Tetra Tech Annual Report 2013

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FY2013 Annual Report · Tetra Tech

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Dear Shareholders

In 2013, our engineers and scientists worked in more than 110 countries around

the world to help communities provide reliable water supplies, adapt to climate

change, plan for future energy needs, and prevent and mitigate impacts from

pollution. Engineering News-Record’s (ENR) annual ranking named Tetra Tech

the top Water firm for the 10th consecutive year, and gave us the #1 ranking in

Environmental Management, Wind Power, and Solid Waste.

We began the 2013 fiscal year with

a record first quarter, with operating

income up 16 percent from the prior

year. However, by late in the second

quarter, we faced a major downturn in

three of our largest markets. The global

mining market saw a sudden decline

resulting in a 50% decrease in profits for

mining companies, which translated into the delay or cancellation of more than $100B in projects across the

industry. The U.S. federal government applied cuts across the board as part of “sequestration” and initiated a

plan to reduce budgets by more than a trillion dollars over the next ten years. And, in Eastern Canada, a political

scandal resulted in an almost complete disruption of government contracting in the region. We responded

quickly in the third quarter to right size affected operations, which included closing offices and reducing staff,

and immediately instituted a stock buyback program to help mitigate the impact to shareholders. By taking

these actions, we ended the year with solid performance in the fourth quarter, strengthening utilization and

increasing backlog, and generated revenues of $698M, up 14 percent from the prior quarter.

Overall for the year, Tetra Tech generated $2.6B in annual revenue and

$138M in cash from operations, or $2.11 in cash per share. Our U.S.

FY13 Financial Report

municipal work was strong, up 23% from the prior year, with new projects

Revenue

in major cities throughout the United States. We added contracts with

the U.S. Department of Defense, winning two major $100M contracts

Net Revenue1

to provide both east and west coast remediation services for the U.S.

Operating Income2

Navy. The U.S. Agency for International Development (USAID) was

our largest client with over $250M in annual revenue, and we were

awarded over $1.4B in new contract capacity to provide services for

Cash EPS3

Backlog

emerging climate change programs in forestry, agriculture, and coastal

resource management.

$2.6B

$2.0B

$77M

$2.11

$1.9B

In the private sector, we grew our oil and gas practice by over 130% from the prior year to $325M in revenue.

We expanded our U.S. pipeline capabilities into Canada, and through our acquisition of Parkland Pipeline

added specialized experience in arctic regions. With the acquisition of American Environmental Group, we

broadened our solid waste capabilities to provide turnkey services for municipal and industrial customers.

1 Net revenue (non-GAAP measure) defined as revenue, net of subcontractor costs.
2 Operating income excludes the fiscal 2013 third quarter non-cash goodwill impairment charge (non-GAAP measure as presented).
3 Cash EPS (non-GAAP measure) defined as cash flow from operations divided by diluted shares outstanding.

Our scientists and engineers worked on more than 57,000 projects over the past year. We designed levee systems

that protect Washington D.C. monuments and government buildings from flooding; and engineered disposal

solutions for energy waste in Orlando, Florida. We are restoring coral reefs affected by port expansion in Miami;

and in Vietnam we are treating soil contaminated by Agent Orange. As Liberia rebuilds after decades of conflict,

we have helped them provide new water supplies for several communities near the capital. In the Philippines,

a region with more than 7,000 islands vulnerable to climate change, we are designing resilient infrastructure

and coral habitat protection areas to help them prepare for future extreme weather events after Super Typhoon

Haiyan. Tetra Tech experts continue to develop cutting-edge systems with worldwide applications, such as

green infrastructure modeling tools and design manuals, offshore bathymetry mapping technology for pipelines

and offshore wind generation, and treatment technologies for industrial water that generate zero waste.

Throughout Tetra Tech’s operations, we also look for sustainable solutions in how we manage our offices and

execute our projects. This company-wide commitment to sustainability has resulted in our achieving 20%

greenhouse gas reduction in 2013, two years prior to our original 2015 goal.

As we begin 2014, we are focused on applying our skills to new challenges both for our existing clients and for

new clients around the world. We are leveraging our top ranked water capabilities to help address the needs

of communities for sustainable infrastructure and industrial clients' water treatment needs. In North America,

the transformational changes in oil and gas production, distribution, and use are creating new opportunities for

our 280 offices across the United States and Canada. We are helping major ports prepare for the larger vessels

expected when the expanded Panama Canal opens. And, around the world we are identifying new partners that

extend our network and capabilities to serve our customers.

Today, Tetra Tech’s scientists and engineers are working on the unique solutions to some of the world’s most

complex and challenging problems associated with water, environment, and energy. We are sought after by

commercial and governmental clients who are at the frontlines of managing limited natural resources in a

changing world. As demand for our services continues to increase, we look forward to providing our shareholders

with long-term growth and superior performance in 2014 and beyond.

Sincerely,

Dan Batrack

Chairman & CEO

(This page has been left blank intentionally.)

2013 Annual Report

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

(Mark One)
(cid:2)

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

FORM 10-K

(cid:3)

For the Fiscal Year Ended September 29, 2013
or

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

For the Transition Period from

Commission File Number 0-19655

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

Delaware
(State or other jurisdiction of
incorporation or organization)

95-4148514
(I.R.S. Employer
Identification No.)

3475 East Foothill Boulevard, Pasadena, California 91107
(Address of principal executive offices) (Zip Code)

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

Securities registered pursuant to Section 12(b) of the Act:

Common Stock, $.01 par value
(Title of class)

The NASDAQ Stock Market LLC
(Name of exchange)

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes (cid:2)
No (cid:3)
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes (cid:3) No (cid:2)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes (cid:2) No (cid:3)
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes (cid:2) No (cid:3)
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is
not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. (cid:3)
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a
smaller reporting company. See the definitions of ‘‘large accelerated filer,’’ ‘‘accelerated filer’’ and ‘‘smaller reporting
company’’ in Rule 12b-2 of the Exchange Act. Large accelerated filer (cid:2) Accelerated filer (cid:3) Non-accelerated filer (Do
not check if a smaller reporting company) (cid:3) Smaller reporting company (cid:3)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes (cid:3) No (cid:2)
The aggregate market value of the registrant’s common stock held by non-affiliates on March 28, 2013, was $1.9 billion
(based upon the closing price of a share of registrant’s common stock as reported by the Nasdaq National Market on that
date).

On November 11, 2013, 64,163,177 shares of the registrant’s common stock were outstanding.

Portions of registrant’s Proxy Statement for its 2014 Annual Meeting of Stockholders are incorporated by reference in
Part III of this report where indicated.

DOCUMENT INCORPORATED BY REFERENCE

TABLE OF CONTENTS

PART I

Item 1

Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Industry Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Tetra Tech Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reportable Segments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Engineering and Consulting Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Technical Support Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Remediation and Construction Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Project Examples . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Clients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Marketing and Business Development
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sustainability Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Backlog . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Seasonality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Potential Liability and Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Executive Officers of the Registrant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1A Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1B Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 2
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 3
Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 4

PART II

Item 5

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer

Item 6
Item 7

Purchases of Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Management’s Discussion and Analysis of Financial Condition and Results of

Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 7A Quantitative and Qualitative Disclosures about Market Risk . . . . . . . . . . . . . . . . . .
Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 8
Changes in and Disagreements with Accountants on Accounting and Financial
Item 9

Page

4
4
5
5
6
8
8
10
11
12
15
18
20
20
21
21
22
22
23
23
24
24
29
50
50
51
51

51
55

56
76
78

Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 9A Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 9B Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

123
123
124

Item 10
Item 11

Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . .
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

124
124

PART III

Item 12

Security Ownership of Certain Beneficial Owners and Management and Related

Item 13
Item 14

Stockholder Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Certain Relationships and Related Transactions, and Director Independence . . . . . .
Principal Accounting Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Page

124
125
125

PART IV

Item 15

Exhibits, Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Index to Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

126
128
130

This Annual Report on Form 10-K (‘‘Report’’), including the ‘‘Management’s Discussion and Analysis
of Financial Condition and Results of Operations,’’ contains forward-looking statements regarding future events
and our future results that are subject to the safe harbors created under the Securities Act of 1933 (the
‘‘Securities Act’’) and the Securities Exchange Act of 1934 (the ‘‘Exchange Act’’). All statements other than
statements of historical facts are statements that could be deemed forward-looking statements. These statements
are based on current expectations, estimates, forecasts and projections about the industries in which we operate
and the beliefs and assumptions of our management. Words such as ‘‘expects,’’ ‘‘anticipates,’’ ‘‘targets,’’
‘‘goals,’’ ‘‘projects,’’ ‘‘intends,’’ ‘‘plans,’’ ‘‘believes,’’ ‘‘estimates,’’ ‘‘seeks,’’ ‘‘continues,’’ ‘‘may,’’ variations of
such words, and similar expressions are intended to identify such forward-looking statements. In addition,
statements that refer to projections of our future financial performance, our anticipated growth and trends in
our businesses, and other characterizations of future events or circumstances are forward-looking statements.
Readers are cautioned that these forward-looking statements are only predictions and are subject to risks,
uncertainties and assumptions that are difficult to predict, including those identified below under ‘‘Risk
Factors,’’ and elsewhere herein. Therefore, actual results may differ materially and adversely from those
expressed in any forward-looking statements. We undertake no obligation to revise or update publicly any
forward-looking statements for any reason.

PART I

Item 1. Business

General

Tetra Tech, Inc. is a leading provider of consulting, engineering, program management,
construction management, construction and technical services that focuses on addressing fundamental
needs for water, the environment, energy, infrastructure and natural resources. We are a full-service
company that leads with science. We typically begin at the earliest stage of a project by identifying technical
solutions to problems 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,
research and technology, engineering, design, construction management, construction, operations and
maintenance, and information technology.

We are a global provider of consulting and engineering services, renowned for our leadership in
water-related services for public and private clients. Engineering News-Record (‘‘ENR’’), the leading trade
journal for our industry, has ranked us the number one water services firm for the past ten years, most
recently in its April 26, 2013, ‘‘Top 500 Design Firms’’ issue. In 2013, Tetra Tech was also ranked number
one in water treatment and supply, environmental management, consulting studies, solid waste and wind
power. ENR also ranks Tetra Tech among the top 10 firms in numerous other service lines, including
environmental science, engineering/design, sanitary/storm sewers, chemical and soil remediation, site
assessment and compliance, hazardous waste, industrial processes and manufacturing.

Our ability to apply our skills to developing solutions for water management across a wide array of
public and private sector needs has diversified our client base, expanded our geographic reach, and
increased our ability to service both existing and emerging markets. We currently have more than 14,000
staff worldwide, located primarily in North America.

Mission

Our mission is to be the premier worldwide consulting and engineering firm, focusing on water,
natural resources, the environment, infrastructure and energy. The following core principles form the
underpinning of how we work together to serve our clients:

• Service. We put our clients first. We listen closely to better understand our clients’ needs and

deliver smart, cost-effective solutions that meet their needs.

• Value. We take on our clients’ problems as if they were our own. We develop and implement

real-world solutions that are innovative, efficient and practical.

• Excellence. We bring superior technical capability, disciplined project management, and

excellence in safety and quality to all of our services.

• Opportunity. Our people are our number one asset. Opportunity means new technical
challenges that provide advancement within the company, encouraging a diverse workforce, and
ensuring a safe workplace.

Industry Overview

We are part of the global consulting and engineering industry that serves public and private clients
by addressing fundamental needs for water, the environment, energy, infrastructure and natural resources.
Our industry provides clients with the technical studies, planning, engineering, design, construction
management and construction services that respond to their needs. The industry’s clients vary in size and
scope from small local public agencies and private companies to national governments and large multi-
national corporations. These clients seek service firms with high-caliber technical expertise, practical
experience, multi-disciplinary capabilities and the global reach needed to analyze their problems in order
to develop and implement the most appropriate, cost-effective solutions.

Many government and commercial organizations face complex challenges due to increased
demand and competition for water and natural resources, newly understood threats to human health and
the environment, aging infrastructure, demand for new infrastructure in emerging economies, and
diversification and development of energy resources. As a global company with a local presence in many
areas around the world, we provide the breadth of technical knowledge and capabilities to solve our
clients’ diverse and challenging problems.

Our water market supports government agencies responsible for managing water supply,
wastewater treatment, stormwater and flood protection. Our water market also supports private sector
clients that require water supply and treatment for industrial processes. We help our clients develop water
supplies and manage water resources, while addressing a wide range of local and national government
requirements and policies. We provide essential support for water and site management needs for resource
extraction in the oil and gas and mining industries. Our water and environmental markets also include both
government and commercial clients that are working to restore contaminated areas and protect
uncontaminated areas. Our energy market consists of both government and commercial clients that seek to
develop renewable energy resources, identify energy efficiency enhancements, and improve energy
transmission. Our infrastructure market includes the design of public and commercial buildings and
facilities, including high efficiency, low-energy use buildings. Our natural resources market provides
support for the safe, sustainable extraction of necessary mineral resources and oil and gas, including the
wide range of required services to meet water, environment, energy and infrastructure-related needs,
sometimes in remote regions of the world.

