2, September 27, September 28, (in thousands) Beginning balance $ $ $ Additions for current year tax positions Additions for prior year tax positions Reductions for prior year tax positions ) ) – Settlements – ) ) Ending balance $ $ $ |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 12 Months Ended |
Oct. 02, 2016 | |
Long-Term Debt | |
Schedule of long-term debt | Fiscal Year Ended October 2, September 27, (in thousands) Credit facilities $ $ Other Total long-term debt Less: Current portion of long-term debt ) ) Long-term debt, less current portion $ $ |
Schedule of maturities of long-term debt | Amount (in thousands) 2017 $ 2018 2019 2020 2021 and beyond – Total $ |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Oct. 02, 2016 | |
Leases | |
Schedule of amounts payable under non-cancelable operating and capital lease commitments | Operating Capital (in thousands) 2017 $ $ 2018 2019 2020 – 2021 – Beyond – Total $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less: Amounts representing interest ​ ​ ​ ​ ​ ​ ​ ​ Net present value $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Schedule of reconciliation of the beginning and ending balances of liabilities related to lease contract termination costs | WEI RME RCM Total (in thousands) Balance at September 28, 2014 $ $ $ $ Adjustments (1) ) ) ) ) Balance at September 27, 2015 $ Cost transfer between groups ) – – Cost incurred and charged to expense – Adjustments (1) ) ) ) ) Balance as October 2, 2016 $ $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (1) Adjustments of the actual timing and potential termination costs or realization of sublease income. |
Stockholders' Equity and Stoc39
Stockholders' Equity and Stock Compensation Plans (Tables) | 12 Months Ended |
Oct. 02, 2016 | |
Stockholders' Equity and Stock Compensation Plans | |
Schedule of the stock-based compensation and related income tax benefits | Fiscal Year Ended October 2, September 27, September 28, (in thousands) Total stock-based compensation $ $ $ Income tax benefit related to stock-based compensation ) ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stock-based compensation, net of tax benefit $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Schedule of stock option activity | Number of Weighted- Weighted- Aggregate Outstanding on September 27, 2015 $ Granted Exercised ) Forfeited ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Outstanding at October 2, 2016 $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Vested or expected to vest at October 2, 2016 $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Exercisable on October 2, 2016 $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Schedule of assumptions used in the calculation of the fair value of stock options using the Black-Scholes option pricing model | Fiscal Year Ended October 2, September 27, September 28, Dividend yield 1.2% 1.0% – Expected stock price volatility 36.1% – 38.8% 36.2% – 38.8% 36.1% – 38.8% Risk-free rate of return, annual 1.6% – 1.8% 1.5% – 1.7% 1.3% – 1.5% |
Schedule of restricted stock activity | Number of Weighted- Nonvested balance at September 27, 2015 $ Granted Vested ) Forfeited ) ​ ​ ​ ​ ​ ​ ​ ​ Nonvested balance at October 2, 2016 $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Vested or expected to vest at October 2, 2016 $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Schedule of performance-based awards | Number of Weighted- Nonvested balance at September 27, 2015 $ Granted ​ ​ ​ ​ ​ ​ ​ ​ Nonvested balance at October 2, 2016 $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Schedule of RSU activity | Number of Weighted- Nonvested balance at September 27, 2015 $ Granted Vested ) Forfeited ) ​ ​ ​ ​ ​ ​ ​ ​ Nonvested balance at October 2, 2016 $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Summary of shares purchased, weighted-average purchase price, cash received, and the aggregate intrinsic value for shares purchased under the ESPP | Fiscal Year Ended October 2, September 27, September 28, (in thousands, except for purchase price) Shares purchased Weighted-average purchase price $ $ $ Cash received from exercise of purchase rights $ $ $ Aggregate intrinsic value $ $ $ |
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 | Fiscal Year Ended October 2, September 27, September 28, Dividend yield % % – Expected stock price volatility % % % Risk-free rate of return, annual % % % Expected life (in years) |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Oct. 02, 2016 | |
Earnings Per Share | |
Schedule of number of weighted-average shares used to compute basic and diluted EPS | Fiscal Year Ended October 2, September 27, September 28, (in thousands, except per share data) Net income attributable to Tetra Tech $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted-average common shares outstanding – basic Effect of diluted stock options and unvested restricted stock ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted-average common stock outstanding – diluted ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Earnings per share attributable to Tetra Tech: Basic $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Diluted $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Derivative Financial Instrume41
Derivative Financial Instruments (Tables) | 12 Months Ended |
Oct. 02, 2016 | |
Derivative Financial Instruments | |
Schedule of notional principal, fixed rates and related expiration dates of outstanding interest rate swap agreements | Notional Amount Fixed Expiration $ % May 2018 % May 2018 % May 2018 % May 2018 % May 2018 |
Schedule of fair values of the entity's outstanding derivatives designated as hedging instruments | Fair Value of Derivative Balance Sheet Location October 2, September 27, (in thousands) Interest rate swap agreements Other current liabilities $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Reclassifications Out of Accu42
Reclassifications Out of Accumulated Other Comprehensive Income (Loss) (Tables) | 12 Months Ended |
Oct. 02, 2016 | |
Reclassifications Out of Accumulated Other Comprehensive Income (Loss) | |
Summary of reclassifications out of accumulated other comprehensive income (loss) | Foreign Gain (Loss) Accumulated (in thousands) Balances at September 28, 2014 $ ) $ $ ) Other comprehensive loss before reclassifications ) ) ) Amounts reclassified from accumulated other comprehensive income Interest rate contracts, net of tax (1) – ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net current-period other comprehensive loss ) ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balances at September 27, 2015 $ ) $ ) $ ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other comprehensive loss before reclassifications Amounts reclassified from accumulated other comprehensive income Interest rate contracts, net of tax (1) – ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net current-period other comprehensive loss ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balances at October 2, 2016 $ ) $ ) $ ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (1) This accumulated other comprehensive component is reclassified in "Interest expense" in our consolidated statements of operations. See Note 14, "Derivative Financial Instruments", for more information. |
Reportable Segments (Tables)
Reportable Segments (Tables) | 12 Months Ended |
Oct. 02, 2016 | |
Reportable Segments | |
Summarized financial information of reportable segments | Fiscal Year Ended October 2, September 27, September 28, (in thousands) Revenue WEI $ $ $ RME RCM Elimination of inter-segment revenue ) ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total revenue $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating Income WEI $ $ $ RME RCM ) ) ) Corporate (1) ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total operating income $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Depreciation WEI $ $ $ RME RCM Corporate ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total depreciation $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (1) Includes goodwill and other intangible assets impairment charges, amortization of intangibles, other costs and other income not allocable to segments. The impairment charges of $60.8 million for fiscal 2015 was recorded at Corporate. The intangible asset amortization expense for fiscal 2016, 2015 and 2014 was $22.1 million, $20.2 million and $27.3 million, respectively. Corporate results also included income (loss) for fair value adjustments to contingent consideration liabilities of $(2.8) million, $3.1 million and $58.7 million for fiscal 2016, 2015 and 2014, respectively. Fiscal 2016 also included $19.5 million of acquisition and integration related expenses recorded at Corporate. October 2, September 27, (in thousands) Total Assets WEI $ $ RME RCM Corporate (1) ​ ​ ​ ​ ​ ​ ​ ​ Total assets $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (1) Corporate assets consist of intercompany eliminations and assets not allocated to segments including goodwill, intangible assets, deferred income taxes and certain other assets. |