Increasingly, the consulting and engineering industry is being asked to provide integrated solutions
in a global marketplace. Large firms such as ours can offer fully integrated services, from front-end science
and planning through construction management. Large firms that offer integrated solutions differentiate
themselves from smaller firms that generally offer niche services by providing turn-key solutions intended
to save time and money. As a large company with a history of leading with science, we are ideally suited to
providing interdisciplinary solutions across our water and related service lines. As a provider of
interdisciplinary services, we have increased our market share in each of the last several years.

Public policy, demand for resources, infrastructure development challenges and natural forces
constantly shape changes in our industry. Public concern over environmental issues, especially water
quality, has been a driving force behind numerous regulations and changes in public policies and practices.
Public and private clients are increasingly focused on water management, energy efficiency and
sustainability. Fluctuations in weather patterns and extreme events, such as droughts, hurricanes or
flooding, are driving concerns over the reliability of water supplies and the need to protect coastal areas
and upgrade water infrastructure. Energy policies, resource limitations and concern about climate change
have encouraged the implementation of energy conservation measures, retrofits to existing structures,
upgrades to energy transmission infrastructure and the development of renewable energy resources.
Governments are now using international development as a foreign policy tool to help developing nations
to overcome numerous challenges, including challenges related to water accessibility and human health.

The Tetra Tech Strategy

To continue our successful growth and maintain a competitive position, we have implemented the

following strategy that is integral to our future success:

Start with Science. We typically start with science at the onset of a project, building on our staff’s
strong technical and interdisciplinary expertise in natural and physical sciences. This strength allows us to
effectively evaluate and recommend potential solutions to our clients’ problems. We can support our
clients through the entire project life cycle by providing consulting, engineering, construction management,
operations and maintenance, and information technology services. We offer these services individually or
as part of our full-service approach.

Capitalize on our Extensive Technical and Multi-Disciplinary Experience. Since our inception, we
have provided innovative consulting and engineering services, focusing on cost-effective solutions to all
aspects of water resource management. We have been successful in leveraging this foundation of scientific
and engineering capabilities into other market areas, including an expanding base on commercial and
industrial clients. Our services are provided by a wide range of professionals, including archaeologists,
architects, biologists, chemical engineers, chemists, civil engineers, computer scientists, economists,
electrical engineers, environmental engineers, environmental scientists, geologists, hydrogeologists,
mechanical engineers, oceanographers, project managers and toxicologists. Because of the experience that
we have gained from thousands of completed projects, we have relevant expertise to draw from, and are
often able to adapt and apply proven solutions to our clients’ problems.

Global Coverage and Local Delivery. We believe that proximity to our clients is instrumental to
understanding their needs and delivering comprehensive services. We have significantly broadened our
geographic presence in recent years through strategic acquisitions and internal growth. We currently have
North American operations throughout the United States and Canada. We have also increased our
international presence with regional offices in Australia, Europe, Asia, South America, Africa and the
Middle East. Our base of operations in North America and network of international offices provide a
platform from which we can respond to the global need for essential water, environment, and energy
services and help foster economic development. Over the past year, we worked in 113 countries, helping
federal and local government agencies, the private sector and development assistance entities address

complex water, environment, energy and related infrastructure needs in an environmentally responsible
manner.

Leverage Existing Client Base. We believe that we can effectively expand our service offerings to
existing clients, resulting in more comprehensive and interdisciplinary projects. We have regularly been
able to secure design and program management contracts after having supported clients in the scientific
evaluation and engineering phases of a project. By expanding our role with existing clients, we can address
larger problems and provide integrated solutions. For our global clients, we also focus on expanding from
localized geographic areas to provide broader national and international support in multiple locations.

Identify and Expand into New Business Areas. We use our consulting services and specialized
technical services as entry points to evaluate adjacent business areas. After our consulting practice is
established in a new business area, we can expand our operations by offering additional technical services.
For example, based on our work in watershed management consulting, we identify adjacent opportunities
and expand into water infrastructure and engineering services.

Focus on Large, Complex and Interdisciplinary Projects. We continue to focus on expanding our
public and private sector services and bidding for complex projects that are at the leading edge of policy
and technology development. We develop
integrated, sustainable solutions by combining our
interdisciplinary capabilities in water, environment, energy, infrastructure and natural resources. Our
combination of technical expertise with practical applications provides challenging and rewarding
opportunities for our employees, thereby enhancing our ability to recruit and retain top quality talent.

Focus on Cash Generation. We take a disciplined approach to monitoring, managing and
improving our return on investment in each of our business areas through our efforts to negotiate
appropriate contract terms, manage our contract performance to minimize schedule delays and cost
overruns, and promptly bill and collect accounts receivable.

Actively Attract, Recruit and Retain Strategic Hires. We focus on attracting and retaining
top-quality individuals who provide technical skills, innovative thinking, teamwork and dedication to
maintaining long-term client relationships. Our full-service capabilities, internal networking programs,
entrepreneurial environment, focus on technical excellence and global project portfolio help to attract and
retain highly qualified individuals who support our long-term growth.

Develop and Maintain Strategic Partnerships with Small Business Companies and Communities.

In
working with suppliers, we are committed to being an excellent partner and mentor, consistent with our
desire to lead with science and develop approaches to best serve our global clients. When combined with
our considerable capabilities and expertise, value-added partnerships with external companies and
suppliers can enhance the services we provide to our clients. We have established a Small Business and
Partnerships Council to identify and promote the most successful partnerships and to coordinate best
practices across our company.

Invest in Strategic Acquisitions. We believe that strategic acquisitions will allow us to continue our
growth in selected business areas, broaden our service offerings and extend our geographic presence. We
intend to continue to acquire companies that will help establish our position in certain emerging business
areas or further strengthen our position in our more established businesses. Our effective integration of
acquired companies can continue to enhance our ability to compete technically and geographically.

Reportable Segments

In fiscal 2013, we managed our business under three reportable segments. The following table

presents the percentage of our revenue by reportable segment:

Reportable Segment

Engineering and Consulting Services . . . . . .
Technical Support Services . . . . . . . . . . . . .
Remediation and Construction Management . .
Inter-segment elimination . . . . . . . . . . . . . .

2013

39.6%
35.7
27.8
(3.1)

Fiscal Year

2012

42.6%
37.7
22.9
(3.2)

2011

43.1%
38.7
23.5
(5.3)

100.0%

In the first quarter of fiscal 2013, we implemented a reorganization of our operations to improve
future growth and profitability, including the consolidation and realignment of certain operating activities
to achieve efficiencies in our segment management. This reorganization included the elimination of the
Engineering and Architecture Services (‘‘EAS’’) reportable segment, and the re-assignment of its
operations to the Engineering and Consulting Services and Technical Support Services segments. Prior
year amounts have been reclassified to conform to the current-year presentation.

For additional information regarding our reorganization and our reportable segments, see
Note 18, ‘‘Reportable Segments’’ of the ‘‘Notes to Consolidated Financial Statements’’ included in Item 8.
For more information on risks related to our business, segments and geographic regions, including risks
related to foreign operations, see Item 1A, ‘‘Risk Factors’’ of this report.

Engineering and Consulting Services (‘‘ECS’’)

ECS provides front-end science, consulting engineering and project management services in the
areas of surface water management, water infrastructure, solid waste management, mining, geotechnical
sciences, arctic engineering, industrial processes and oil sands, transportation and information technology.

Surface Water Management. Public concern with the quality of rivers, lakes, streams, and coastal
and marine waters, and the ensuing legislative and regulatory response, is driving demand for our services.
More recently, two important factors have raised the visibility of the need for surface water management:
competition for water resources and climate variations, such as those that cause increasingly severe
droughts and floods. Over the past 40 years, we have developed a specialized set of technical skills that
position us to compete effectively for surface water and watershed management projects. We provide water
resource services to U.S. federal and Canadian provincial government clients such as the U.S.
Environmental Protection Agency (‘‘EPA’’), the U.S. Department of Defense (‘‘DoD’’), the U.S.
Department of Energy (‘‘DOE’’) and the Alberta Ministry of Environment. We also provide these services
to a broad base of commercial clients, including those in the aerospace, chemical, alternative energy,
mining, oil and gas, pharmaceutical, retail and utility industries. Further, we provide surface water
modeling services to municipal government agencies in the United States and Canada, particularly in the
areas of watershed management, climate adaptation analysis, flood control, and the optimal management
of stormwater and combined sewer overflow systems.

Water Infrastructure. Our design and technical services are applied to numerous aspects of water
quality and quantity management, including major water and wastewater treatment plants, combined sewer
storage and separation, and drainage and flood control. Our experience includes planning, permitting,
design and construction management services for water treatment facilities, desalination facilities and
water distribution systems, including pipelines and pump stations. We also support planning, permitting,

design and construction of water-related redevelopment projects, and parks and river corridor restoration
projects.

Solid Waste Management. We provide a wide range of engineering and consulting services for
solid waste management, including landfill design and management. We also provide full-service solutions
for gas-to-energy facilities using landfill methane gas. These services are performed throughout the United
States and Canada.

Mining. We offer a full range of services for mining projects worldwide, including resource
assessment, mine development, operations support and closure/remediation. Our full-service mining
services team includes geologists, metallurgists, mine engineers, environmental scientists and water
specialists. We address tough challenges in engineering design, procurement and construction to support
all areas of mine operations, including underground and open pit operations, surface infrastructure, mills
and process plants, power generation and transmission projects, water treatment, tailings management and
regulatory compliance.

Geotechnical Services. Our geotechnical practice

includes geotechnical engineers, soils
technicians and drillers who investigate, analyze and develop geotechnical engineering recommendations
for all types of soil and rock conditions. We have specialized capabilities to evaluate, monitor and design
foundations and materials for roads, bridges, levees, flood walls and buildings located in extremely poor
soil conditions, including conditions common to coastal regions.

Arctic Engineering. We provide consulting and construction services to owners of transportation,
mining, energy and community infrastructure in the circumpolar region, which includes the Arctic and
areas of permafrost around the globe. In this extreme environment where temperatures can drop below
(cid:4)50 (cid:5)C ((cid:4)58 (cid:5)F), we provide adaptive engineering and scientific services that reach beyond traditional
approaches. We are one of the few firms that are capable of providing full life-cycle services for northern
development. We offer these arctic engineering services during all project phases: exploration and project
planning; feasibility studies, design and permitting; engineering, procurement and construction
management (‘‘EPCM’’), and construction; and operation, decommissioning and reclamation.

Industrial Processes and Oil Sands. We offer plant engineering services for clients in heavy
industry, including mining and metals, and oil sands, as well as for those in the chemical and petrochemical
industries. We have supported the industrial processes needs of clients with expertise in the production of
base, rare, ferrous and agricultural minerals. We help renovate, upgrade and modernize industrial
facilities, including concentrators, smelters and refineries. We provide significant services to major clients
in the oil sands region of northern Alberta, Canada, including the management of tailings treatment and
recovery. We also provide plant engineering, project execution, program management and full EPCM
services for industrial process projects throughout North America.

Transportation. We provide engineering, architecture, construction management and technical
services for transportation projects that improve public safety and mobility. Our transportation projects
include roadway monitoring and improvements, commuter railway stations, airport expansions, bridges
and major highways. We provide design solutions to repair, replace and upgrade older transportation
infrastructure.

Information Technology. We provide

to support data
management, data processing, communications and outreach, and systems development. Our projects
range from large-scale environmental monitoring, modeling and data management to systems engineering
and design for major infrastructure rehabilitation programs. We provide systems analysis and information
management to optimize the U.S. National Airspace System and related aviation systems. We also support

technology systems

integration

research and technical services for national-scale water resource and environmental data management,
including archiving and statistical analysis.

Technical Support Services (‘‘TSS’’)

TSS provides management consulting and engineering services and strategic direction in the areas
of environmental assessments/hazardous waste management, climate change, international development,
international reconstruction and stabilization, energy, oil and gas, technical government consulting, and
building and facilities.

Environmental Assessments/Hazardous Waste Management. We provide comprehensive services
for environmental planning, cleanup and reuse of sites contaminated with hazardous materials, toxic
chemicals, and oil and petroleum products. Our services cover all phases of the remedial planning process,
starting with emergency response and initial site assessment through removal actions, remedial design and
implementation management. Sites range from small properties undergoing voluntary cleanup, to
brownfields redevelopment projects, to DoD installations, to some of the largest and most complex
Superfund sites in the United States. We support both commercial and government clients in planning and
implementing remedial activities at numerous sites around the world. We also provide a broad range of
environmental analysis and planning services to ensure that our clients are implementing their operations
in a sustainable manner. Our services include air quality management, regulatory compliance, information
management and geographic information systems, radiation protection and health physics, risk
management, pollution prevention and control, radioactive and hazardous waste management, National
Environmental Policy Act services and environmental response training.

Climate Change.

In a resource-constrained world, our experts assist clients in identifying,
reducing and strategically managing their environmental footprint to provide cost savings, mitigate
regulatory impacts, institute operational efficiencies, develop new business opportunities and promote
corporate responsibility. Our services support our clients’ efforts to become sustainable by ‘‘greening’’
energy supplies, implementing energy efficiency and resource conservation, using alternative fuels,
capturing and sequestering carbon, improving land and forest resource management, and purchasing
carbon offsets. We have demonstrated that clients can concurrently reduce their carbon emissions and
environmental impacts while saving money. Our services include climate change and strategic management
consulting, project implementation, and greenhouse gas inventory assessment, certification, reduction and
management.

International Development. We provide services to many donor agencies such as the U.S. Agency
for International Development (‘‘USAID’’), the World Bank, the Asian Development Bank and the
United Kingdom Department for International Development to develop safe and reliable water supplies
and sanitation services, support the eradication of poverty, improve livelihoods, promote democracy and
increase economic growth. We plan, design, implement, research and monitor projects in the broad areas
of climate change, agriculture and rural development, governance and institutional development, natural
resources and the environment, infrastructure, economic growth, energy, rule of law and justice systems,
land tenure and property rights, and training and consulting for public-private partnerships. We build
capacity and strengthen institutions in areas such as global health, energy sector reform, utility
management, food security and local governance. We currently provide international development services
in numerous countries around the world, working for the U.S. Department of State (‘‘DoS’’), USAID, the
Millennium Challenge Corporation (‘‘MCC’’) and the DoD.

International Reconstruction and Stabilization. We provide integral support to the DoS and
USAID in reconstruction and stabilization worldwide, including the design, development, implementation
and evaluation of these efforts. We also help develop training programs and curricula for ‘‘whole of
government’’ reconstruction and stabilization training offered through the Foreign Service Institute. We

helped develop the Interagency Conflict Assessment Framework, the tool now used by the U.S.
government to assess and develop solutions in conflict-prone environments. Our experts have worked on
these issues in such countries as the Republic of Georgia, South Sudan, Kosovo, Haiti, Bangladesh, Nepal
and the Democratic Republic of Congo. We support the DoS by providing subject matter experts in areas
such as energy, criminal justice and drug interdiction.

Energy. We provide a full range of services to electric power utilities and independent power
producers worldwide, ranging from macro-level planning, management and advisory services to project-
specific environmental, engineering and construction services. For utilities and governmental agencies
regulating power, we provide policy and regulatory development, utility management and privatization,
power asset evaluation and management, and transaction support services. For energy developers and
owners of renewable and conventional power generation facilities, as well as transmission and distribution
assets, we provide environmental, engineering, procurement, and operations and maintenance services for
all project phases. Our projects range from onshore and offshore wind facilities and solar farms to
liquefied natural gas facilities.

Oil and Gas. We support oil and gas clients in the upstream, midstream and downstream market
sectors. Our services include environmental support, siting studies, strategic planning and analyses, design
of well pads and surface impoundments for drilling sites, water management for exploration activities,
design of midstream pipelines and associated pumping stations and storage facilities, construction
monitoring, biological and cultural assessments, site investigations and hazardous waste site remediation.

Technical Government Consulting. We provide a broad spectrum of professional and technical
services, including advisory and assistance services, to supplement and support the internal staff of our
U.S. federal government clients. Our service offerings include facility planning and operational support,
infrastructure development and management, human resource management, program and logistics
management, engineering, test and evaluation, information technology, and administrative support. We
provide senior advisors and subject matter experts to a diverse array of clients including the DoS, U.S.
National Guard Bureaus, the Missile Defense Agency and the MCC in such areas as political-military
affairs, public diplomacy and strategic communication, strategic planning, and measurement and
evaluation.

Buildings and Facilities. We provide planning, architectural and engineering services for U.S.
federal, state and local government and commercial facilities including military housing, educational,
institutional, corporate headquarters, healthcare and research facilities. We specialize in designing
high-performance, sustainable facilities that minimize environmental impacts, typically by minimizing
water and power usage. Many of these green buildings include integrated interior systems for heat, light,
security and communications, and may ultimately achieve Leadership in Energy and Environmental
Design certification. Our projects include high-rise office buildings, museums, hotels, parks, visitor centers,
marinas, and entertainment and leisure facilities. We have provided civil, electrical, mechanical, structural,
plumbing and fire protection engineering and design services for high-profile buildings around the world.
We have completed engineering and construction management projects for a wide range of clients with
specialized needs such as security systems, training and audiovisual facilities, clean rooms, laboratories,
medical facilities and emergency preparedness facilities.

Remediation and Construction Management (‘‘RCM’’)

RCM provides full-service support, including construction and construction management, to all of
our client sectors, including the U.S. federal government in the United States and internationally, and
commercial clients worldwide, in the areas of environmental remediation, infrastructure development,
solid waste management, energy, and oil and gas.

Environmental Remediation. We provide environmental remediation and reconstruction services
to evaluate and restore lands to beneficial use. Under the U.S. federal government’s Base Realignment
and Closure (‘‘BRAC’’) Act, we help remediate and restore facilities at military locations in the United
States and around the world. We also manage large, complex sediment remediation programs that help
restore rivers and coastal waters to beneficial use. Environmental remediation also includes activities to
identify, evaluate and destroy unexploded ordinance (UXO), both domestically and internationally.

Infrastructure Development. We provide program management, construction management, and
development services for large-scale water management infrastructure, including flood protection
structures, water conveyance and treatment facilities, and hydroelectric power projects. For the mining
industry we build processing plants, facilities, and supporting infrastructure. We also support our clients in
developing a wide range of transportation-related structures and interconnections, including roads,
bridges, aviation/runways, and ports and harbor facilities. We provide environmental, engineering,
procurement, construction, and operations and maintenance services for all project phases.

Solid Waste Management. We provide program management, construction management,
development and maintenance services for solid waste management systems including landfills and
hazardous waste disposal. We provide design, construction management, and maintenance services to
manage solid and hazardous waste, for environmental, wastewater, energy, oil and gas containment,
mining, utilities, aquaculture, and other industrial clients. We design and install geosynthetic liners for
large lining and capping projects, as well as innovative renewable energy projects such as solar energy-
generating landfill caps. We also provide full-service solutions for gas-to-energy facilities to efficiently use
landfill methane gas.

Energy. We provide full range of services for alternative and conventional energy development.
For wind, solar and hydroelectric power development and upgrade projects, we provide environmental,
engineering, procurement, construction, and operations and maintenance services for all project phases.
We provide construction management, construction and electrical services to bring projects to completion.
We provide retrofit, rehabilitation and renovation to aging conventional power plants, as well as
decontamination and decommissioning. We also provide full-range services for other energy technologies
including hydropower, geothermal, nuclear and biogeneration technologies.

Oil and Gas. We provide safe, reliable services from initial site conception, preparation and
permitting to engineering, construction and start-up. We support the upstream, midstream and
downstream components of the oil and gas industry including project controls, estimating, constructability,
engineering, procurement, construction, construction management, equipment and material management.

Project Examples

The following table presents brief examples of projects in our three segments during fiscal 2013:

Segment

ECS

Representative Projects

• Assisting the EPA Office of Wastewater Management in conducting the Clean
Watersheds Needs Survey to assess financial needs for constructing wastewater
treatment plants and other water-related infrastructure.

• Providing watershed planning and modeling services for City of San Diego,
California to address water quality and optimize stormwater management program
needs.

Segment

Representative Projects

• Providing full-service support to Cameco Corporation, such as due diligence,
feasibility studies, environmental assessment and permitting, and EPCM, including
design delivery and support for all phases of global uranium mine operations.

• Providing mine planning services to Nevada Copper’s Pumpkin Hollow Mine, one of
the largest U.S. copper mines, including development of the complete mine plan
from start up through construction, operations and closure.

• Providing engineering design services to Shell Canada for sustaining capital
improvements and management of tailings waters at one of the world’s largest oil
sands mining operations in northern Alberta, Canada.

• Providing engineering design and environmental management services to the U.S.
Army Corps of Engineers (‘‘USACE’’) for the Port of Miami channel deepening
environmental mitigation program.

• Providing a combined sewer overflow (CSO) control strategy that improves real time
control (RTC) rules, to reduce overflows, maximize use of retention in the system
and improve operational efficiency, in the City of Edmonton, Alberta, Canada.

• Providing engineering design services to the City of San Antonio, Texas for the
planning and design of a 30 million gallons per day reverse osmosis brackish
groundwater water supply treatment system which will be the largest of its kind in
the United States when completed.

TSS

• Providing technical, analytical and programmatic support under the EPA’s
Brownfields and Land Revitalization Program to promote the assessment, cleanup
and revitalization of properties affected by the presence or potential presence of
hazardous substances, pollutants and other contaminants.

• Providing support to EPA’s Climate Change Division to reduce emissions of
methane, a potent greenhouse gas and potential source of clean energy. Supporting
EPA’s Natural Gas STAR, a voluntary partnership program that encourages oil and
natural gas companies to adopt cost-effective technologies and practices that
improve operational efficiency and reduce methane emissions, and AgStar, which
aims to reduce emissions from livestock and agro-industrial wastes by promoting the
use of anaerobic digestion systems and biogas recovery.

• Working with USAID to implement innovative approaches to strengthen property
rights and resource tenure as methods of advancing U.S. government strategic
foreign affairs objectives by enhancing food security and economic growth, resource
governance, strengthened property rights for women and vulnerable groups, climate
change adaptation, and conflict prevention.

• Helping USAID implement multiple international development programs in
Afghanistan, including the Sustainable Water Supply and Sanitation contract; the
Rule of Law Stabilization Program – Formal Component; the Kabul City Initiative;
and the Land Reform in Afghanistan program.

Segment

Representative Projects

• Providing program management, integration and technical services to the U.S. Army
Chemical Materials Agency (‘‘CMA’’) to support the efficient destruction of
chemical warfare and related materiel. Helping CMA manage its non-stockpile
chemical materiel program, comply with
international chemical weapons
conventions and move towards ultimate closure of chemical agent disposal facilities
and stockpile storage areas.

• Providing specialty marine impact studies, permitting services, biological and cultural
resources surveys, design and construction support for Garden State Offshore
Energy, LLC, a major offshore wind developer.

• Providing engineering, detailed design and construction monitoring for multiple oil
and gas midstream pipeline companies such as Enbridge Inc., Kinder Morgan
Energy Partners, L.P. and Plains All American Pipeline, L.P.

• Supporting environmental activities at U.S. Air Force (‘‘USAF’’), U.S. Army and
U.S. Navy (‘‘USN’’) installations worldwide to assist the DoD in its environmental
mission in the areas of environmental conservation and planning, environmental
quality, environmental restoration, design and construction.

RCM

• Providing engineering, project management and construction management to help
construct facilities and infrastructure in Afghanistan for the USAF and the USACE.

• Providing design-build services for energy-efficient facilities and environmental
restoration services at various DoD BRAC sites, such as the Hunters Point Naval
Shipyard and former Naval Air Station Alameda, both located on San Francisco Bay,
California.

• Providing turn-key solutions for utilities and commercial energy developers,
including environmental studies, permitting, engineering, design, construction, and
operations and maintenance services for wind farms and solar facilities throughout
the United States.

• Providing turn-key design, construction, dredging and treatment services for the

Lower Fox River remediation and clean-up project.

• Providing design-build and construction management services for energy-efficient
facilities particularly for the military, such as the Transient Wounded Warrior Lodge
and Parking Structure at the Walter Reed National Medical Center in Bethesda,
Maryland and the North America Treaty Organization Supreme Allied Commander
Transformation Headquarters in Norfolk, Virginia.

• Improving the aging infrastructure in the United States through rehabilitation and

construction of highways, overpasses and bridges.

• Providing technical support, engineering and construction management of oil and

gas pipelines and oil field facilities.

• Providing construction services to mining clients in support of capital projects and

maintenance.

Clients

We provide services to a diverse base of international, U.S. commercial, U.S. federal and U.S.
state and local government clients. The following table presents the percentage of our revenue by client
sector:

Client Sector

International (1)
. . . . . . . . . . . . . . . . . .
U.S. commercial . . . . . . . . . . . . . . . . . .
U.S. federal government (2)
. . . . . . . . . .
U.S. state and local government . . . . . . .

2013

26.7%
26.5
31.8
15.0

100.0%

Fiscal Year

2012

24.5%
26.5
37.2
11.8

100.0%

2011

23.2%
22.4
43.4
11.0

100.0%

(1)

(2)

Includes revenue generated from foreign operations, primarily in Canada, and revenue generated from
non-U.S. clients.
Includes revenue generated under U.S. federal government contracts performed outside the United
States.