Schedule of geographic information | Fiscal Year Ended October 2, 2016 September 27, 2015 September 28, 2014 Revenue Long-Lived (2) Revenue Long-Lived (2) Revenue Long-Lived (2) (in thousands) United States $ $ $ $ $ $ Foreign countries (1) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (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 other intangible assets. |
Summary of revenue by client sector | Fiscal Year Ended October 2, September 27, September 28, (in thousands) Client Sector International (1) $ $ $ U.S commercial U.S. federal government (2) U.S. state and local government ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (1) Includes revenue generated from foreign operations, primarily in Canada and Australia, and revenue generated from non-U.S. clients. (2) Includes revenue generated under U.S. federal government contracts performed outside the United States. |
Quarterly Financial Informati44
Quarterly Financial Information-Unaudited (Tables) | 12 Months Ended |
Oct. 02, 2016 | |
Quarterly Financial Information-Unaudited | |
Schedule of unaudited quarterly data | First Second Third Fourth (in thousands, except per share data) Fiscal Year 2016 Revenue $ $ $ $ Operating income Net income attributable to Tetra Tech Earnings per share attributable to Tetra Tech (1) : Basic $ $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Diluted $ $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted-average common shares outstanding: Basic ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Diluted ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year 2015 Revenue $ $ $ $ Operating income (loss) ) Net income (loss) attributable to Tetra Tech ) Earnings (loss) per share attributable to Tetra Tech (1) : Basic $ $ $ $ ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Diluted $ $ $ $ ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted-average common shares outstanding: Basic ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Diluted ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (1) The sum of the quarterly EPS may not add up to the full-year EPS due to rounding. |
Description of Business (Detail
Description of Business (Details) | 12 Months Ended |
Oct. 02, 2016segment | |
Description of Business | |
Number of reportable segments | 2 |
Basis of Presentation and Pre46
Basis of Presentation and Preparation - Fiscal Year (Details) | 12 Months Ended | ||
Oct. 02, 2016 | Sep. 27, 2015 | Sep. 28, 2014 | |
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 | 371 days | 364 days | 364 days |
Basis of Presentation and Pre47
Basis of Presentation and Preparation - Revenue Recognition and Contract Costs (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Oct. 02, 2016USD ($) | Jun. 26, 2016USD ($) | Mar. 27, 2016USD ($) | Dec. 27, 2015USD ($) | Sep. 27, 2015USD ($) | Jun. 28, 2015USD ($) | Mar. 29, 2015USD ($) | Dec. 28, 2014USD ($) | Oct. 02, 2016USD ($)item | Sep. 27, 2015USD ($) | Sep. 28, 2014USD ($) | |
Revenue recognition and contract costs | |||||||||||
Unfavorable operating income adjustments | $ (47,190) | $ (39,085) | $ (16,650) | $ (32,930) | $ 20,047 | $ (40,721) | $ (30,398) | $ (36,612) | $ (135,855) | $ (87,684) | $ (153,833) |
Liability for anticipated losses | 6,700 | $ 10,500 | 6,700 | 10,500 | |||||||
Estimated cost to complete the related contracts | $ 23,600 | $ 23,600 | |||||||||
Number of types of contracts under which revenue is recognized | item | 3 | ||||||||||
Number of types of fixed-price contracts | item | 2 | ||||||||||
Contracts accounted for under the percentage-of-completion method of accounting | |||||||||||
Revenue recognition and contract costs | |||||||||||
Unfavorable operating income adjustments | $ 2,300 | $ 8,900 | $ 35,900 |
Basis of Presentation and Pre48
Basis of Presentation and Preparation - Cash and Cash Equivalents and Accounts Receivable (Details) $ in Millions | 12 Months Ended |
Oct. 02, 2016USD ($) | |
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" | $ 2.5 |
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 Pre49
Basis of Presentation and Preparation - Property and Equipment (Details) | 12 Months Ended |
Oct. 02, 2016 | |
Equipment | Maximum | |
Estimated useful lives | |
Estimated useful lives | 10 years |
Equipment | Minimum | |
Estimated useful lives | |
Estimated useful lives | 3 years |
Furniture and fixtures | Maximum | |
Estimated useful lives | |
Estimated useful lives | 10 years |
Furniture and fixtures | Minimum | |
Estimated useful lives | |
Estimated useful lives | 3 years |
Buildings | Maximum | |
Estimated useful lives | |
Estimated useful lives | 40 years |
Basis of Presentation and Pre50
Basis of Presentation and Preparation - Goodwill and Intangible Assets (Details) | 12 Months Ended |
Oct. 02, 2016item | |
Goodwill and Intangible Assets | |
Number of levels below reportable segments at which goodwill impairment testing is performed | 1 |
Number of steps involved in process of goodwill annual impairment test | 2 |
Basis of Presentation and Pre51
Basis of Presentation and Preparation - Contingent Consideration and Concentration of Credit Risk (Details) | 12 Months Ended |
Oct. 02, 2016item | |
Concentration of Credit Risk | |
Financial institutions, in any such number of which investment exposure is limited | 1 |
Accounts receivable due from various agencies of the U.S. federal government (as a percent) | 22.00% |
U.S. federal government | |
Concentration of Credit Risk | |
Revenue from customers (as a percent) | 42.40% |
U.S. commercial | |
Concentration of Credit Risk | |
Revenue from customers (as a percent) | 29.50% |
International | |
Concentration of Credit Risk | |
Revenue from customers (as a percent) | 28.10% |
Minimum | |
Contingent Consideration | |
Period for contingent earn-out payments | 2 years |
Maximum | |
Contingent Consideration | |
Period for contingent earn-out payments | 3 years |
Basis of Presentation and Pre52
Basis of Presentation and Preparation - Recently Adopted and Pending Accounting Guidance (Details) $ in Millions | Oct. 02, 2016USD ($) |
Basis of Presentation and Preparation | |
Unamortized debt issuance costs | $ 2.6 |
Stock Repurchase and Dividends
Stock Repurchase and Dividends (Details) - USD ($) $ / shares in Units, $ in Millions | Nov. 07, 2016 | Jul. 25, 2016 | Apr. 25, 2016 | Jan. 25, 2016 | Nov. 09, 2015 | Nov. 10, 2014 | Oct. 02, 2016 | Sep. 27, 2015 |
Maximum repurchase amount under stock repurchase program | $ 200 | |||||||
Period of stock repurchase program | 2 years | |||||||
Shares repurchased through open market purchases | 3,468,062 | |||||||
Average price of shares repurchased (in dollars per share) | $ 28.69 | |||||||
Cost of shares repurchased | $ 99.5 | |||||||
Quarterly cash dividend declared (in dollars per share) | $ 0.09 | $ 0.09 | $ 0.08 | $ 0.08 | ||||
Payment of dividends | $ 19.7 | $ 18.2 | ||||||
Subsequent Events | ||||||||
Maximum repurchase amount under stock repurchase program | $ 200 | |||||||
Quarterly cash dividend declared (in dollars per share) | $ 0.09 |
Accounts Receivable - Net and54
Accounts Receivable - Net and Revenue Recognition (Details) $ in Thousands | 12 Months Ended | |
Oct. 02, 2016USD ($) | Sep. 27, 2015USD ($)claim | |
Billed | $ 364,287 | $ 331,364 |
Unbilled | 356,147 | 311,823 |
Contract retentions | 29,135 | 24,333 |
Total accounts receivable - gross | 749,569 | 667,520 |
Allowance for doubtful accounts | (35,233) | (31,490) |
Total accounts receivable - net | 714,336 | 636,030 |
Billings in excess of costs on uncompleted contracts | $ 88,223 | 93,989 |
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 | $ 45,000 | 53,000 |
Billed accounts receivable related to U.S. federal government contracts | 47,400 | 61,900 |
U.S. federal government unbilled receivables | $ 92,200 | $ 74,200 |
Threshold percentage for disclosure of accounts receivable from a single client | 10.00% | 10.00% |
RCM | ||
Cash proceeds from claim settlement | $ 13,400 | $ 29,000 |
Claims settlement amount | 8,800 | $ 31,000 |
Decrease in operating income related to the increase in allowance for doubtful accounts | 7,900 | |
Increase in allowance for doubtful accounts | 7,900 | |
Collectability of certain accounts receivable | 4,600 | |
Number of claims settled | claim | 2 | |
Decrease in operating income resulted from settlement of claims | $ 2,000 | |
Revenue recognized resulted from settlement of claims | $ (2,000) | |
Gain (loss) from claim settlement | $ 4,600 |