U.S. federal government agencies are significant clients. The DoD accounted for 12.1%, 14.4%
and 20.4% of our revenue in fiscal 2013, 2012 and 2011, respectively. We typically support multiple
programs within a single U.S. federal government agency, both domestically and internationally. We also
assist U.S. state and local government clients in a variety of jurisdictions across the United States. In
Canada, we work for several provinces and a variety of local jurisdictions. Our commercial clients include
companies in the chemical, energy, mining, pharmaceutical, retail, aerospace, automotive, petroleum and
communications industries. No single client, except for U.S. federal government clients, accounted for
more than 10% of our revenue in fiscal 2013.

The following table presents a list of representative clients in fiscal 2013 in our reportable

segments.

Reportable
Segment

ECS

Representative Clients

U.S. Federal
Government

U.S. State and Local
Governments

U.S. Commercial

International

General Motors;

Barrick Gold Corp.; Alberta

California
DoD; EPA; Federal
Department of Water Chevron Mining Inc.; Transportation;
Aviation
Cameco Corp.;
Resources; Cities of
ConocoPhillips Co.;
Administration
Chevron Corp.; City
Atlanta, Georgia and Exxon Mobil Corp.;
(‘‘FAA’’); General
of Calgary, Alberta;
San Diego,
Services
City of Winnipeg,
California; Counties Kinder Morgan
Administration;
International
Energy Partners, L.P.; Manitoba; Hydro
of Los Angeles,
Boundary and Water Orange and Ventura, The Mosaic Co.;
California; Louisiana Nevada Copper
Commission;
Corp.; Newmont
National Oceanic and Office of Coastal
Mining Corp.; Suncor Generation Inc.;
Atmospheric
Administration
Energy Inc.; Waste
(‘‘NOAA’’); USACE; Michigan, Seattle and Management, Inc.
USAF; USAID; U.S. Washington State
Bureau of
Reclamation; U.S.
Department of the
Interior, Bureau of
Land Management;
U.S. Coast Guard
(‘‘USCG’’); U.S.
Forest Service
(‘‘USFS’’); USN

Panama Canal
Authority; Shell
Canada Limited;
Terrane Metals
Corp.; Winnipeg
Airports
Authority Inc.; Yukon
Zinc Corporation

One Incorporated;
Hydro-Quebec;
Ontario Power

Protection and
Restoration;

Department of
Transportation
(‘‘DOTs’’);
Plaquemines Parish
Government,
Louisiana; Port of
Los Angeles,
California; Port of
Long Beach,
California; Prince
George’s County,
Maryland; State of
Wyoming

Reportable
Segment

TSS

Representative Clients

U.S. Federal
Government

U.S. State and Local
Governments

U.S. Commercial

International

Alcoa Inc.;
Cities of Chicago,
Illinois, Fort Pierce,
Appalachia
Florida, Kansas City, Midstream

Gamesa Corporac´ıon
Tecnol´ogica; EDP
Renewables North
America, LLC
(formerly Horizon

DOE; DoS;
Department of
Homeland Security;
EPA; MCC; National Missouri and Los
Aeronautics and
Space
Administration;
National Guard
Bureaus; National
Nuclear Security
Administration;
NOAA; USAF;
USACE; USAID;
USCG; USFS; U.S.
Missile Defense
Agency; USN; U.S.
Transportation
Security
Administration

Chartis Inc.;
ConocoPhillips Co.; OPMAC Corporation
of Japan; Renewable
Energy Systems Ltd.;

Services, LLC;
AT&T Inc.; Carson
Angeles, California;
Ports of Los Angeles Marketplace, LLC; Wind Energy, LLC);
and San Diego,
California; Public
Utility Commission of DCP Midstream;
Texas; States of
California,
Massachusetts,
Missouri, Montana,
New Jersey, New
York, North Dakota, Energy Corporation;
Pennsylvania and
Enbridge Inc.;
Wisconsin; South
Excelerate Energy;
Exxon Mobil Corp.;
Florida Water
Management District Ford Motor Co.; GE

Deep Water Wind
New England, LLC; Ridgeline Energy
Dominion; D.R.
Horton, Inc.; El Paso AG (Germany);
Corp.; El Paso

Services, Inc.; RWE

Saudi ARAMCO

Iberdrola S.A.;

Hitachi Nuclear
Energy; Idaho Power;
Lockheed Martin
Corp.; McClellan
Business Park, LLC;
Mitsubishi Nuclear
Energy; NextEra
Energy
Resources, LLC;
Occidental Chemical
Corporation; Portland
General Electric;
Range Resources-
Appalachia, LLC;
Southern California
Gas Company; Statoil
North America;
Sunoco Logistics;
W.R. Grace & Co.

Reportable
Segment

RCM

Representative Clients

U.S. Federal
Government

U.S. State and Local
Governments

U.S. Commercial

International

New Jersey Turnpike ACCIONA North

DoD; The Naval
Facilities Engineering Authority; New York America; Alcoa Inc.; Cameco Corporation;
Command; USACE;
USAID; U.S. Air
Force Civil Engineer Orlando Utilities
Center; USCG

Canada ULC; Shell
Canada Ltd.;

State and North
Carolina DOTs;

Atco Pipelines;

Commission

AT&T Inc.; Chevron Plains Midstream
Corp.; Cogentrix
Energy, LLC;
Comcast Corp.; CPV Williams Energy
Keenan II Renewable Canada ULC
Energy Co., LLC;
Idaho Power Co.;
Invenergy Wind LLC;
Lower Fox River
Remediation LLC;
Marble River, LLC;
NextEra Energy
Resources, LLC;
Noble
Constructors, LLC;
Verizon
Communications Inc.;
Waste
Management, Inc.

Contracts

Our services are performed under three principal types of contracts with our clients: fixed-price,
time-and-materials, and cost-plus. The following table presents the percentage of our revenue by contract
type:

Contract Type

Fixed-price . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Time-and-materials . . . . . . . . . . . . . . . . . . . . . .
Cost-plus . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2013

42.9%
39.2
17.9

Fiscal Year

2012

40.2%
40.8
19.0

2011

40.4%
38.7
20.9

100.0%

Our clients select the type of contract we enter into for a particular engagement. Under a fixed-
price contract, the client agrees to pay a specified price for our performance of the entire contract or a
specified portion of the contract. Some fixed-price contracts can include date-certain and/or performance
obligations. Fixed-price contracts carry certain
losses from
underestimating costs, delays in project completion, problems with new technologies, price increases for
materials, and economic and other changes that may occur over the contract period. Consequently, the
profitability of fixed-price contracts may vary substantially. Under our time-and-materials contracts, we are
paid for labor at negotiated hourly billing rates and also paid for other expenses. Profitability on these
contracts is driven by billable headcount and cost control. Many of our time-and-materials contracts are
subject to maximum contract values and, accordingly, revenue related to these contracts is recognized as if
these contracts were fixed-price contracts. Under our cost-plus contracts, some of which are subject to
contract ceiling amount, we are reimbursed for allowable costs and fees, which may be fixed or

including risks of

inherent risks,

performance-based. If our costs exceed the contract ceiling or are not allowable, we may not be able to
obtain full reimbursement. Further, the amount of the fee received for a cost-plus award fee contract
partially depends upon the client’s discretionary periodic assessment of our performance on that contract.

Some contracts with the U.S. federal government are subject to annual funding approval. U.S.
federal government agencies may impose spending restrictions that limit the continued funding of our
existing contracts and may limit our ability to obtain additional contracts. These limitations, if significant,
could have a material adverse effect on us. All contracts with the U.S. federal government may be
terminated by the government at any time, with or without cause.

U.S. federal government agencies have formal policies against continuing or awarding contracts
that would create actual or potential conflicts of interest with other activities of a contractor. These policies
may prevent us from bidding for or performing government contracts resulting from or related to certain
work we have performed. In addition, services performed for a commercial or government sector client
may create conflicts of interest that preclude or limit our ability to obtain work for a private organization.
We attempt to identify actual or potential conflicts of interest and to minimize the possibility that such
conflicts could affect our work under current contracts or our ability to compete for future contracts. We
have, on occasion, declined to bid on a project because of an existing or potential conflict of interest.

Some of our operating units have contracts with the U.S. federal government that are subject to
audit by the government, primarily by the Defense Contract Audit Agency (‘‘DCAA’’). The DCAA
generally seeks to (i) identify and evaluate all activities that contribute to, or have an impact on, proposed
or incurred costs of government contracts; (ii) evaluate a contractor’s policies, procedures, controls and
performance; and (iii) prevent or avoid wasteful, careless and inefficient production or service. To
accomplish this, the DCAA examines our internal control systems, management policies and financial
capability; evaluates the accuracy, reliability and reasonableness of our cost representations and records;
and assesses our compliance with Cost Accounting Standards (‘‘CAS’’) and defective-pricing clauses found
within the Federal Acquisition Regulation (‘‘FAR’’). The DCAA also performs an annual review of our
overhead rates and assists in the establishment of our final rates. This review focuses on the allowability of
cost items and the applicability of CAS. The DCAA also audits cost-based contracts, including the
close-out of those contracts.

The DCAA reviews all types of U.S. federal government proposals, including those of award,
administration, modification and re-pricing. The DCAA considers our cost accounting system, estimating
methods and procedures, and specific proposal requirements. Operational audits are also performed by
the DCAA. A review of our operations at every major organizational level is conducted during the
proposal review period. During the course of its audit, the U.S. federal government may disallow costs if it
determines that we accounted for such costs in a manner inconsistent with CAS. Under a government
contract, only those costs that are reasonable, allocable and allowable are recoverable. A disallowance of
costs by the U.S. federal government could have a material adverse effect on our financial results.

In accordance with our corporate policies, we maintain controls to minimize any occurrence of
fraud or other unlawful activities that could result in severe legal remedies, including the payment of
damages and/or penalties, criminal and civil sanctions, and debarment. In addition, we maintain
preventative audit programs and mitigation measures to ensure that appropriate control systems are in
place.

We provide our services under contracts, purchase orders or retainer letters. Our policy requires
that all contracts must be in writing. We bill our clients in accordance with the contract terms and
periodically based on costs incurred, on either an hourly-fee basis or on a percentage-of-completion basis,
as the project progresses. Most of our agreements permit our clients to terminate the agreements without
cause upon payment of fees and expenses through the date of the termination. Generally, our contracts do

not require that we provide performance bonds. If required, a performance bond, issued by a surety
company, guarantees a contractor’s performance under the contract. If the contractor defaults under the
contract, the surety will, at its discretion, complete the job or pay the client the amount of the bond. If the
contractor does not have a performance bond and defaults in the performance of a contract, the contractor
is responsible for all damages resulting from the breach of contract. These damages include the cost of
completion, together with possible consequential damages such as lost profits.

Marketing and Business Development

Our corporate management team establishes the scope and range of services we provide and our
overall business strategy. Our annual strategic planning defines and guides our investment in marketing
and business development toward priority programs and growth markets. Our centralized business
development support group develops corporate marketing materials, conducts market research, and
manages promotional and professional activities, including appearances at trade shows, direct mailings,
advertising and public relations.

Business development activities are implemented by our technical and professional management
staff throughout the company. We believe that these personnel have the best understanding of a client’s
needs and the effect of local or client-specific issues, laws and regulations and procurement procedures.
Our professional staff members hold frequent meetings with existing and potential clients; give
presentations to civic and professional organizations; and present seminars on current technical topics.
Essential to the effective development of business is each staff member’s access to all of our service
offerings through our internal technical and geographic networks. Our strong internal networking
programs help our professional staff members to pursue new opportunities for both existing and new
clients. These networks also facilitate our ability to provide services throughout the project life cycle from
the early studies through to construction management and operations. Our information technology systems
provide the support for a variety of data needs including skills search tools, business development tracking,
and collaboration.

For our major focus areas, consistent with our strategic plan, we have established company-wide
growth initiatives that reinforce internal coordination, track the development of new programs, identify
and coordinate collective resources for major bids, and help us build interdisciplinary teams for major
pursuits. Our growth initiatives provide a forum for cross-sector collaboration and the development of
interdisciplinary solutions. We continuously identify new markets that are consistent with our strategic plan
and service offerings, and we leverage our full-service capabilities and internal coordination structure to
develop and implement strategies to research, anticipate and position for future procurements and
emerging programs.

Sustainability Program

Our Sustainability Program allows us to encourage, coordinate and report on actions to minimize
our collective impacts on the environment. Our Sustainability Program has three primary pillars: Projects –
the solutions we provide for our clients; Procurement – our procurement and subcontracting approaches;
and Processes – the internal policies and processes that promote sustainable practices, reduce costs and
minimize environmental impacts. We have established a clear set of metrics to evaluate our progress
toward our sustainability goals. We continuously implement sustainability-related policies and practices,
and we assess the results of our efforts in order to improve upon them in the future.

Our Sustainability Program is led by our Chief Sustainability Officer, who has been appointed by
executive management and is supported by other key corporate and operations representatives via our
Sustainability Council. Our executive management team reviews and approves the Sustainability Program

and evaluates our progress in achieving the goals and objectives outlined in our plan. We publish an annual
sustainability report that documents our progress.

Acquisitions

We continuously evaluate the marketplace for strategic acquisition opportunities. Due to our
reputation, size, financial resources, geographic presence and range of services, we have numerous
opportunities to acquire privately and publicly held companies or selected portions of such companies.
During our evaluation, we examine the effect an acquisition may have on our long-range business strategy
and results of operations. Generally, we proceed with an acquisition if we believe that it would have a
positive effect on future operations and could strategically expand our service offerings. Successful
integration and implementation are essential to achieving favorable results. Accordingly, no assurance can
be given that any acquisition will provide accretive results.

Our strategy is to position ourselves to address existing and emerging markets. We view
acquisitions as a key component of our growth strategy, and we intend to use cash, debt or securities, as we
deem appropriate, to fund acquisitions. We may acquire other businesses that we believe are synergistic
and will ultimately increase our revenue and net income, strengthen our ability to achieve our strategic
goals, provide critical mass with existing clients and further expand our lines of service. We typically pay a
purchase price that results in the recognition of goodwill, generally representing the intangible value of a
successful business with an assembled workforce specialized in our areas of interest. Acquisitions are
inherently risky, and no assurance can be given that our previous or future acquisitions will be successful or
will not have a material adverse effect on our financial position, results of operations or cash flow. All
acquisitions require the approval of our Board of Directors, and those in excess of a certain size require
the approval of our lenders.

For detailed information regarding acquisitions, see Note 5, ‘‘Mergers and Acquisitions’’ of the

‘‘Notes to Consolidated Financial Statements’’ included in Item 8.

Competition

The market for our services is generally competitive. We often compete with many other firms

ranging from small regional firms to large international firms.

We perform a broad spectrum of consulting, engineering and technical services across our
reportable segments. Our client base includes U.S. federal government agencies such as the DoD, USAID,
DOE, EPA and FAA; U.S. state and local government agencies; provincial and local government agencies
in Canada; the U.S. commercial sector, which consists primarily of large industrial companies and utilities;
and our international commercial clients, which are predominantly located in Canada and include
primarily mining and oil and gas companies. Our competition varies and is a function of the business areas
in which, and the client sectors for which, we perform our services. The number of competitors for any
procurement can vary widely, depending upon technical qualifications, the relative value of the project,
geographic location, the financial terms and risks associated with the work, and any restrictions placed
upon competition by the client. Historically, clients have chosen among competing firms by weighing the
quality, innovation and timeliness of the firm’s service versus its cost to determine which firm offers the
best value. When less work becomes available in a given market, price becomes an increasingly important
factor.

We believe that our principal competitors include the following firms, in alphabetical order:
AECOM Technology Corporation; AMEC PLC; Arcadis NV; Black & Veatch Corporation; Brown &
Caldwell; CDM Smith Inc.; CH2M HILL Companies, Ltd.; Chemonics International, Inc.; Dessau Inc.;
Foster Wheeler AG; GENIVAR Inc.; GHD; ICF International,Inc.; Jacobs Engineering Group Inc.;

Leidos, Inc., Michael Baker International, LLC; MWH Global, Inc.; Sinclair Knight Merz Pty Ltd.;
SNC-Lavalin Group Inc.; Stantec Inc.; TRC Companies, Inc.; URS Corporation; Weston Solutions, Inc.;
and Willbros Group, Inc.

Backlog

We include in our backlog only those contracts for which funding has been provided and work
authorization has been received. We estimate that approximately 70% of our backlog at the end of fiscal
2013 will be recognized as revenue in fiscal 2014, as work is being performed. However, we cannot
guarantee that the revenue projected in our backlog will be realized or, if realized, will result in profits. In
addition, project cancellations or scope adjustments may occur with respect to contracts reflected in our
backlog. For example, certain of our contracts with the U.S. federal government and other clients are
terminable at the discretion of the client, with or without cause. These types of backlog reductions could
adversely affect our revenue and margins. Accordingly, our backlog as of any particular date is an
uncertain indicator of our future earnings.

At fiscal 2013 year-end, our backlog was $1.9 billion, a decrease of $225.7 million, or 10.6%,
compared to last year-end. We experienced a broad-based decline in our backlog across all client sectors
due to the volatility of current economic conditions, and increased ambiguity as to whether the U.S. or the
global economy will grow modestly or remain stagnant. These conditions have been, and could continue to
be, negatively impacted by mandatory federal budget reductions, or sequestrations, that became effective
in our fiscal second quarter. In addition, the concerns over the economic challenges appear to be
restraining business owners from making the significant investment commitments needed to fund future
growth. As a result, our backlog was negatively impacted by the current economic conditions, including
budget uncertainties, the effect of sequestration, and reduced customer spending. The overall decline was
partially mitigated by the growth in our oil and gas business due to our continued expansion in North
America.

Regulations

We engage in various service activities that are subject to government oversight, including
environmental laws and regulations, general government procurement laws and regulations, and other
regulations and requirements imposed by specific government agencies with which we conduct business.

Environmental. A significant portion of our business involves planning, design, program
management and construction management of pollution control facilities, as well as assessment and
management of remediation activities at hazardous waste or U.S. Superfund sites and military bases. In
addition, we contract with U.S. federal government entities to destroy hazardous materials, including
weapons stockpiles. These activities require us to manage, handle, remove, treat, transport and dispose of
toxic or hazardous substances.

Some environmental laws, such as the Superfund law and similar state and local statutes, can
impose liability for the entire cost of clean-up for contaminated facilities or sites upon present and former
owners and operators, as well as generators, transporters and persons arranging for the treatment or
disposal of such substances. In addition, while we strive to handle hazardous and toxic substances with care
and in accordance with safe methods, the possibility of accidents, leaks, spills and the events of force
majeure always exist. Humans exposed to these materials, including workers or subcontractors engaged in
the transportation and disposal of hazardous materials and persons in affected areas, may be injured or
become ill, resulting in lawsuits that expose us to liability that may result in substantial damage awards.
Liabilities for contamination or human exposure to hazardous or toxic materials, or a failure to comply
with applicable regulations, could result in substantial costs, including clean-up costs, fines, civil or criminal
sanctions, third party claims for property damage or personal injury, or cessation of remediation activities.

Certain of our business operations are covered by U.S. Public Law 85-804, which provides for
government indemnification against claims and damages arising out of unusually hazardous activities
performed at the request of the government. Due to changes in public policies and law, however,
government indemnification may not be available in the case of any future claims or liabilities relating to
other hazardous activities that we perform.

Government Procurement. The services we provide to the U.S. federal government are subject to

FAR and other rules and regulations applicable to government contracts. These rules and regulations:

• require certification and disclosure of all cost and pricing data in connection with the contract

negotiations under certain contract types;

• impose accounting rules that define allowable and unallowable costs and otherwise govern our

right to reimbursement under certain cost-based government contracts; and

• restrict the use and dissemination of information classified for national security purposes and

the exportation of certain products and technical data.

In addition, services provided to the DoD are monitored by the Defense Contract Management
Agency and audited by the DCAA. Our government clients can also terminate any of their contracts, and
many of our government contracts are subject to renewal or extension annually. Further, the services we
provide to state and local government clients are subject to various government rules and regulations.

Seasonality

We experience seasonal trends in our business. Our revenue and operating income are typically
lower in the first half of our fiscal year, primarily due to the Thanksgiving, Christmas and New Year’s
holidays. Many of our clients’ employees, as well as our own employees, take vacations during these
holiday periods. Further, seasonal inclement weather conditions occasionally cause some of our offices to
close temporarily or may hamper our project field work. These occurrences result in fewer billable hours
worked on projects and, correspondingly, less revenue recognized. Our revenue is typically higher in the
second half of the fiscal year due to favorable weather conditions during spring and summer months that
may result in higher billable hours. In addition, our revenue is typically higher in the fourth fiscal quarter
due to the U.S. federal government’s fiscal year-end spending.

Potential Liability and Insurance

Our business activities could expose us to potential liability under various environmental laws and
under workplace health and safety regulations. In addition, we occasionally assume liability by contract
under indemnification agreements. We cannot predict the magnitude of such potential liabilities.

We maintain a comprehensive general liability policy with an umbrella policy that covers losses
beyond the general liability limits. We also maintain professional errors and omissions liability and
contractor’s pollution liability insurance policies. We believe that both policies provide adequate coverage
for our business. When we perform higher-risk work, such as fixed-price remediation, we obtain the
necessary types of insurance coverage for such activities, as is typically required by our clients.

We obtain insurance coverage through a broker that is experienced in the professional liability
field. The broker and our risk manager regularly review the adequacy of our insurance coverage. Because
there are various exclusions and retentions under our policies, or an insurance carrier may become
insolvent, there can be no assurance that all potential liabilities will be covered by our insurance policies or
paid by our carrier.

We evaluate the risk associated with claims. If we determine that a loss is probable and reasonably
estimable, we establish an appropriate reserve. A reserve is not established if we determine that a claim has
no merit or is not probable or reasonably estimable. Our historic levels of insurance coverage and reserves
have been adequate. However, partially or completely uninsured claims, if successful and of significant
magnitude, could have a material adverse effect on our business.

Employees

At fiscal 2013 year-end, we had more than 14,000 staff. A large percentage of our employees have
technical and professional backgrounds and undergraduate and/or advanced degrees, including the
employees of recently acquired companies. Our professional staff includes archaeologists, architects,
biologists, chemical engineers, chemists, civil engineers, computer scientists, economists, electrical
engineers, environmental engineers, environmental scientists, geologists, hydrogeologists, mechanical
engineers, oceanographers, project managers and toxicologists. Approximately 450 employees are
represented by labor unions pursuant to collective bargaining agreements. We often employ union workers
on a project-specific basis. We consider the current relationships with our employees including those
represented by unions, to be favorable. We are not aware of any employment circumstances that are likely
to disrupt work at any of our facilities. See Part I, Item 1A, ‘‘Risk Factors’’ for a discussion of the risks
related to the loss of key personnel or our inability to attract and retain qualified personnel.

Executive Officers of the Registrant

The following table shows the name, age and position of each of our executive officers at

November 14, 2013:

Name

Dan L. Batrack

Age

Chairman, Chief Executive Officer and President

Position

Mr. Batrack joined our predecessor in 1980 and was named
Chairman in January 2008. He has served as our Chief Executive
Officer and a director since November 2005, and as our President
since October 2008. Mr. Batrack has served in numerous capacities
over the last 30 years, including project scientist, project manager,
operations manager, Senior Vice President and President of an
operating unit. He has managed complex programs for many small
and Fortune 500 clients, both
in the United States and
internationally. Mr. Batrack holds a B.A. degree in Business
Administration from the University of Washington.

Name

Steven M. Burdick

Age

Position

Executive Vice President, Chief Financial Officer and Treasurer

Mr. Burdick has served as our Executive Vice President, Chief
Financial Officer and Treasurer since April 2011. He served as our
Senior Vice President and Corporate Controller from January 2004
to March 2011. Mr. Burdick joined us in April 2003 as Vice
President, Management Audit. Previously, Mr. Burdick served as
the Executive Vice President and Chief Financial Officer for Aura
Systems, Inc. From 2000 through 2002 he was the Chief Financial
Officer for TRW Ventures. Prior to this, Mr. Burdick held the
position of Senior Manager with Ernst & Young LLP in Los
in Business
Angeles. Mr. Burdick holds a B.S. degree
Administration from Santa Clara University and is a Certified
Public Accountant.

James R. Pagenkopf

Executive Vice President and President of Engineering and
Consulting Services

Mr. Pagenkopf has served as the President of Engineering and
Consulting Services since September 2009. He has over 35 years of
experience with us in both technical and management roles,
including project and program manager, office manager, group
manager, Vice President, and President of ECS, our largest
operating unit. Mr. Pagenkopf’s academic and professional
background is in the development and application of hydrodynamic
and water quality models, which he has applied in more than 200
projects throughout the United States and internationally. He has
served as program manager on several large technical support
contracts for the EPA’s Office of Water, and more recently has led
our strategic water initiative to focus our growth in the Louisiana/
Gulf Coast and Panama Canal water infrastructure markets.
Mr. Pagenkopf holds a B.S. in Civil Engineering from Valparaiso
the
University and an M.S.
Massachusetts Institute of Technology.

in Civil Engineering

from

Name

Ronald J. Chu

Age

Position

Executive Vice President and President of Technical Support
Services

Mr. Chu has served as the President of Technical Support Services
since June 2007. He has more than 16 years of experience with us
and has served in various technical and management capacities,
including project and program manager, office manager, regional
manager and Chief Operating Officer for TSS. Mr. Chu was named
a Vice President in 2001. He began his career as a civil/sanitary
engineer in 1981 and entered the environmental consulting field in
1984. His career has included management of major assessment,
engineering and remediation programs for the DoD, the EPA, state
and local government agencies, and commercial clients. Mr. Chu is
a registered professional engineer in several states and has
authored numerous technical articles. He holds a B.S. in Civil
in
Engineering from Northeastern University and an M.S.
Environmental Engineering from the University of Southern
California.