Mergers and Acquisitions (Detai
Mergers and Acquisitions (Details) $ / shares in Units, $ in Thousands, CAD in Millions | Jan. 18, 2016USD ($)employee | Oct. 02, 2016USD ($) | Jun. 26, 2016USD ($) | Mar. 27, 2016USD ($) | Mar. 29, 2015CAD | Mar. 29, 2015USD ($) | Sep. 28, 2014USD ($) | Jun. 29, 2014USD ($) | Mar. 30, 2014USD ($) | Dec. 29, 2013CAD | Dec. 29, 2013USD ($) | Mar. 31, 2013CAD | Mar. 31, 2013USD ($) | Mar. 30, 2014USD ($) | Oct. 02, 2016USD ($)$ / shares | Sep. 27, 2015USD ($)$ / shares | Sep. 28, 2014USD ($) | Oct. 02, 2016USD ($) | Sep. 27, 2015USD ($) | Sep. 28, 2014USD ($) | Dec. 29, 2013USD ($) |
Business acquisition | |||||||||||||||||||||
Contingent earn-out liability | $ 8,800 | $ 0 | |||||||||||||||||||
Aggregate maximum of contingent consideration | 15,500 | ||||||||||||||||||||
Increase (Decrease) in contingent consideration | $ 2,800 | ||||||||||||||||||||
Gain (loss) on change in contingent consideration | (2,800) | $ (1,000) | |||||||||||||||||||
Estimated fair values of the assets acquired and liabilities assumed | |||||||||||||||||||||
Goodwill | 717,988 | 601,379 | $ 714,190 | ||||||||||||||||||
Pro forma operating results | |||||||||||||||||||||
Severance including change in control payments | 10,917 | ||||||||||||||||||||
Professional services | 5,685 | ||||||||||||||||||||
Real estate-related | 2,946 | ||||||||||||||||||||
Total | 19,548 | ||||||||||||||||||||
Pre-payment charges paid | $ 1,900 | 1,900 | |||||||||||||||||||
Contingent consideration liability | $ 8,757 | $ 7,030 | $ 81,789 | $ 81,789 | 4,169 | 7,030 | $ 81,789 | 8,757 | 4,169 | 7,030 | |||||||||||
Estimated contingent earn-out liabilities | |||||||||||||||||||||
Beginning balance (at fair value) | $ 81,789 | 81,789 | 4,169 | 7,030 | 81,789 | ||||||||||||||||
Estimated earn-out liabilities for acquisition during the fiscal year | 4,745 | 4,100 | 6,242 | ||||||||||||||||||
Increases due to re-measurement of fair value reported in interest expense | 271 | 136 | 1,846 | ||||||||||||||||||
Net increase (decrease) due to re-measurement of fair value reported as losses (gains) in operating income | 2,823 | (3,113) | (58,694) | ||||||||||||||||||
Foreign exchange impact | (785) | (3,507) | |||||||||||||||||||
Earn-out payments | |||||||||||||||||||||
Reported as cash used in operating activities | (1,984) | ||||||||||||||||||||
Reported as cash used in financing activities | (3,251) | (3,199) | (18,662) | ||||||||||||||||||
Ending balance (at fair value) | 8,757 | 7,030 | $ 8,757 | 4,169 | 7,030 | ||||||||||||||||
Maximum | |||||||||||||||||||||
Pro forma operating results | |||||||||||||||||||||
Period for contingent earn-out payments | 3 years | ||||||||||||||||||||
Minimum | |||||||||||||||||||||
Pro forma operating results | |||||||||||||||||||||
Period for contingent earn-out payments | 2 years | ||||||||||||||||||||
CEG | |||||||||||||||||||||
Business acquisition | |||||||||||||||||||||
Aggregate fair value of purchase prices | 15,900 | ||||||||||||||||||||
Cash paid to the sellers | 11,800 | ||||||||||||||||||||
Contingent earn-out liability | 4,100 | ||||||||||||||||||||
Aggregate maximum of contingent consideration | $ 9,800 | ||||||||||||||||||||
Increase (Decrease) in contingent consideration | $ 1,800 | ||||||||||||||||||||
Gain (loss) on change in contingent consideration | (1,800) | ||||||||||||||||||||
Coffey | |||||||||||||||||||||
Business acquisition | |||||||||||||||||||||
Aggregate fair value of purchase prices | $ 76,100 | ||||||||||||||||||||
Number of employees | employee | 3,300 | ||||||||||||||||||||
Secured bank debt assumed | $ 37,100 | ||||||||||||||||||||
Unsecured corporate bonds assumed | 28,000 | ||||||||||||||||||||
Estimated fair values of the assets acquired and liabilities assumed | |||||||||||||||||||||
Borrowings | $ (65,100) | ||||||||||||||||||||
Pro forma operating results | |||||||||||||||||||||
Total | $ 2,600 | $ 1,000 | $ 15,900 | 19,500 | |||||||||||||||||
INDUS | |||||||||||||||||||||
Business acquisition | |||||||||||||||||||||
Aggregate fair value of purchase prices | 18,700 | ||||||||||||||||||||
Cash paid to the sellers | 14,000 | ||||||||||||||||||||
Contingent earn-out liability | 4,700 | ||||||||||||||||||||
Aggregate maximum of contingent consideration | $ 8,000 | ||||||||||||||||||||
Earn-out period for operating income projection | 2 years | ||||||||||||||||||||
Coffey and INDUS | |||||||||||||||||||||
Estimated fair values of the assets acquired and liabilities assumed | |||||||||||||||||||||
Accounts receivable | 71,515 | ||||||||||||||||||||
Other current assets | 18,869 | ||||||||||||||||||||
Property and equipment | 14,218 | ||||||||||||||||||||
Goodwill | 107,618 | ||||||||||||||||||||
Backlog and trade name intangible assets | 29,445 | ||||||||||||||||||||
Other assets | 747 | ||||||||||||||||||||
Current liabilities | (77,606) | ||||||||||||||||||||
Borrowings | (65,086) | ||||||||||||||||||||
Other long-term liabilities | (4,885) | ||||||||||||||||||||
Net assets acquired | $ 94,835 | ||||||||||||||||||||
Pro forma operating results | |||||||||||||||||||||
Revenue | 2,714,658 | 2,749,653 | |||||||||||||||||||
Operating income | 152,676 | 73,209 | |||||||||||||||||||
Net income attributable to Tetra Tech | $ 98,871 | $ 20,689 | |||||||||||||||||||
Earnings per share attributable to Tetra Tech Basic (in dollars per share) | $ / shares | $ 1.70 | $ 0.33 | |||||||||||||||||||
Earnings per share attributable to Tetra Tech Diluted (in dollars per share) | $ / shares | $ 1.68 | $ 0.33 | |||||||||||||||||||
Revenue since date of acquisition | $ 320,600 | ||||||||||||||||||||
Operating income since date of acquisition | 13,600 | ||||||||||||||||||||
Amortization of intangible assets since date of acquisition | $ 6,700 | ||||||||||||||||||||
Coffey and INDUS | Maximum | Backlog And Trade Name Member | |||||||||||||||||||||
Estimated fair values of the assets acquired and liabilities assumed | |||||||||||||||||||||
Useful life of intangible assets | 5 years | ||||||||||||||||||||
Coffey and INDUS | Maximum | Trade names | |||||||||||||||||||||
Estimated fair values of the assets acquired and liabilities assumed | |||||||||||||||||||||
Useful life of intangible assets | 5 years | ||||||||||||||||||||
Coffey and INDUS | Minimum | Backlog And Trade Name Member | |||||||||||||||||||||
Estimated fair values of the assets acquired and liabilities assumed | |||||||||||||||||||||
Useful life of intangible assets | 1 year | ||||||||||||||||||||
Coffey and INDUS | Minimum | Trade names | |||||||||||||||||||||
Estimated fair values of the assets acquired and liabilities assumed | |||||||||||||||||||||
Useful life of intangible assets | 3 years | ||||||||||||||||||||
Coffey and INDUS | Weighted average | Backlog And Trade Name Member | |||||||||||||||||||||
Estimated fair values of the assets acquired and liabilities assumed | |||||||||||||||||||||
Useful life of intangible assets | 3 years | ||||||||||||||||||||
Caber | |||||||||||||||||||||
Business acquisition | |||||||||||||||||||||
Contingent earn-out liability | $ 0 | ||||||||||||||||||||
Aggregate maximum of contingent consideration | CAD | CAD 8 | ||||||||||||||||||||
Increase (Decrease) in contingent consideration | 1,000 | $ (3,100) | |||||||||||||||||||
Gain (loss) on change in contingent consideration | (1,000) | $ 3,100 | |||||||||||||||||||
Earn-out period for operating income projection | 2 years | 2 years | |||||||||||||||||||
Pro forma operating results | |||||||||||||||||||||
Potential earn-out to be paid each year | CAD | CAD 4 | ||||||||||||||||||||
Minimum operating income threshold to earn contingent consideration during year one | CAD | 4 | ||||||||||||||||||||
Minimum operating income threshold to earn contingent consideration during year two | CAD | 4.6 | ||||||||||||||||||||
Operating income to earn maximum consideration during the first year | CAD | 4.4 | ||||||||||||||||||||
Operating income to earn maximum consideration during the second year | CAD | 5.1 | ||||||||||||||||||||
Initial fair value of the contingent consideration | CAD | CAD 6.5 | ||||||||||||||||||||
Estimated potential earn-out (as a percent) | 81.00% | 81.00% | |||||||||||||||||||
Potential maximum earn-out to be paid | 4,000 | ||||||||||||||||||||
Earn-out paid to former owners | CAD 4 | 3,200 | |||||||||||||||||||
Gains (loss) on fair value adjustment in operating income | $ 3,100 | ||||||||||||||||||||
Parkland | |||||||||||||||||||||
Business acquisition | |||||||||||||||||||||
Contingent earn-out liability | $ 0 | 0 | 0 | $ 0 | |||||||||||||||||
Gain (loss) on change in contingent consideration | 19,900 | 19,100 | $ 5,600 | $ 24,700 | |||||||||||||||||
Earn-out period for operating income projection | 3 years | 3 years | |||||||||||||||||||