Frank C. Gross, Jr.

Executive Vice President and President of Remediation and
Construction Management

Mr. Gross joined us as the President of Remediation and
Construction Management in July 2011. He previously served as
President of the Industrial/Process Business Unit of URS
Corporation’s Washington Division since February 2008. At his
former employer, Mr. Gross led an $850 million per year business
group focused on construction management. He joined URS in
1978 and gained progressive responsibility in a variety of technical
and leadership roles. He has more than 30 years of experience with
large, multi-disciplinary engineering and construction projects in
power, oil and gas, industrial/manufacturing, automotive, and other
in Civil and
heavy
Environmental Engineering from Clarkson University.

industries. Mr. Gross earned a B.S.

William R. Brownlie

Senior Vice President, Chief Engineer and Corporate Risk
Management Officer

Dr. Brownlie was named Senior Vice President and Chief Engineer
in September 2009, and Corporate Risk Management Officer in
November 2013. From December 2005 to September 2009, he
served as President of ECS. Dr. Brownlie joined our predecessor in
1981 and was named a Senior Vice President in December 1993.
Dr. Brownlie has managed various operating units and programs
focusing on water resources and environmental services, including
work with USACE, the USAF, Bureau of Reclamation and DOE.
He is a registered professional engineer and has a strong technical
background in water resources. Dr. Brownlie holds B.S. and M.S.
degrees in Civil Engineering from the State University of New York
at Buffalo and a Ph.D. in Civil Engineering from the California
Institute of Technology.

Name

Richard A. Lemmon

Age

Senior Vice President, Corporate Administration

Position

Mr. Lemmon joined our predecessor in 1981 in a technical capacity
and became a member of its corporate staff in a management
position in 1985. In 1988, at the time of our predecessor’s
divestiture from Honeywell, Inc., Mr. Lemmon structured and
managed many of our corporate functions. He is currently
responsible for insurance, risk management, human resources,
safety and facilities.

Janis B. Salin

Senior Vice President, General Counsel and Secretary

Ms. Salin joined us in February 2002. For the prior 17 years,
Ms. Salin was a Principal with the law firm of Riordan & McKinzie
in Los Angeles (which merged into Bingham McCutchen LLP in
2003), and served as Managing Principal of that firm from 1990 to
1992. She served as our outside counsel from the time of our
formation in 1988. Ms. Salin holds B.A. and J.D. degrees from the
University of California at Los Angeles.

Craig L. Christensen

Senior Vice President, Chief Information Officer

for our

information services and

Mr. Christensen joined us in 1998 through the acquisition of our
Tetra Tech NUS, Inc. (‘‘NUS’’) subsidiary. Mr. Christensen is
responsible
technologies,
including the implementation of our enterprise resource planning
system. Previously, Mr. Christensen held positions at NUS, Brown
and Root Services, and Landmark Graphics subsidiaries of
Halliburton Company where his responsibilities included contracts
administration, finance and system development. Prior to his
service at Halliburton, Mr. Christensen held positions at Burroughs
Corporation and Apple Computer. Mr. Christensen holds B.A. and
M.B.A. degrees from Brigham Young University.

Michael A. Bieber

Senior Vice President, Corporate Development

Mr. Bieber joined us in 1996, and he is currently responsible for
driving strategic growth through the leadership of our mergers and
acquisitions program. Mr. Bieber has overseen our investor
relations function since 2000. From 1996 to 2000, he was a proposal
manager in our corporate marketing group. From 1994 to 1996,
Mr. Bieber served as a strategic business development consultant to
large defense, infrastructure, and environmental firms at CRC, Inc.
and its successor. Prior to that, Mr. Bieber worked for IT
Corporation (now Chicago Bridge & Iron Company N.V.), where
he served as project manager and engineer on government nuclear
and petrochemical projects. Mr. Bieber holds a B.S. degree in Civil
Engineering from the Tennessee Technological University.

Name

Leslie L. Shoemaker

Age

Senior Vice President, Corporate Strategy

Position

Dr. Shoemaker joined us in 1991, and she is currently responsible
for our strategic planning, business development, sustainability and
corporate communications functions. Dr. Shoemaker coordinates
our Strategic Initiatives Program, which supports company-wide
collaboration on key services in our major growth markets.
Dr. Shoemaker is our Chief Sustainability Officer. She also leads
water resources modeling and systems development projects, and
consults on the development of policy and programs for watershed
management and sustainable communities. Dr. Shoemaker has
more than 25 years of industry experience and has previously
served in various technical and management capacities including
project engineer, project manager, Vice President, and technical
practice
in
Mathematics from Hamilton College, a Master of Engineering
from Cornell University and a Ph.D. in Agricultural Engineering
from the University of Maryland.

leader. Dr. Shoemaker holds a B.A. degree

Kevin P. McDonald

Senior Vice President, Corporate Human Resources

(‘‘HR’’),

resources

Mr. McDonald joined us in 2004 through the acquisition of Foster
Wheeler Environmental Corporation. He is responsible for all
including executive
areas of human
compensation, employee benefits, succession planning, human
resources information systems, and employment law compliance.
Prior to leading our corporate HR organization, Mr. McDonald
was the HR Director for one of our subsidiaries. He has more than
30 years’ experience in the engineering and construction services
industry. Mr. McDonald earned a B.S. degree in Management from
the University of Scranton and an M.B.A from Fairleigh Dickinson
University.

Brian N. Carter

Senior Vice President, Corporate Controller and Chief
Accounting Officer

Mr. Carter joined Tetra Tech as Vice President, Corporate
Controller and Chief Accounting Officer in June 2011 and was
appointed Senior Vice President in October 2012. He previously
served as Vice President of Finance and Administration for
Wedbush, Inc., a privately held financial services holding company,
from September 2009 to June 2011. Mr. Carter was Vice President,
Financial Planning and Analysis,
for AECOM Technology
Corporation during 2008 and 2009. He was Executive Vice
President, Financial Planning & Analysis and Management
Accounting for IndyMac Bancorp, Inc. from 2002 to 2008, and he
previously held finance and auditing positions with Huntington
Bancshares, Inc., Nationwide Financial Services, Inc., and Ernst &
Young LLP. Mr. Carter holds a B.S. in Business Administration
from Miami University and is a Certified Public Accountant.

Available Information

All of our periodic report filings with the Securities and Exchange Commission (‘‘SEC’’) pursuant
to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the ‘‘Exchange Act’’), are
made available, free of charge, through our website located at www.tetratech.com, including our Annual
Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any
amendments to these reports. These reports are available on our website as soon as reasonably practicable
after we electronically file with or furnish the reports to the SEC. You may also request an electronic or
paper copy of these filings at no cost by writing or telephoning us at the following: Tetra Tech, Inc.,
Attention: Investor Relations, 3475 East Foothill Boulevard, Pasadena, California 91107, (626) 351-4664.

Item 1A. Risk Factors

We operate in a changing environment that involves numerous known and unknown risks and
uncertainties that could materially adversely affect our operations. Set forth below and elsewhere in this report
and in other documents we file with the SEC are descriptions of the risks and uncertainties that could cause our
actual results to differ materially from the results contemplated by the forward-looking statements contained in
this report. Additional risks we do not yet know of or that we currently think are immaterial may also affect our
business operations. If any of the events or circumstances described in the following risks actually occurs, our
business, financial condition or results of operations could be materially adversely affected.

Our operating results may be adversely impacted by worldwide political and economic uncertainties and
specific conditions in the markets we address.

General worldwide economic conditions have experienced a downturn due to the reduction of
available credit, slower economic activity, concerns about inflation and deflation, increased energy and
commodity costs, decreased consumer confidence and capital spending, adverse business conditions, and,
in the United States, the negative impact on economic growth resulting from the combination of federal
income tax increases and government spending restrictions. These conditions make it extremely difficult
for our clients and our vendors to accurately forecast and plan future business activities and could cause
businesses to slow spending on services, and they have also made it very difficult for us to predict the
short-term and long-term impacts on our business. We cannot predict the timing, strength or duration of
any economic slowdown or subsequent economic recovery worldwide or in our industry. If the economy or
markets in which we operate deteriorate from the level experienced in fiscal 2013, our business, financial
condition and results of operations may be materially and adversely affected.

The implementation of the March 1, 2013 budget sequester under the Budget Control Act of 2011 has
produced significant uncertainty with respect to future government programs and funding, and could
significantly reduce government spending for the services we provide.

The Budget Control Act of 2011imposed U.S. federal government automatic across-the-board
spending cuts, known as the ‘‘sequester,’’ in fiscal year 2013 and beyond. Our work with agencies and
departments of the U.S. federal government, as well as any state government agencies and departments
that are funded directly or indirectly by the U.S. federal government, may be impacted by sequestration or
as a result of any legislation implemented to end the sequester. Uncertainty among our government
customer organizations over the timing and implementation of the sequester is likely to produce delays in
the awards of future contracts. There are many variables in how the sequester will continue to be
implemented that make it difficult to determine any specific consequences on our business in fiscal year
2014 and beyond, but the sequester could have a material adverse effect on our business, results of
operations and financial condition.

Our annual revenue, expenses and operating results may fluctuate significantly, which may adversely affect
our stock price.

Our annual revenue, expenses and operating results may fluctuate significantly because of
numerous factors, some of which may contribute to more pronounced fluctuations in an uncertain global
economic environment. These factors include:

• general economic or political conditions;

• unanticipated changes in contract performance that may affect profitability, particularly with

contracts that are fixed-price or have funding limits;

• contract negotiations on change orders, requests for equitable adjustment, and collections of

related billed and unbilled accounts receivable;

• seasonality of the spending cycle of our public sector clients, notably the U.S. federal
government, the spending patterns of our commercial sector clients, and weather conditions;

• budget constraints experienced by our U.S. federal, state and local government clients;

• integration of acquired companies;

• changes in contingent consideration related to acquisition earn-outs;

• divestiture or discontinuance of operating units;

• employee hiring, utilization and turnover rates;

• loss of key employees;

• the number and significance of client contracts commenced and completed during a quarter;

• creditworthiness and solvency of clients;

• the ability of our clients to terminate contracts without penalties;

• delays incurred in connection with a contract;

• the size, scope and payment terms of contracts;

• the timing of expenses incurred for corporate initiatives;

• reductions in the prices of services offered by our competitors;

• threatened or pending litigation;

• legislative and regulatory enforcement policy changes that may affect demand for our services;

• the impairment of goodwill or identifiable intangible assets;

• the fluctuation of a foreign currency exchange rate;

• stock-based compensation expense;

• actual events, circumstances, outcomes and amounts differing from judgments, assumptions and
estimates used in determining the value of certain assets (including the amounts of related
valuation allowances), liabilities and other items reflected in our consolidated financial
statements;

• success in executing our strategy and operating plans;

• changes in tax laws or regulations or accounting rules;

• results of income tax examinations;

• the timing of announcements in the public markets regarding new services or potential
problems with the performance of services by us or our competitors, or any other material
announcements;

• speculation in the media and analyst community, changes in recommendations or earnings
estimates by financial analysts, changes in investors’ or analysts’ valuation measures for our
stock and market trends unrelated to our stock; and

• continued volatility in the financial markets.

As a consequence, operating results for a particular future period are difficult to predict and,
therefore, prior results are not necessarily indicative of results to be expected in future periods. Any of the
foregoing factors, or any other factors discussed elsewhere herein, could have a material adverse effect on
our business, results of operations and financial condition that could adversely affect our stock price.

Demand for our services is cyclical and vulnerable to economic downturns. If economic growth slows,
government fiscal conditions worsen, or client spending declines further, then our revenue, profits and our
financial condition may deteriorate.

Demand for our services is cyclical, and vulnerable to economic downturns and reductions in
government and private industry spending, such as budget cuts related to federal sequestration. Such
downturns or reductions may result in clients delaying, curtailing or canceling proposed and existing
projects. Our business traditionally lags the overall recovery in the economy; therefore, our business may
not recover immediately when the economy improves. If economic growth slows, government fiscal
conditions worsen, or client spending declines further, then our revenue, profits and overall financial
condition may deteriorate. Our government clients may face budget deficits that prohibit them from
funding new or existing projects. In addition, our existing and potential clients may either postpone
entering into new contracts or request price concessions. Difficult financing and economic conditions may
cause some of our clients to demand better pricing terms or delay payments for services we perform,
thereby increasing the average number of days our receivables are outstanding and the potential of
increased credit losses of uncollectible invoices. Further, these conditions may result in the inability of
some of our clients to pay us for services that we have already performed. If we are not able to reduce our
costs quickly enough to respond to the revenue decline from these clients, our operating results may be
adversely affected. Accordingly, these factors affect our ability to forecast our future revenue and earnings
from business areas that may be adversely impacted by market conditions.

We derive revenue from companies in the mining industry, which is a historically cyclical industry with
levels of activity that are significantly affected by the levels and volatility of prices for commodities. If
economic growth slows or global demand for commodities declines further, then our revenue, profits and
our financial condition may deteriorate.