Pro forma operating results | |||||||||||||||||||||
Minimum operating income threshold to earn contingent consideration during year one | CAD | CAD 34.7 | ||||||||||||||||||||
Minimum operating income threshold to earn contingent consideration during year two | CAD | 38.2 | ||||||||||||||||||||
Minimum operating income threshold to earn contingent consideration during year three | CAD | 41.9 | ||||||||||||||||||||
Operating income to earn maximum consideration during the first year | CAD | 42.5 | ||||||||||||||||||||
Operating income to earn maximum consideration during the second year | CAD | 46.4 | ||||||||||||||||||||
Operating income to earn maximum consideration during the third year | CAD | 50.6 | ||||||||||||||||||||
Initial fair value of the contingent consideration | CAD | CAD 46.8 | ||||||||||||||||||||
Estimated potential earn-out (as a percent) | 84.00% | 84.00% | |||||||||||||||||||
Potential maximum earn-out to be paid | CAD | CAD 56 | ||||||||||||||||||||
Potential earn-out to be paid in the first year | CAD | 12 | ||||||||||||||||||||
Potential earn-out to be paid in the second year | CAD | 22 | ||||||||||||||||||||
Potential earn-out to be paid in the third year | CAD | CAD 22 | ||||||||||||||||||||
Net gains on fair value adjustments in operating income | 44,600 | ||||||||||||||||||||
Net decrease in contingent earn-out liabilities | 44,600 | ||||||||||||||||||||
Profit previously recognized on project | 5,300 | ||||||||||||||||||||
AEG | |||||||||||||||||||||
Business acquisition | |||||||||||||||||||||
Contingent earn-out liability | $ 0 | ||||||||||||||||||||
Increase (Decrease) in contingent consideration | $ (8,900) | 1,000 | |||||||||||||||||||
Gain (loss) on change in contingent consideration | $ 8,900 | $ (1,000) | |||||||||||||||||||
Earn-out period for operating income projection | 2 years | 2 years | |||||||||||||||||||
Pro forma operating results | |||||||||||||||||||||
Minimum operating income threshold to earn contingent consideration during year one | $ 10,000 | ||||||||||||||||||||
Minimum operating income threshold to earn contingent consideration during year two | 11,000 | ||||||||||||||||||||
Operating income to earn maximum consideration during the first year | 17,500 | ||||||||||||||||||||
Operating income to earn maximum consideration during the second year | 18,500 | ||||||||||||||||||||
Initial fair value of the contingent consideration | $ 21,500 | ||||||||||||||||||||
Estimated potential earn-out (as a percent) | 79.00% | 79.00% | |||||||||||||||||||
Potential maximum earn-out to be paid | $ 27,100 | ||||||||||||||||||||
Net gains on fair value adjustments in operating income | 4,500 | $ 13,200 | |||||||||||||||||||
Annual payment amount | 11,300 | ||||||||||||||||||||
One-time payment | 4,500 | ||||||||||||||||||||
Minimum operating income in both years for earning one-time payment | 9,000 | 9,000 | |||||||||||||||||||
Earn-out provision paid for meeting second earn out provision | $ 4,500 | $ 4,500 | |||||||||||||||||||
Earn-outs paid to former owners reported as cash used in financing activities | $ 9,100 |
Goodwill and Intangible Asset56
Goodwill and Intangible Assets - Summary (Details) | Jun. 27, 2016USD ($)item | Jun. 30, 2014 | Sep. 27, 2015USD ($) | Oct. 02, 2016USD ($) | Sep. 27, 2015USD ($) |
Goodwill | |||||
Balance at beginning of the period | $ 601,379,000 | $ 714,190,000 | |||
Goodwill additions | 107,618,000 | 6,272,000 | |||
Foreign exchange translation | 7,304,000 | (60,965,000) | |||
Goodwill impairment | $ 0 | (58,118,000) | |||
Goodwill adjustment | 1,687,000 | ||||
Balance at end of the period | $ 601,379,000 | 717,988,000 | 601,379,000 | ||
Number of reporting units having fair value in excess of carrying value of less than 20%. | item | 0 | ||||
Impairment of goodwill and other intangible assets | 60,800,000 | 60,763,000 | |||
Impairment of goodwill and other intangible assets, net of tax | 57,300,000 | ||||
Identifiable intangible assets that were determined not to be recoverable | 2,700,000 | ||||
Minimum | |||||
Goodwill | |||||
Percentage of excess of fair value over carrying value | 20.00% | ||||
WEI | |||||
Goodwill | |||||
Balance at beginning of the period | 210,748,000 | 281,930,000 | |||
Goodwill additions | 9,080,000 | ||||
Foreign exchange translation | 2,125,000 | (27,479,000) | |||
Goodwill impairment | (43,703,000) | ||||
Balance at end of the period | 210,748,000 | 221,953,000 | 210,748,000 | ||
Gross amounts of goodwill | 293,100,000 | 304,400,000 | 293,100,000 | ||
Accumulated impairment | 82,400,000 | 82,400,000 | 82,400,000 | ||
RME | |||||
Goodwill | |||||
Balance at beginning of the period | 390,631,000 | 432,260,000 | |||
Goodwill additions | 98,538,000 | 6,272,000 | |||
Foreign exchange translation | 5,179,000 | (33,486,000) | |||
Goodwill impairment | (14,415,000) | ||||
Goodwill adjustment | 1,687,000 | ||||
Balance at end of the period | 390,631,000 | 496,035,000 | 390,631,000 | ||
Gross amounts of goodwill | 423,800,000 | 529,200,000 | 423,800,000 | ||
Accumulated impairment | $ 33,200,000 | $ 33,200,000 | $ 33,200,000 | ||
GMP | RME | |||||
Goodwill | |||||
Percentage of decline in revenue | 25.00% | ||||
Annual revenue growth rate (as a percent) | 3.00% |
Goodwill and Intangible Asset57
Goodwill and Intangible Assets - Amortization (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 02, 2016 | Sep. 27, 2015 | Sep. 28, 2014 | |
Finite-lived intangible assets | |||
Gross Amount | $ 144,044 | $ 112,116 | |
Accumulated Amortization | (95,082) | (71,784) | |
Foreign currency translation adjustments | 1,100 | ||
Amortization expense for intangible assets | 22,100 | 20,200 | $ 27,300 |
Estimated amortization expense | |||
2,017 | 22,617 | ||
2,018 | 14,295 | ||
2,019 | 6,989 | ||
2,020 | 3,755 | ||
2,021 | 666 | ||
Beyond | 640 | ||
Total | $ 48,962 | ||
Non-compete agreements | |||
Finite-lived intangible assets | |||
Weighted-Average Remaining Life | 7 months 6 days | ||
Gross Amount | $ 881 | 819 | |
Accumulated Amortization | $ (840) | (587) | |
Client relations | |||
Finite-lived intangible assets | |||
Weighted-Average Remaining Life | 3 years | ||
Gross Amount | $ 112,367 | 106,676 | |
Accumulated Amortization | $ (83,514) | (67,726) | |
Backlog | |||
Finite-lived intangible assets | |||
Weighted-Average Remaining Life | 2 years 2 months 12 days | ||
Gross Amount | $ 23,018 | 2,115 | |
Accumulated Amortization | $ (7,536) | (1,444) | |
Technology and trade names | |||
Finite-lived intangible assets | |||
Weighted-Average Remaining Life | 4 years | ||
Gross Amount | $ 7,778 | 2,506 | |
Accumulated Amortization | $ (3,192) | $ (2,027) |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 02, 2016 | Sep. 27, 2015 | Sep. 28, 2014 | |
Property and Equipment | |||
Property and equipment at cost, gross | $ 214,694 | $ 202,126 | |
Accumulated depreciation | (146,867) | (137,220) | |
Property and equipment, net | 67,827 | 64,906 | |
Depreciation expense related to property and equipment, including assets under capital leases | 22,756 | 23,110 | $ 26,452 |
Proceeds from sale of property and equipment | 3,076 | 10,426 | 4,594 |
Gain (loss) on disposal of property and equipment | 537 | 6,014 | (58) |
RCM | |||
Property and Equipment | |||
Depreciation expense related to property and equipment, including assets under capital leases | 736 | 1,801 | $ 2,958 |
Carrying value of property | 4,400 | ||
Proceeds from sale of property and equipment | 10,400 | ||
Gain (loss) on disposal of property and equipment | 6,000 | ||
Land and buildings | |||
Property and Equipment | |||
Property and equipment at cost, gross | 3,683 | 3,661 | |
Equipment, furniture and fixtures | |||
Property and Equipment | |||
Property and equipment at cost, gross | 180,750 | 176,883 | |
Leasehold improvements | |||
Property and Equipment | |||
Property and equipment at cost, gross | $ 30,261 | $ 21,582 |
Income Taxes - Summary (Details
Income Taxes - Summary (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 02, 2016 | Sep. 27, 2015 | Sep. 28, 2014 | |
Income (loss) before income taxes: | |||
United States | $ 113,576 | $ 118,822 | $ 118,900 |
Foreign | 10,890 | (38,501) | 25,443 |
Total income before income taxes | 124,466 | 80,321 | 144,343 |
Current: | |||
Federal | 22,277 | 23,836 | 26,503 |
State | 5,634 | 5,072 | 7,551 |
Foreign | 6,651 | 3,773 | 1,759 |
Total current income tax expense | 34,562 | 32,681 | 35,813 |
Deferred: | |||
Federal | 6,231 | 7,218 | 5,957 |
State | (16) | 2,335 | 434 |
Foreign | (164) | (1,141) | (6,536) |
Total deferred income tax expense (benefit) | 6,051 | 8,412 | (145) |
Total income tax expense | $ 40,613 | $ 41,093 | $ 35,668 |
Reconciliation of effective income tax rate | |||
Tax at federal statutory rate (as a percent) | 35.00% | 35.00% | 35.00% |
State taxes, net of federal benefit (as a percent) | 3.10% | 5.00% | 3.40% |
Research and Development ("R&D") credits (as a percent) | (3.40%) | (3.80%) | (0.60%) |
Domestic production deduction (as a percent) | (0.70%) | (0.80%) | (0.70%) |
Tax differential on foreign earnings (as a percent) | (5.50%) | (2.50%) | (5.50%) |
Non-deductible executive compensation (as a Percent) | 2.00% | ||
Goodwill and contingent consideration (as a percent) | 12.00% | (8.20%) | |
Stock compensation (as a percent) | 0.30% | 0.50% | 0.20% |
Valuation allowance (as a percent) | 2.40% | 5.70% | 0.30% |
Change in uncertain tax positions ( as a percent) | (2.00%) | ||
Other (as a percent) | 1.40% | 0.10% | 0.80% |
Total income tax expense (as a percent) | 32.60% | 51.20% | 24.70% |
Income Taxes - Acquisition and
Income Taxes - Acquisition and integration expenses information (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||
Sep. 27, 2015 | Oct. 02, 2016 | Sep. 27, 2015 | Sep. 28, 2014 | |
Income Taxes | ||||
Effective tax rate (as a percent) | 32.60% | 51.20% | 24.70% | |
Acquisition and integration expenses and debt pre-payment fees | $ 13.3 | |||
Income tax benefit on business combination acquisition and integration expenses and debt pre-payment fees | 0 | |||
Business combination acquisition related expenses | 6.4 | |||
Business combination integration costs and debt pre-payment fees | 6.9 | |||
R&D credits | $ 2 | $ 1.2 | ||
Impairment charge | $ 60.8 | $ 60.8 | ||
Effective income tax rate excluding R&D credits, acquisition expenses and debt pre-payment fees (as a percent) | 30.90% | 32.50% | ||
Decrease in income tax rate from developments in ongoing examinations | 2.00% |
Income Taxes - Reconciliation (
Income Taxes - Reconciliation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 02, 2016 | Sep. 27, 2015 | Sep. 28, 2014 | |
Deferred Tax Asset: | |||
State taxes | $ 697 | $ 1,746 | |
Reserves and contingent liabilities | 2,539 | 3,842 | |
Allowance for doubtful accounts | 3,817 | 4,115 | |
Accrued liabilities | 24,663 | 19,404 | |
Stock-based compensation | 10,684 | 10,516 | |
Intangibles | 2,910 | ||
Loss carry-forwards | 23,514 | 5,512 | |
Valuation allowance | (25,447) | (7,791) | |
Total deferred tax asset | 40,467 | 40,254 | |
Deferred Tax Liability: | |||
Unbilled revenue | (54,638) | (46,513) | |
Prepaid expense | (2,921) | (5,506) | |
Intangibles | (33,268) | (33,068) | |
Property and equipment | (9,358) | (10,713) | |
Total deferred tax liability | (100,185) | (95,800) | |
Net deferred tax liability | (59,718) | (55,546) | |
Undistributed earnings of foreign subsidiaries | 65,900 | ||
Incremental federal tax due to repatriation of foreign earnings | 5,900 | ||
Unrecognized tax benefits that would affect the effective tax rate, if recognized | $ 22,800 | ||
Period during which unrecognized tax benefits would affect the effective tax rate | 12 months | ||
Reconciliation of the beginning and ending amount of unrecognized tax benefits | |||
Beginning balance | $ 21,618 | 21,717 | $ 25,886 |
Additions for current year tax positions | 2,802 | 1,147 | 1,243 |
Additions for prior year tax positions | 1,466 | 2,309 | 1,416 |
Reductions for prior year tax positions | (3,100) | (23) | |
Settlements | (3,532) | (6,828) | |
Ending balance | 22,786 | 21,618 | $ 21,717 |
Accrued additional interest income | 200 | ||
Accrued additional interest expense | 400 | ||
Reduction in accrued interest | 0 | 500 | |
Amount of interest and penalties accrued | 1,000 | $ 1,200 | |
Foreign | |||
Deferred Tax Liability: | |||
Net operating loss carry forwards which have no expiration date | 59,200 | ||
Expiration Dates Through 2036 | State | |||
Deferred Tax Liability: | |||
Net operating loss carry forwards which expire at various dates | 43,700 | ||
Expiration Dates Through 2036 | Foreign | |||
Deferred Tax Liability: | |||
Net operating loss carryforwards | 74,200 | ||
Net operating loss carry forwards which expire at various dates | $ 15,000 |
Long-Term Debt - Components (De
Long-Term Debt - Components (Details) - USD ($) $ in Thousands | Oct. 02, 2016 | Sep. 27, 2015 |
Long-term debt | ||
Total long-term debt | $ 347,011 | $ 192,876 |
Less: Current portion of long-term debt | (15,510) | (11,904) |
Long-term debt, less current portion | 331,501 | 180,972 |
Credit facility. | ||
Long-term debt | ||
Total long-term debt | 346,813 | 192,203 |
Other | ||
Long-term debt | ||
Total long-term debt | $ 198 | $ 673 |
Long-Term Debt - Additional Inf
Long-Term Debt - Additional Information (Details) $ in Thousands, AUD in Millions | May 29, 2015USD ($) | Oct. 02, 2016USD ($)item | Apr. 08, 2016AUD | Sep. 27, 2015USD ($) | May 07, 2013USD ($) |
Long-term debt | |||||
Amount outstanding under credit facility | $ 346,800 | ||||
Scheduled maturities of long-term debt | |||||
2,017 | 15,510 | ||||
2,018 | 15,425 | ||||
2,019 | 15,388 | ||||
2,020 | 300,688 | ||||
Total long-term debt | 347,011 | $ 192,876 | |||
Credit Agreement | |||||
Long-term debt | |||||
Maximum borrowing capacity | $ 654,800 | ||||
Term of borrowings | 5 years | ||||
Borrowings outstanding | $ 346,800 | ||||
Weighted-average rate including the effects of interest rate swap agreement (as a percent) | 2.52% | ||||
Weighted-average interest rate (as a percent) | 1.92% | ||||
Consolidated leverage ratio | 1.91 | ||||
Consolidated fixed charge coverage ratio | 2.82 | ||||
Credit Agreement | Maximum | |||||
Long-term debt | |||||
Consolidated leverage ratio | 3 | ||||
Credit Agreement | Minimum | |||||
Long-term debt | |||||
Consolidated fixed charge coverage ratio | 1.25 | ||||
Credit Agreement | Base rate | |||||
Long-term debt | |||||
Margin spread on variable rate basis, low end of the range (as a percent) | 0.15% | ||||
Margin spread on variable rate basis, high end of the range (as a percent) | 1.00% | ||||
Credit Agreement | Base rate | U.S. federal funds base rate | |||||
Long-term debt | |||||
Interest rate basis | U.S. federal funds rate | ||||
Basis spread on variable rate (as a percent) | 0.50% | ||||
Credit Agreement | Base rate | Eurocurrency base rate | |||||
Long-term debt | |||||
Interest rate basis | Eurocurrency rate | ||||
Basis spread on variable rate (as a percent) | 1.00% | ||||
Credit Agreement | Base rate | Bank's prime rate | |||||
Long-term debt | |||||
Interest rate basis | bank's prime rate | ||||
Basis spread on variable rate (as a percent) | 1.00% | ||||
Credit Agreement | Eurocurrency rate | Eurocurrency base rate | |||||
Long-term debt | |||||
Interest rate basis | Eurocurrency rate | ||||
Margin spread on variable rate basis, low end of the range (as a percent) | 1.15% | ||||
Margin spread on variable rate basis, high end of the range (as a percent) | 2.00% | ||||
Credit facility. | |||||
Long-term debt | |||||
Maximum borrowing capacity | AUD | AUD 30 | ||||
Standby letters of credit under letter of credit agreements | |||||
Long-term debt | |||||
Maximum borrowing capacity | $ 53,000 | ||||
Letters of credit outstanding | $ 25,300 | ||||
Number of banks with whom entity entered into agreement | item | 3 | ||||
Term loan facility | |||||
Long-term debt | |||||
Maximum borrowing capacity | $ 194,800 | $ 205,000 | |||
Effective interest rate (as a percent) | 1.57% | ||||
Principal payment due in year 1 | $ 10,300 | ||||
Principal payment in year 2 | 15,400 | ||||
Principal payment in year 3 | 15,400 | ||||
Principal payment in year 4 | 15,400 | ||||
Principal payment in year 5 | 15,400 | ||||
Borrowings outstanding | 176,800 | ||||
Bank guarantees | |||||
Long-term debt | |||||
Amount outstanding under credit facility | 5,600 | ||||
Revolving credit facility | |||||
Long-term debt | |||||
Maximum borrowing capacity | 460,000 | $ 460,000 | |||
Amount available for borrowing under facility | 288,700 | ||||
Amount available for borrowing under facility without violation of debt covenants | 222,400 | ||||
Borrowings outstanding | 170,000 | ||||
Standby letters of credit | |||||
Long-term debt | |||||
Maximum borrowing capacity | 150,000 | ||||
Letters of credit outstanding | 1,300 | ||||
Swingline loans | |||||
Long-term debt | |||||
Maximum borrowing capacity | 20,000 | ||||
Multicurrency borrowings and letter of credit | |||||
Long-term debt | |||||
Maximum borrowing capacity | $ 150,000 | ||||
Letters of credit outstanding | $ 6,000 |
Leases - Commitments (Details)
Leases - Commitments (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 02, 2016 | Sep. 27, 2015 | Sep. 28, 2014 | |
Leases | |||
Expense associated with operating leases | $ 75,000 | $ 66,400 | $ 70,000 |
Operating lease commitments | |||
2,017 | 83,050 | ||
2,018 | 56,687 | ||
2,019 | 42,916 | ||
2,020 | 31,533 | ||
2,021 | 18,673 | ||
Beyond | 22,732 | ||
Total | 255,591 | ||
Capital lease commitments | |||
2,017 | 89 | ||