The businesses of our global mining clients are, to varying degrees, cyclical and have experienced
declines over the last year due to lower global growth expectations and the associated decline in market
prices. For example, depending on the market prices of uranium, precious metals, aluminum, copper, iron
ore and potash, our mining company clients may cancel or curtail their mining projects, which could result
in a corresponding decline in the demand for our services among these clients. Accordingly, the cyclical
nature of the mining market could have a material adverse effect on our business, operating results or
financial condition.

Demand for our oil and gas services fluctuates.

Demand for our oil and gas services fluctuates, and we depend on our customers’ willingness to
make future expenditures to explore for, develop, produce and transport oil and natural gas in the United
States and Canada. For example, in the second quarter of 2013, our revenues were adversely affected by
unusually severe flooding in Western Canada that disrupted activities at project sites. Our customers’
willingness to undertake these activities depends largely upon prevailing industry conditions that are
influenced by numerous factors over which we have no control, including:

• prices, and expectations about future prices, of oil and natural gas;

• domestic and foreign supply of and demand for oil and natural gas;

• the cost of exploring for, developing, producing and delivering oil and natural gas;

• available pipeline, storage and other transportation capacity;

• availability of qualified personnel and lead times associated with acquiring equipment and

products;

• federal, state and local regulation of oilfield activities;

• environmental concerns regarding the methods our customers use to produce hydrocarbons;

• the availability of water resources and the cost of disposal and recycling services; and

• seasonal limitations on access to work locations.

Anticipated future prices for natural gas and crude oil are a primary factor affecting spending by
our customers. Lower prices or volatility in prices for oil and natural gas typically decrease spending, which
can cause rapid and material declines in demand for our services and in the prices we are able to charge for
our services. In addition, should the proposed Keystone XL pipeline project application be denied or
further delayed by the U.S. federal government, then there may be a slowing of spending in the
development of the Canadian oil sands. Worldwide political, economic, military and terrorist events, as
well as natural disasters and other factors beyond our control contribute to oil and natural gas price levels
and volatility and are likely to continue to do so in the future.

We derive a substantial amount of our revenue from U.S. federal, state and local government agencies, and
any disruption in government funding or in our relationship with those agencies could adversely affect our
business.

In fiscal 2013, we generated 46.8% of our revenue from contracts with U.S. federal, state and local
government agencies. U.S. federal government agencies are among our most significant clients. We
generated 31.8% of our revenue for the fiscal 2013 from the following agencies: 12.1% from DoD agencies,
9.7% from USAID and 10.0% from other U.S. federal government agencies. A significant amount of this
revenue is derived under multi-year contracts, many of which are appropriated on an annual basis. As a
result, at the beginning of a project, the related contract may be only partially funded, and additional
funding is normally committed only as appropriations are made in each subsequent year. These
appropriations, and the timing of payment of appropriated amounts, may be influenced by numerous
factors as noted below. Our backlog includes only the projects that have funding appropriated.

The demand for our U.S. government-related services is generally driven by the level of
government program funding. Accordingly, the success and further development of our business depends,
in large part, upon the continued funding of these U.S. government programs, and upon our ability to
obtain contracts and perform well under these programs. There are several factors that could materially
affect our U.S. government contracting business, including the following:

• the failure of the U.S. government to complete its budget process before its fiscal year-end,
which results in the funding of government operations by means of a continuing resolution that
authorizes agencies to continue to operate but does not authorize new spending initiatives. As a
result, U.S. government agencies may delay the procurement of services;

• changes

in and delays or cancellations of government programs, requirements or

appropriations;

• budget constraints or policy changes resulting in delay or curtailment of expenditures related to

the services we provide;

• re-competes of government contracts;

• the timing and amount of tax revenue received by federal, state and local governments, and the

overall level of government expenditures;

• curtailment in the use of government contracting firms;

• delays associated with insufficient numbers of government staff to oversee contracts;

• the increasing preference by government agencies for contracting with small and disadvantaged

businesses;

• competing political priorities and changes in the political climate with regard to the funding or

operation of the services we provide;

• the adoption of new laws or regulations affecting our contracting relationships with the federal,

state or local governments;

• unsatisfactory performance on government contracts by us or one of our subcontractors,
negative government audits, or other events that may impair our relationship with the federal,
state or local governments;

• a dispute with or improper activity by any of our subcontractors; and

• general economic or political conditions.

These and other factors could cause U.S. government agencies to delay or cancel programs, to
reduce their orders under existing contracts, to exercise their rights to terminate contracts or not to
exercise contract options for renewals or extensions. Any of these actions could have a material adverse
effect on our revenue or timing of contract payments from these agencies.

As a U.S. government contractor, we must comply with various procurement laws and regulations and are
subject to regular government audits; a violation of any of these laws and regulations or the failure to pass a
government audit could result in sanctions, contract termination, forfeiture of profit, harm to our
reputation or loss of our status as an eligible government contractor and could reduce our profits and
revenue.

We must comply with and are affected by U.S. federal, state, local and foreign laws and regulations
relating to the formation, administration and performance of government contracts. For example, we must
comply with FAR, the Truth in Negotiations Act, CAS, the American Recovery and Reinvestment Act of
2009, the Services Contract Act and DoD security regulations, as well as many other rules and regulations.
In addition, we must also comply with other government regulations related to employment practices,
environmental protection, health and safety, tax, accounting and anti-fraud measures, as well as many
others regulations in order to maintain our government contractor status. These laws and regulations
affect how we do business with our clients and, in some instances, impose additional costs on our business
operations. Although we take precautions to prevent and deter fraud, misconduct and non-compliance, we
face the risk that our employees or outside partners may engage in misconduct, fraud or other improper
activities. U.S. government agencies, such as the DCAA, routinely audit and investigate government
contractors. These government agencies review and audit a government contractor’s performance under its
contracts and cost structure, and evaluate compliance with applicable laws, regulations and standards. In
addition, during the course of its audits, the DCAA may question our incurred project costs. If the DCAA
believes we have accounted for such costs in a manner inconsistent with the requirements for FAR or CAS,
the DCAA auditor may recommend to our U.S. government corporate administrative contracting officer
to disallow such costs. Historically, we have not experienced significant disallowed costs as a result of
government audits. However, we can provide no assurance that the DCAA or other government audits will
not result in material disallowances for incurred costs in the future. In addition, U.S. government contracts
are subject to various other requirements relating to the formation, administration, performance and
accounting for these contracts. We may also be subject to qui tam litigation brought by private individuals
on behalf of the U.S. government under the Federal Civil False Claims Act, which could include claims for
treble damages. U.S. government contract violations could result in the imposition of civil and criminal
penalties or sanctions, contract termination, forfeiture of profit and/or suspension of payment, any of
which could make us lose our status as an eligible government contractor. We could also suffer serious
harm to our reputation. Any interruption or termination of our U.S. government contractor status could
reduce our profits and revenue significantly.

Our inability to win or renew U.S. government contracts during regulated procurement processes could
harm our operations and significantly reduce or eliminate our profits.

U.S. government contracts are awarded through a regulated procurement process. The U.S.
federal government has increasingly relied upon multi-year contracts with pre-established terms and
conditions, such as indefinite delivery/indefinite quantity (‘‘IDIQ’’) contracts, which generally require
those contractors who have previously been awarded the IDIQ to engage in an additional competitive
bidding process before a task order is issued. As a result, new work awards tend to be smaller and of
shorter duration, since the orders represent individual tasks rather than large, programmatic assignments.

In addition, we believe that there has been an increase in the award of federal contracts based on a
low-price, technically acceptable criteria emphasizing price over qualitative factors, such as past
performance. As a result, pricing pressure may reduce our profit margins on future federal contracts. The
increased competition and pricing pressure, in turn, may require us to make sustained efforts to reduce
costs in order to realize revenue and profits under government contracts. If we are not successful in
reducing the amount of costs we incur, our profitability on government contracts will be negatively
impacted. In addition, the U.S. federal government has scaled back outsourcing of services in favor of
‘‘insourcing’’ jobs to its employees, which could reduce our revenue. Also, the Budget Control Act of 2011
imposed federal spending cuts mandated across the federal budget in fiscal year 2013 and beyond that have
resulted in reductions in the funding for infrastructure, defense and other projects. Moreover, even if we
are qualified to work on a government contract, we may not be awarded the contract because of existing
government policies designed to protect small businesses and under-represented minority contractors. Our
inability to win or renew government contracts during regulated procurement processes could harm our
operations and significantly reduce or eliminate our profits.

Each year, client funding for some of our U.S. government contracts may rely on government appropriations
or public-supported financing. If adequate public funding is delayed or is not available, then our profits and
revenue could decline.

Each year, client funding for some of our U.S. government contracts may directly or indirectly rely
on government appropriations or public-supported financing. Legislatures may appropriate funds for a given
project on a year-by-year basis, even though the project may take more than one year to perform. In
addition, public-supported financing such as U.S. state and local municipal bonds may be only partially raised
to support existing projects. The Budget Control Act of 2011 imposed federal spending cuts mandated across
the federal budget in fiscal year 2013 and beyond that have resulted in reductions in the funding for
infrastructure, defense and other projects. Similarly, the impact of the economic downturn on U.S. state and
local governments may make it more difficult for them to fund projects. In addition to the state of the
economy and competing political priorities, public funds and the timing of payment of these funds may be
influenced by, among other things, curtailments in the use of government contracting firms, increases in raw
material costs, delays associated with insufficient numbers of government staff to oversee contracts, budget
constraints, the timing and amount of tax receipts and the overall level of government expenditures. If
adequate public funding is not available or is delayed, then our profits and revenue could decline.

Our U.S. federal government contracts may give government agencies the right to modify, delay, curtail,
renegotiate or terminate existing contracts at their convenience at any time prior to their completion, which
may result in a decline in our profits and revenue.

U.S. federal government projects in which we participate as a contractor or subcontractor may
extend for several years. Generally, government contracts include the right to modify, delay, curtail,
renegotiate or terminate contracts and subcontracts at the government’s convenience any time prior to
their completion. Any decision by a U.S. federal government client to modify, delay, curtail, renegotiate or
terminate our contracts at their convenience may result in a decline in our profits and revenue.

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

In fiscal 2013, we generated 49.1% of our revenue from U.S. and foreign commercial clients. Due
to continuing weakness in general economic conditions, our commercial business may be at risk as we rely
upon the financial stability and creditworthiness of our clients. To the extent the credit quality of these
clients deteriorates or these clients seek bankruptcy protection, our ability to collect our receivables, and
ultimately our operating results, may be adversely affected.

Our international operations expose us to legal, political and economic risks that could harm our business
and financial results.

In fiscal 2013, we generated 26.7% of our revenue from our international operations, primarily in
Canada, and from international clients for work that is performed by our domestic operations.
International business is subject to a variety of risks, including:

• potential non-compliance with a wide variety of laws and regulations, including anti-corruption
and anti-boycott rules, trade and export control regulations, and other international regulations;

• lack of developed legal systems to enforce contractual rights;

• greater risk of uncollectible accounts and longer collection cycles;

• currency exchange rate fluctuations, devaluations and other conversion restrictions;

• uncertain and changing tax rules, regulations and rates;

• the potential for civil unrest, acts of terrorism and greater physical security risks, which may

cause us to leave a country quickly;

• logistical and communication challenges;

• imposition of governmental controls and potentially adverse changes in laws and regulatory

practices, including tariffs and taxes;

• changes in labor conditions;

• general economic, political and financial conditions in foreign markets; and

• exposure to civil or criminal liability under the U.S. Foreign Corrupt Practices Act (‘‘FCPA’’),
the U.K. Bribery Act, the Canadian Corruption of Foreign Public Officials Act, the anti-boycott
rules, trade and export control regulations, as well as other international regulations.

For example, an on-going government investigation into political corruption in Quebec has
contributed to the slow-down in procurements and business activity in that province, which has adversely
affected our business. The Province of Quebec has adopted legislation that requires businesses and
individuals seeking contracts with governmental bodies (including cities, towns, municipalities and the
provincial government) be certified by a Quebec regulatory authority as deserving the trust of the public
for contracts over a specified size. Our failure to obtain certification could adversely affect our business.

International risks and violations of international regulations may significantly reduce our revenue
and profits, and subject us to criminal or civil enforcement actions, including fines, suspensions or
disqualification from future U.S. federal procurement contracting. Although we have policies and
procedures to monitor legal and regulatory compliance, our employees, subcontractors and agents could
take actions that violate these requirements. As a result, our international risk exposure may be more or
less than the percentage of revenue attributed to our international operations.

We could be adversely affected by violations of the FCPA and similar worldwide anti-bribery laws.