2,018 | 52 | ||
2,019 | 13 | ||
Total | 154 | ||
Less: Amounts representing interest | 6 | ||
Net present value | 148 | ||
Lease contract termination costs | $ 2,900 | $ 0 |
Leases - Reconciliation of Term
Leases - Reconciliation of Termination Costs (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Oct. 02, 2016 | Sep. 27, 2015 | |
Reconciliation of the beginning and ending balances of liabilities related to contract termination costs | ||
Balance at the beginning of the period | $ 3,169 | $ 6,369 |
Costs incurred and charged to expense | 2,167 | |
Adjustments | (2,232) | (3,200) |
Balance at the end of the period | 3,104 | 3,169 |
WEI | ||
Reconciliation of the beginning and ending balances of liabilities related to contract termination costs | ||
Balance at the beginning of the period | 531 | 900 |
Cost transfer between groups | 637 | |
Costs incurred and charged to expense | 1,418 | |
Adjustments | (1,034) | (369) |
Balance at the end of the period | 1,552 | 531 |
RME | ||
Reconciliation of the beginning and ending balances of liabilities related to contract termination costs | ||
Balance at the beginning of the period | 2,461 | 5,046 |
Cost transfer between groups | (637) | |
Costs incurred and charged to expense | 749 | |
Adjustments | (1,060) | (2,585) |
Balance at the end of the period | 1,513 | 2,461 |
RCM | ||
Reconciliation of the beginning and ending balances of liabilities related to contract termination costs | ||
Balance at the beginning of the period | 177 | 423 |
Adjustments | (138) | (246) |
Balance at the end of the period | $ 39 | $ 177 |
Stockholders' Equity and Stoc66
Stockholders' Equity and Stock Compensation Plans - Summary (Details) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Mar. 31, 2006 | Oct. 02, 2016 | Sep. 27, 2015 | Sep. 28, 2014 | |
Stockholder's equity and stock compensation plans | ||||
Vesting period | 1 year | 1 year | ||
Stock-based compensation and related income tax benefits | ||||
Stock-based compensation expense | $ 12,964,000 | $ 10,926,000 | $ 10,374,000 | |
Income tax benefit related to stock-based compensation | (4,656,000) | (3,811,000) | (3,696,000) | |
Stock-based compensation, net of tax benefit | $ 8,308,000 | $ 7,115,000 | 6,678,000 | |
RSUs | ||||
Stockholder's equity and stock compensation plans | ||||
Vesting period | 4 years | 4 years | ||
ESPP | ||||
Stockholder's equity and stock compensation plans | ||||
Available for future awards | 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 | ||||
Stock-based compensation expense | $ 400,000 | $ 600,000 | $ 700,000 | |
2005 EIP | Stock options | ||||
Stockholder's equity and stock compensation plans | ||||
Expiration period | 10 years | 8 years | ||
Vesting period | 4 years | |||
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% | |||
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% | |||
2005 EIP | RSUs | Each anniversary of grant date | ||||
Stockholder's equity and stock compensation plans | ||||
Percentage of vesting rights after specified period | 25.00% | |||
2005 EIP | Restricted Stock | ||||
Stockholder's equity and stock compensation plans | ||||
Vesting period | 3 years | |||
2015 EIP | ||||
Stockholder's equity and stock compensation plans | ||||
Available for future awards | 3,700,000 | |||
The number every share or unit issued counts against aggregate share limit | 3 |
Stockholders' Equity and Stoc67
Stockholders' Equity and Stock Compensation Plans - Stock Options (Details) - Stock options - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Oct. 02, 2016 | Sep. 27, 2015 | Sep. 28, 2014 | |
Number of Options | |||
Outstanding at the beginning of the year (in shares) | 2,985 | ||
Granted (in shares) | 242 | ||
Exercised (in shares) | (839) | ||
Forfeited (in shares) | (21) | ||
Outstanding at the end of the period (in shares) | 2,367 | 2,985 | |
Vested or expected to vest at the end of the period (in shares) | 2,320 | ||
Exercisable at the end of the period (in shares) | 1,776 | ||
Weighted-Average Exercise Price per Share | |||
Outstanding at the beginning of the year (in dollars per share) | $ 23.71 | ||
Granted (in dollars per share) | 27.16 | ||
Exercised (in dollars per share) | 30.04 | ||
Forfeited (in dollars per share) | 23.59 | ||
Outstanding at the end of the period (in dollars per share) | 24.88 | $ 23.71 | |
Vested or expected to vest at the end of the period (in dollars per share) | 24.88 | ||
Exercisable at the end of the period (in dollars per share) | $ 24.10 | ||
Weighted-Average Remaining Contractual Term | |||
Outstanding at the end of the period | 4 years 15 days | ||
Vested or expected to vest at the end of the period | 3 years 11 months 27 days | ||
Exercisable at the end of the period | 3 years 15 days | ||
Aggregate Intrinsic Value | |||
Outstanding at the end of the period | $ 25,068 | ||
Vested or expected to vest at the end of the period | 24,579 | ||
Exercisable at the end of the period | 20,197 | ||
Other disclosures | |||
Unrecognized compensation cost | $ 3,500 | ||
Weighted-average period to recognize the unrecognized compensation cost | 4 years | ||
Weighted-average fair value of stock options granted (in dollars per share) | $ 8.05 | $ 8.20 | $ 9.36 |
Aggregate intrinsic value of options exercised | $ 7,300 | $ 2,300 | $ 9,300 |
Assumptions used in the Black-Scholes option-pricing model | |||
Dividend yield (as a percent) | 1.20% | 1.00% | |
Expected stock price volatility, minimum (as a percent) | 36.10% | 36.20% | 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) | 1.60% | 1.50% | 1.30% |
Risk-free rate of return, annual, maximum (as a percent) | 1.80% | 1.70% | 1.50% |
Net cash proceeds from the exercise of stock options | $ 18,000 | $ 10,800 | $ 23,800 |
Income tax benefit realized from exercises of nonqualified stock options and disqualifying dispositions of qualified options | $ 5,300 | $ 3,000 | $ 4,600 |
Stockholders' Equity and Stoc68
Stockholders' Equity and Stock Compensation Plans - Restricted Stock, PSUS and RSUs (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Oct. 02, 2016 | Sep. 27, 2015 | Sep. 28, 2014 | |
Stockholder's equity and stock compensation plans | |||
Vesting period | 1 year | 1 year | |
Restricted Stock Program | |||
Stock-based compensation expense | $ 12,964 | $ 10,926 | $ 10,374 |
Restricted Stock | |||
Stockholder's equity and stock compensation plans | |||
Initially granted (in shares) | 0 | 0 | 117,067 |
Number of Shares | |||
Nonvested balance at the beginning of the period (in shares) | 104,000 | ||
Granted (in shares) | 14,000 | ||
Vested (in shares) | (49,000) | ||
Forfeited (in shares) | (34,000) | ||
Nonvested balance at the end of the period (in shares) | 35,000 | 104,000 | |
Vested or expected to vest at the end of the period (in shares) | 35,000 | ||
Weighted-Average Grant Date Fair Value | |||
Nonvested balance at the beginning of the period (in dollars per share) | $ 27.15 | ||
Granted (in dollars per share) | 28.58 | ||
Vested (in dollars per share) | 28.58 | ||
Forfeited (in dollars per share) | 24.26 | ||
Nonvested balance at the end of the period (in dollars per share) | 28.58 | $ 27.15 | |
Vested or expected to vest at the end of the period (in dollars per share) | $ 28.58 | ||
Performance-based restricted stock | |||
Stockholder's equity and stock compensation plans | |||
Period of growth in earnings per share considered to calculate percentage of shares vested | 3 years | ||
Additional shares awarded based on performance-based adjustments (in shares) | 13,932 | 15,605 | |
Base rate percentage for performance based adjustments | 100.00% | ||
Performance-based restricted stock | Minimum | |||
Stockholder's equity and stock compensation plans | |||
Percentage of shares that ultimately vest depending on fiscal year earnings per share growth rates | 0.00% | ||
Performance-based restricted stock | Maximum | |||
Stockholder's equity and stock compensation plans | |||
Percentage of shares that ultimately vest depending on fiscal year earnings per share growth rates | 140.00% | ||
PSUs | |||
Stockholder's equity and stock compensation plans | |||
Vesting period | 3 years | ||
Percentage of shares that ultimately vest depending on fiscal year earnings per share growth rates | 50.00% | ||
Percentage of shares that ultimately vest depending on total shareholder return | 50.00% | ||
Number of Shares | |||
Nonvested balance at the beginning of the period (in shares) | 139,000 | ||
Granted (in shares) | 137,777 | ||
Nonvested balance at the end of the period (in shares) | 277,000 | 139,000 | |
Weighted-Average Grant Date Fair Value | |||
Nonvested balance at the beginning of the period (in dollars per share) | $ 31.66 | ||
Granted (in dollars per share) | 31.63 | ||
Nonvested balance at the end of the period (in dollars per share) | $ 31.65 | $ 31.66 | |
RSUs | |||
Stockholder's equity and stock compensation plans | |||
Vesting period | 4 years | 4 years | |
Number of Shares | |||
Nonvested balance at the beginning of the period (in shares) | 483,111 | ||
Granted (in shares) | 216,539 | 234,685 | |
Vested (in shares) | (180,000) | ||
Forfeited (in shares) | (21,000) | ||
Nonvested balance at the end of the period (in shares) | 499,021 | 483,111 | |
Weighted-Average Grant Date Fair Value | |||
Nonvested balance at the beginning of the period (in dollars per share) | $ 26.75 | ||
Granted (in dollars per share) | 27.14 | $ 27.21 | |
Vested (in dollars per share) | 26.03 | ||
Forfeited (in dollars per share) | 27.11 | ||
Nonvested balance at the end of the period (in dollars per share) | $ 27.16 | $ 26.75 | |
Restricted Stock, PSUs and RSUs | Restricted Stock Program | |||
Restricted Stock Program | |||
Stock-based compensation expense | $ 10,300 | $ 7,500 | $ 4,600 |
Unrecognized compensation cost | $ 13,500 |
Stockholders' Equity and Stoc69
Stockholders' Equity and Stock Compensation Plans - ESPP (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Oct. 02, 2016 | Sep. 27, 2015 | Sep. 28, 2014 | |
ESPP | |||
Stock-based compensation expense | $ 12,964 | $ 10,926 | $ 10,374 |
ESPP | |||
Stockholder's equity and stock compensation plans | |||
Shares purchased | 209 | 243 | 245 |
Weighted-average purchase price (in dollars per share) | $ 22.54 | $ 21.44 | $ 22.99 |
Cash received from exercise of purchase rights | $ 4,707 | $ 5,204 | $ 5,604 |
Aggregate intrinsic value | $ 710 | $ 1,277 | $ 1,221 |
Assumptions used in the Black-Scholes option-pricing model | |||
Dividend yield (as a percent) | 1.30% | 1.10% | |
Expected stock price volatility (as a percent) | 23.70% | 23.70% | 29.20% |
Risk-free rate of return, annual (as a percent) | 0.20% | 0.20% | 0.10% |
Expected life | 1 year | 1 year | 1 year |
ESPP | |||
Stock-based compensation expense | $ 400 | $ 600 | $ 700 |
Unrecognized compensation cost | 100 | $ 100 | |
Accumulated amount by participants to purchase the entity's common stock | $ 2,800 |
Retirement Plans (Details)
Retirement Plans (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 02, 2016 | Sep. 27, 2015 | Sep. 28, 2014 | |
Retirement Plans | |||
Minimum service period for employee to participate in the defined contribution plans | 1 year | ||
Employer contributions to the plans | $ 10.7 | $ 9.8 | $ 9.6 |
Assets related to deferred compensation plans | 20.9 | 19.5 | |
Liabilities related to deferred compensation plans | $ 20.8 | $ 19.3 |
Earnings Per Share - Calculatio
Earnings Per Share - Calculation (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Oct. 02, 2016 | Jun. 26, 2016 | Mar. 27, 2016 | Dec. 27, 2015 | Sep. 27, 2015 | Jun. 28, 2015 | Mar. 29, 2015 | Dec. 28, 2014 | Oct. 02, 2016 | Sep. 27, 2015 | Sep. 28, 2014 | |
Number of weighted-average shares used to compute basic and diluted EPS: | |||||||||||
Net income attributable to Tetra Tech | $ 31,106 | $ 25,694 | $ 3,744 | $ 23,239 | $ (31,724) | $ 26,206 | $ 19,017 | $ 25,575 | $ 83,783 | $ 39,074 | $ 108,266 |
Weighted-average common shares outstanding - basic | 57,309 | 57,796 | 58,451 | 59,058 | 59,963 | 60,207 | 61,153 | 62,452 | 58,186 | 60,913 | 64,379 |
Effect of dilutive stock options and unvested restricted stock | 780 | 619 | 767 | ||||||||
Weighted-average common stock outstanding - diluted | 58,192 | 58,616 | 59,131 | 59,793 | 59,963 | 60,792 | 61,723 | 63,112 | 58,966 | 61,532 | 65,146 |
Earnings per share attributable to Tetra Tech: | |||||||||||
Basic (in dollars per share) | $ 0.54 | $ 0.44 | $ 0.06 | $ 0.39 | $ (0.53) | $ 0.44 | $ 0.31 | $ 0.41 | $ 1.44 | $ 0.64 | $ 1.68 |
Diluted (in dollars per share) | $ 0.53 | $ 0.44 | $ 0.06 | $ 0.39 | $ (0.53) | $ 0.43 | $ 0.31 | $ 0.41 | $ 1.42 | $ 0.64 | $ 1.66 |
Earnings Per Share - Antidiluti
Earnings Per Share - Antidilutive Securities (Details) - shares shares in Millions | 12 Months Ended | ||
Oct. 02, 2016 | Sep. 27, 2015 | Sep. 28, 2014 | |
Stock options | |||
Antidilutive securities | |||
Securities excluded from the calculation of dilutive potential common shares | 0 | 1 | 0 |
Derivative Financial Instrume73
Derivative Financial Instruments - General Information (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Dec. 29, 2013item | Oct. 02, 2016USD ($)item | Sep. 27, 2015USD ($)item | Sep. 29, 2013item | Sep. 28, 2014item | |
Not designated as hedging instruments | |||||
Derivative financial instruments | |||||
Number of derivative instruments | item | 0 | 0 | 0 | ||
Foreign currency forward contracts and interest rate swap agreements | Derivatives designated as hedging instruments | |||||
Derivative financial instruments | |||||
Amounts excluded from effectiveness testing | $ 0 | $ 0 | |||
Interest rate swap agreements | Designated as cash flow hedges | Derivatives designated as hedging instruments | |||||
Derivative financial instruments | |||||
Number of derivative agreements | item | 2 | 3 | |||
Amount of effective portion of derivatives before tax effect | 1,600 | 2,300 | |||
Amount expected to be reclassified from accumulated other comprehensive income to interest expense | $ 1,600 | $ 2,300 | |||
Period of reclassification from accumulated other comprehensive income to interest expense | 12 months | ||||
Interest rate swap agreement bearing fixed rate 1.36% | Designated as cash flow hedges | Derivatives designated as hedging instruments | |||||
Derivative financial instruments | |||||
Notional Amount | $ 44,203 | ||||
Fixed Rate (as a percent) | 1.36% | ||||
Interest rate swap agreement bearing fixed rate 1.34% | Designated as cash flow hedges | Derivatives designated as hedging instruments | |||||
Derivative financial instruments | |||||
Notional Amount | $ 44,203 | ||||
Fixed Rate (as a percent) | 1.34% | ||||
Interest rate swap agreement bearing fixed rate 1.35% | Designated as cash flow hedges | Derivatives designated as hedging instruments | |||||
Derivative financial instruments | |||||
Notional Amount | $ 44,203 | ||||
Fixed Rate (as a percent) | 1.35% | ||||
Interest rate swap agreement bearing fixed rate 1.23% | Designated as cash flow hedges | Derivatives designated as hedging instruments | |||||
Derivative financial instruments | |||||
Notional Amount | $ 22,102 | ||||
Fixed Rate (as a percent) | 1.23% | ||||
Interest rate swap agreement bearing fixed rate 1.24% | Designated as cash flow hedges | Derivatives designated as hedging instruments | |||||
Derivative financial instruments | |||||
Notional Amount | $ 22,102 | ||||
Fixed Rate (as a percent) | 1.24% |
Derivative Financial Instrume74
Derivative Financial Instruments - Table (Details) - USD ($) $ in Thousands | Oct. 02, 2016 | Sep. 27, 2015 |
Interest rate swap agreements | Derivatives designated as hedging instruments | Designated as cash flow hedges | Other current liabilities | ||
Derivative financial instruments | ||
Derivative liabilities, Fair Value of Derivative Instruments | $ 1,572 | $ 2,518 |
Reclassifications Out of Accu75
Reclassifications Out of Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Oct. 02, 2016 | Sep. 27, 2015 | |
Reclassifications out of accumulated other comprehensive income (loss) | ||
Balance at the beginning of the period | $ 856,325 | |
Balance at the end of the period | 869,259 | $ 856,325 |
Foreign Currency Translation Adjustments | ||
Reclassifications out of accumulated other comprehensive income (loss) | ||
Balance at the beginning of the period | (141,229) | (43,085) |
Other comprehensive loss before classifications | 14,385 | (98,144) |
Net current-period other comprehensive loss | 14,385 | (98,144) |
Balance at the end of the period | (126,844) | (141,229) |
Gain (Loss) on Derivative Instruments | ||
Reclassifications out of accumulated other comprehensive income (loss) | ||
Balance at the beginning of the period | (1,942) | 547 |
Other comprehensive loss before classifications | 2,722 | (203) |
Net current-period other comprehensive loss | 778 | (2,489) |
Balance at the end of the period | (1,164) | (1,942) |
Gain (Loss) on Derivative Instruments | Interest rate contracts | ||
Reclassifications out of accumulated other comprehensive income (loss) | ||
Amounts reclassified from accumulated other comprehensive income Interest rate contracts, net of tax | (1,944) | (2,286) |
Accumulated Other Comprehensive Income (Loss) | ||
Reclassifications out of accumulated other comprehensive income (loss) | ||
Balance at the beginning of the period | (143,171) | (42,538) |
Other comprehensive loss before classifications | 17,107 | (98,347) |
Net current-period other comprehensive loss | 15,163 | (100,633) |
Balance at the end of the period | (128,008) | (143,171) |
Accumulated Other Comprehensive Income (Loss) | Interest rate contracts | ||
Reclassifications out of accumulated other comprehensive income (loss) | ||
Amounts reclassified from accumulated other comprehensive income Interest rate contracts, net of tax | $ (1,944) | $ (2,286) |
Fair Value Measurements (Detail
Fair Value Measurements (Details) $ in Millions | Oct. 02, 2016USD ($) |
Fair Value Measurements | |
Net borrowing under credit agreement | $ 346.8 |
Joint Ventures (Details)
Joint Ventures (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Oct. 02, 2016 | Jun. 26, 2016 | Mar. 27, 2016 | Dec. 27, 2015 | Sep. 27, 2015 | Jun. 28, 2015 | Mar. 29, 2015 | Dec. 28, 2014 | Oct. 02, 2016 | Sep. 27, 2015 | Sep. 28, 2014 | |
Aggregate revenue of consolidated joint ventures | $ 728,508 | $ 666,869 | $ 627,384 | $ 560,708 | $ 578,394 | $ 575,108 | $ 564,763 | $ 581,056 | $ 2,583,469 | $ 2,299,321 | $ 2,483,814 |
Cash and cash equivalents of consolidated joint ventures | 2,500 | 2,500 | |||||||||
Unconsolidated Joint Ventures | |||||||||||
Equity in earnings from unconsolidated joint ventures | 1,652 | 5,131 | 2,804 | ||||||||
Carrying value of assets of unconsolidated joint ventures | 15,600 | 17,100 | 15,600 | 17,100 | |||||||
Carrying value of liabilities of unconsolidated joint ventures | 13,500 | 15,200 | 13,500 | 15,200 | |||||||
Consolidated Joint Ventures | |||||||||||
Aggregate revenue of consolidated joint ventures | 3,700 | 7,500 | $ 12,300 | ||||||||
Cash and cash equivalents of consolidated joint ventures | $ 200 | $ 700 | $ 200 | $ 700 |
Reportable Segments - Financial
Reportable Segments - Financial Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Oct. 02, 2016 | Jun. 26, 2016 | Mar. 27, 2016 | Dec. 27, 2015 | Sep. 27, 2015 | Jun. 28, 2015 | Mar. 29, 2015 | Dec. 28, 2014 | Oct. 02, 2016 | Sep. 27, 2015 | Sep. 28, 2014 | |
Financial information concerning reportable segments | |||||||||||
Acquisition and integration expenses | $ 19,548 | ||||||||||
Revenue | $ 728,508 | $ 666,869 | $ 627,384 | $ 560,708 | $ 578,394 | $ 575,108 | $ 564,763 | $ 581,056 | 2,583,469 | $ 2,299,321 | $ 2,483,814 |
Operating income | 47,190 | $ 39,085 | $ 16,650 | $ 32,930 | (20,047) | $ 40,721 | $ 30,398 | $ 36,612 | 135,855 | 87,684 | 153,833 |
Depreciation | 22,756 | 23,110 | 26,452 | ||||||||
Impairment charge | 60,800 | 60,800 | |||||||||
Amortization expense for intangible assets | 22,100 | 20,200 | 27,300 | ||||||||
Fair value adjustments to contingent consideration liabilities | (2,823) | 3,113 | 58,694 | ||||||||
Total assets | 1,800,779 | 1,559,242 | 1,800,779 | 1,559,242 | |||||||
WEI | |||||||||||
Financial information concerning reportable segments | |||||||||||
Revenue | 1,028,281 | 993,631 | 1,018,522 | ||||||||
Operating income | 95,996 | 93,142 | 93,853 | ||||||||
Depreciation | 4,797 | 5,335 | 6,302 | ||||||||
Total assets | 308,438 | 287,112 | 308,438 | 287,112 | |||||||
RME | |||||||||||
Financial information concerning reportable segments | |||||||||||
Revenue | 1,569,702 | 1,282,046 | 1,333,127 | ||||||||
Operating income | 112,202 | 93,359 | 84,862 | ||||||||
Depreciation | 15,703 | 13,342 | 14,089 | ||||||||
Total assets | 522,895 | 422,133 | 522,895 | 422,133 | |||||||
RCM | |||||||||||
Financial information concerning reportable segments | |||||||||||
Revenue | 52,150 | 86,575 | 221,108 | ||||||||
Operating income | (11,834) | (8,614) | (45,151) | ||||||||
Depreciation | 736 | 1,801 | 2,958 | ||||||||
Total assets | 39,107 | 57,612 | 39,107 | 57,612 | |||||||
Inter-segment elimination | |||||||||||
Financial information concerning reportable segments | |||||||||||
Revenue | (66,664) | (62,931) | (88,943) | ||||||||
Corporate. | |||||||||||
Financial information concerning reportable segments | |||||||||||
Acquisition and integration expenses | 19,500 | ||||||||||
Operating income | (60,509) | (90,203) | 20,269 | ||||||||
Depreciation | 1,520 | 2,632 | 3,103 | ||||||||
Impairment charge | 60,800 | ||||||||||
Amortization expense for intangible assets | 22,100 | 20,200 | 27,300 | ||||||||
Fair value adjustments to contingent consideration liabilities | (2,800) | 3,100 | $ 58,700 | ||||||||
Total assets | $ 930,339 | $ 792,385 | $ 930,339 | $ 792,385 |
Reportable Segments - Geographi
Reportable Segments - Geographic Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Oct. 02, 2016 | Jun. 26, 2016 | Mar. 27, 2016 | Dec. 27, 2015 | Sep. 27, 2015 | Jun. 28, 2015 | Mar. 29, 2015 | Dec. 28, 2014 | Oct. 02, 2016 | Sep. 27, 2015 | Sep. 28, 2014 | |
Reportable Segments | |||||||||||
Revenue | $ 728,508 | $ 666,869 | $ 627,384 | $ 560,708 | $ 578,394 | $ 575,108 | $ 564,763 | $ 581,056 | $ 2,583,469 | $ 2,299,321 | $ 2,483,814 |
United States | |||||||||||
Reportable Segments | |||||||||||
Revenue | 1,858,551 | 1,734,439 | 1,840,129 | ||||||||
Long-Lived Assets | 59,334 | 61,526 | 59,334 | 61,526 | 61,940 | ||||||
Foreign countries | |||||||||||
Reportable Segments | |||||||||||
Revenue | 724,918 | 564,882 | 643,685 | ||||||||
Long-Lived Assets | $ 39,067 | $ 32,230 | $ 39,067 | $ 32,230 | $ 38,576 |
Reportable Segments - Revenue b
Reportable Segments - Revenue by Sector (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Oct. 02, 2016 | Jun. 26, 2016 | Mar. 27, 2016 | Dec. 27, 2015 | Sep. 27, 2015 | Jun. 28, 2015 | Mar. 29, 2015 | Dec. 28, 2014 | Oct. 02, 2016 | Sep. 27, 2015 | Sep. 28, 2014 | |
Revenue by client sector | |||||||||||
Threshold percentage for disclosure of revenue from a single client | 10.00% | 10.00% | 10.00% | ||||||||
Revenue | $ 728,508 | $ 666,869 | $ 627,384 | $ 560,708 | $ 578,394 | $ 575,108 | $ 564,763 | $ 581,056 | $ 2,583,469 | $ 2,299,321 | $ 2,483,814 |
International | |||||||||||
Revenue by client sector | |||||||||||
Revenue | 724,918 | 564,882 | 643,649 | ||||||||
U.S. commercial | |||||||||||
Revenue by client sector | |||||||||||
Revenue | 763,443 | 736,815 | 713,266 | ||||||||
U.S. federal government | |||||||||||
Revenue by client sector | |||||||||||
Revenue | 784,368 | 709,600 | 772,290 | ||||||||
U.S. state and local government | |||||||||||
Revenue by client sector | |||||||||||
Revenue | $ 310,740 | $ 288,024 | $ 354,609 |
Quarterly Financial Informati81
Quarterly Financial Information-Unaudited (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Oct. 02, 2016 | Jun. 26, 2016 | Mar. 27, 2016 | Dec. 27, 2015 | Sep. 27, 2015 | Jun. 28, 2015 | Mar. 29, 2015 | Dec. 28, 2014 | Oct. 02, 2016 | Sep. 27, 2015 | Sep. 28, 2014 | |
Acquisition and integration expenses | $ 19,548 | ||||||||||
Pre-payment charges paid | $ 1,900 | 1,900 | |||||||||
Impairment charge | $ 60,800 | $ 60,800 | |||||||||
Impairment charge after tax | 57,300 | 57,300 | |||||||||
Revenue | $ 728,508 | $ 666,869 | 627,384 | $ 560,708 | 578,394 | $ 575,108 | $ 564,763 | $ 581,056 | 2,583,469 | 2,299,321 | $ 2,483,814 |
Operating income (loss) | 47,190 | 39,085 | 16,650 | 32,930 | (20,047) | 40,721 | 30,398 | 36,612 | 135,855 | 87,684 | 153,833 |
Net income (loss) attributable to Tetra Tech | $ 31,106 | $ 25,694 | $ 3,744 | $ 23,239 | $ (31,724) | $ 26,206 | $ 19,017 | $ 25,575 | $ 83,783 | $ 39,074 | $ 108,266 |
Earnings (loss) per share attributable to Tetra Tech (1): | |||||||||||
Basic (in dollars per share) | $ 0.54 | $ 0.44 | $ 0.06 | $ 0.39 | $ (0.53) | $ 0.44 | $ 0.31 | $ 0.41 | $ 1.44 | $ 0.64 | $ 1.68 |
Diluted (in dollars per share) | $ 0.53 | $ 0.44 | $ 0.06 | $ 0.39 | $ (0.53) | $ 0.43 | $ 0.31 | $ 0.41 | $ 1.42 | $ 0.64 | $ 1.66 |
Weighted-average common shares outstanding: | |||||||||||
Basic (in shares) | 57,309 | 57,796 | 58,451 | 59,058 | 59,963 | 60,207 | 61,153 | 62,452 | 58,186 | 60,913 | 64,379 |
Diluted (in shares) | 58,192 | 58,616 | 59,131 | 59,793 | 59,963 | 60,792 | 61,723 | 63,112 | 58,966 | 61,532 | 65,146 |
Coffey | |||||||||||
Acquisition and integration expenses | $ 2,600 | $ 1,000 | $ 15,900 | $ 19,500 | |||||||
Coffey | Interest expense. | |||||||||||
Pre-payment charges paid | $ 1,900 |
SCHEDULE II-VALUATION AND QUA82
SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS AND RESERVES (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 02, 2016 | Sep. 27, 2015 | Sep. 28, 2014 | |
Allowance for doubtful accounts | |||
Changes in valuation and qualifying accounts and reserves | |||
Balance at Beginning of Period | $ 31,490 | $ 39,780 | $ 44,623 |
Charged to Costs, Expenses and Revenue | 8,082 | (1,034) | 1,467 |
Deductions | (12,191) | (5,965) | (4,855) |
Other | 7,852 | (1,291) | (1,455) |
Balance at End of Period | 35,233 | 31,490 | 39,780 |
Income tax valuation allowance | |||
Changes in valuation and qualifying accounts and reserves | |||
Balance at Beginning of Period | 7,791 | 7,576 | 7,459 |
Charged to Costs, Expenses and Revenue | 3,856 | 4,609 | 396 |
Other | 13,800 | (4,394) | (279) |
Balance at End of Period | $ 25,447 | $ 7,791 | $ 7,576 |