The FCPA and similar anti-bribery laws generally prohibit companies and their intermediaries
from making improper payments to foreign government officials for the purpose of obtaining or retaining

business. The U.K. Bribery Act of 2010 prohibits both domestic and international bribery, as well as
bribery across both private and public sectors. In addition, an organization that ‘‘fails to prevent bribery’’
by anyone associated with the organization can be charged under the U.K. Bribery Act unless the
organization can establish the defense of having implemented ‘‘adequate procedures’’ to prevent bribery.
Practices in the local business community of many countries outside the United States have a level of
government corruption that is greater than that found in the developed world. Our policies mandate
compliance with these anti-bribery laws and we have established policies and procedures designed to
monitor compliance with these anti-bribery law requirements; however, we cannot ensure that our policies
and procedures will protect us from potential reckless or criminal acts committed by individual employees
or agents. If we are found to be liable for anti-bribery law violations, we could suffer from criminal or civil
penalties or other sanctions that could have a material adverse effect on our business.

We could be adversely impacted if we fail to comply with domestic and international export laws.

To the extent we export technical services, data and products outside of the United States, we are
subject to U.S. and international laws and regulations governing international trade and exports, including
but not limited to the International Traffic in Arms Regulations, the Export Administration Regulations
and trade sanctions against embargoed countries. A failure to comply with these laws and regulations could
result in civil or criminal sanctions, including the imposition of fines, the denial of export privileges and
suspension or debarment from participation in U.S. government contracts, which could have a material
adverse effect on our business.

If we fail to complete a project in a timely manner, miss a required performance standard or otherwise fail
to adequately perform on a project, then we may incur a loss on that project, which may reduce or eliminate
our overall profitability.

Our engagements often involve large-scale, complex projects. The quality of our performance on
such projects depends in large part upon our ability to manage the relationship with our clients and our
ability to effectively manage the project and deploy appropriate resources, including third-party
contractors and our own personnel, in a timely manner. We may commit to a client that we will complete a
project by a scheduled date. We may also commit that a project, when completed, will achieve specified
performance standards. If the project is not completed by the scheduled date or fails to meet required
performance standards, we may either incur significant additional costs or be held responsible for the costs
incurred by the client to rectify damages due to late completion or failure to achieve the required
performance standards. The uncertainty of the timing of a project can present difficulties in planning the
amount of personnel needed for the project. If the project is delayed or canceled, we may bear the cost of
an underutilized workforce that was dedicated to fulfilling the project. In addition, performance of projects
can be affected by a number of factors beyond our control, including unavoidable delays from government
inaction, public opposition, inability to obtain financing, weather conditions, unavailability of vendor
materials, changes in the project scope of services requested by our clients, industrial accidents,
environmental hazards, labor disruptions and other factors. To the extent these events occur, the total costs
of the project could exceed our estimates, and we could experience reduced profits or, in some cases, incur
a loss on a project, which may reduce or eliminate our overall profitability. Further, any defects or errors,
or failures to meet our clients’ expectations, could result in claims for damages against us. Failure to meet
performance standards or complete performance on a timely basis could also adversely affect our
reputation.

The loss of key personnel or our inability to attract and retain qualified personnel could impair our ability
to provide services to our clients and otherwise conduct our business effectively.

As primarily a professional and technical services company, we are labor-intensive and, therefore,
our ability to attract, retain and expand our senior management and our professional and technical staff is

an important factor in determining our future success. The market for qualified scientists and engineers is
competitive and, from time to time, it may be difficult to attract and retain qualified individuals with the
required expertise within the timeframe demanded by our clients. For example, some of our U.S.
government contracts may require us to employ only individuals who have particular government security
clearance levels. In addition, we rely heavily upon the expertise and leadership of our senior management.
If we are unable to retain executives and other key personnel, the roles and responsibilities of those
employees will need to be filled, which may require that we devote time and resources to identify, hire and
integrate new employees. With limited exceptions, we do not have employment agreements with any of our
key personnel. The loss of the services of any of these key personnel could adversely affect our business.
Although we have obtained non-compete agreements from certain principals and stockholders of
companies we have acquired, we generally do not have non-compete or employment agreements with key
employees who were once equity holders of these companies. Further, many of our non-compete
agreements have expired. We do not maintain key-man life insurance policies on any of our executive
officers or senior managers. Our failure to attract and retain key individuals could impair our ability to
provide services to our clients and conduct our business effectively.

Our actual business and financial results could differ from the estimates and assumptions that we use to
prepare our financial statements, which may significantly reduce or eliminate our profits.

To prepare financial statements in conformity with generally accepted accounting principles in the
United States of America (‘‘GAAP’’), management is required to make estimates and assumptions as of
the date of the financial statements. These estimates and assumptions affect the reported values of assets,
liabilities, revenue and expenses, as well as disclosures of contingent assets and liabilities. For example, we
typically recognize revenue over the life of a contract based on the proportion of costs incurred to date
compared to the total costs estimated to be incurred for the entire project. Areas requiring significant
estimates by our management include:

• the application of the percentage-of-completion method of accounting and revenue recognition
on contracts, change orders and contract claims including related unbilled accounts receivable;

• unbilled accounts receivable including amounts related to requests for equitable adjustment to
contracts that provide for price redetermination, primarily with the U.S. federal government.
These amounts are recorded only when they can be reliably estimated and realization is
probable;

• provisions for uncollectible receivables, client claims and recoveries of costs from

subcontractors, vendors and others;

• provisions for income taxes, research and experimentation (‘‘R&E’’) credits, valuation

allowances and unrecognized tax benefits;

• value of goodwill and recoverability of other intangible assets;

• valuations of assets acquired and liabilities assumed in connection with business combinations;

• valuation of contingent earn-out liabilities recorded in connection with business combinations;

• valuation of employee benefit plans;

• valuation of stock-based compensation expense; and

• accruals for estimated liabilities, including litigation and insurance reserves.

Our actual business and financial results could differ from those estimates, which may significantly

reduce or eliminate our profits.

Our profitability could suffer if we are not able to maintain adequate utilization of our workforce.

The cost of providing our services, including the extent to which we utilize our workforce, affects
our profitability. The rate at which we utilize our workforce is affected by a number of factors, including:

• our ability to transition employees from completed projects to new assignments and to hire and

assimilate new employees;

• our ability to forecast demand for our services and thereby maintain an appropriate headcount

in each of our geographies and workforces;

• our ability to manage attrition;

• our need to devote time and resources to training, business development, professional

development and other non-chargeable activities; and

• our ability to match the skill sets of our employees to the needs of the marketplace.

If we over-utilize our workforce, our employees may become disengaged, which will impact

employee attrition. If we under-utilize our workforce, our profit margin and profitability could suffer.

Our use of the percentage-of-completion method of revenue recognition could result in a reduction or
reversal of previously recorded revenue and profits.

We account for most of our contracts on the percentage-of-completion method of revenue
recognition. Generally, our use of this method results in recognition of revenue and profit ratably over the
life of the contract, based on the proportion of costs incurred to date to total costs expected to be incurred
for the entire project. The effects of revisions to revenue and estimated costs, including the achievement of
award fees as well as the impact of change orders and claims, are recorded when the amounts are known
and can be reasonably estimated. Such revisions could occur in any period and their effects could be
material. Although we have historically made reasonably reliable estimates of the progress towards
completion of long-term contracts, the uncertainties inherent in the estimating process make it possible for
actual costs to vary materially from estimates, including reductions or reversals of previously recorded
revenue and profit.

If we are unable to accurately estimate and control our contract costs, then we may incur losses on our
contracts, which could decrease our operating margins and reduce our profits. In particular, our fixed-price
contracts could increase the unpredictability of our earnings.

It is important for us to accurately estimate and control our contract costs so that we can maintain
positive operating margins and profitability. We generally enter into three principal types of contracts with
our clients: fixed-price, time-and-materials and cost-plus.

The U.S. federal government and some clients have increased the use of fixed-priced contracts.
Under fixed-price contracts, we receive a fixed price irrespective of the actual costs we incur and,
consequently, we are exposed to a number of risks. We realize a profit on fixed-price contracts only if we
can control our costs and prevent cost over runs on our contracts. Fixed-price contracts require cost and
scheduling estimates that are based on a number of assumptions, including those about future economic
conditions, costs and availability of labor, equipment and materials, and other exigencies. We could

experience cost overruns if these estimates are originally inaccurate as a result of errors or ambiguities in
the contract specifications, or become inaccurate as a result of a change in circumstances following the
submission of the estimate due to, among other things, unanticipated technical problems, difficulties in
obtaining permits or approvals, changes in local laws or labor conditions, weather delays, changes in the
costs of raw materials, or inability of our vendors or subcontractors to perform. If cost overruns occur, we
could experience reduced profits or, in some cases, a loss for that project. If a project is significant, or if
there are one or more common issues that impact multiple projects, costs overruns could increase the
unpredictability of our earnings as well as have a material adverse impact on our business and earnings.

Under our time-and-materials contracts, we are paid for labor at negotiated hourly billing rates
and also paid for other expenses. Profitability on these contracts is driven by billable headcount and cost
control. Many of our time-and-materials contracts are subject to maximum contract values and,
accordingly, revenue relating to these contracts is recognized as if these contracts were fixed-price
contracts. Under our cost-plus contracts, some of which are subject to contract ceiling amounts, we are
reimbursed for allowable costs and fees, which may be fixed or performance-based. If our costs exceed the
contract ceiling or are not allowable under the provisions of the contract or any applicable regulations, we
may not be able to obtain reimbursement for all of the costs we incur.

Profitability on our contracts is driven by billable headcount and our ability to manage our
subcontractors, vendors and material suppliers. If we are unable to accurately estimate and manage our
costs, we may incur losses on our contracts, which could decrease our operating margins and significantly
reduce or eliminate our profits. Certain of our contracts require us to satisfy specific design, engineering,
procurement or construction milestones in order to receive payment for the work completed or equipment
or supplies procured prior to achievement of the applicable milestone. As a result, under these types of
arrangements, we may incur significant costs or perform significant amounts of services prior to receipt of
payment. If a client determines not to proceed with the completion of the project or if the client defaults
on its payment obligations, we may face difficulties in collecting payment of amounts due to us for the costs
previously incurred or for the amounts previously expended to purchase equipment or supplies.

Accounting for a contract requires judgments relative to assessing the contract’s estimated risks,
revenue, costs and other technical issues. Due to the size and nature of many of our contracts, the
estimation of overall risk, revenue and cost at completion is complicated and subject to many variables.
Changes in underlying assumptions, circumstances or estimates may also adversely affect future period
financial performance. If we are unable to accurately estimate the overall revenue or costs on a contract,
then we may experience a lower profit or incur a loss on the contract.

Our failure to win new contracts and renew existing contracts with private and public sector clients could
adversely affect our profitability.

Our business depends on our ability to win new contracts and renew existing contracts with private
and public sector clients. Contract proposals and negotiations are complex and frequently involve a lengthy
bidding and selection process, which is affected by a number of factors. These factors include market
conditions, financing arrangements and required governmental approvals. For example, a client may
require us to provide a bond or letter of credit to protect the client should we fail to perform under the
terms of the contract. If negative market conditions arise, or if we fail to secure adequate financial
arrangements or the required government approval, we may not be able to pursue particular projects,
which could adversely affect our profitability.

We have made and expect to continue to make acquisitions that could disrupt our operations and adversely
impact our business and operating results. Our failure to conduct due diligence effectively or our inability
to successfully integrate acquisitions could impede us from realizing all of the benefits of the acquisitions,
which could weaken our results of operations.

A key part of our growth strategy is to acquire other companies that complement our lines of
business or that broaden our technical capabilities and geographic presence. We expect to continue to
acquire companies as an element of our growth strategy; however, our ability to make acquisitions is
restricted under our Credit Agreement. Acquisitions involve certain known and unknown risks that could
cause our actual growth or operating results to differ from our expectations or the expectations of
securities analysts. For example:

• we may not be able to identify suitable acquisition candidates or to acquire additional

companies on acceptable terms;

• we are pursuing international acquisitions, which inherently pose more risk than domestic

acquisitions;

• we compete with others to acquire companies, which may result in decreased availability of, or

increased price for, suitable acquisition candidates;

• we may not be able to obtain the necessary financing, on favorable terms or at all, to finance any

of our potential acquisitions;

• we may ultimately fail to consummate an acquisition even if we announce that we plan to

acquire a company; and

• acquired companies may not perform as we expect, and we may fail to realize anticipated

revenue and profits.

In addition, our acquisition strategy may divert management’s attention away from our existing
businesses, resulting in the loss of key clients or key employees, and expose us to unanticipated problems
or legal liabilities, including responsibility as a successor-in-interest for undisclosed or contingent liabilities
of acquired businesses or assets.

If we fail to conduct due diligence on our potential targets effectively, we may, for example, not
identify problems at target companies or fail to recognize incompatibilities or other obstacles to successful
integration. Our inability to successfully integrate future acquisitions could impede us from realizing all of
the benefits of those acquisitions and could severely weaken our business operations. The integration
process may disrupt our business and, if implemented ineffectively, may preclude realization of the full
benefits expected by us and could harm our results of operations. In addition, the overall integration of the
combining companies may result in unanticipated problems, expenses, liabilities, and competitive
responses, and may cause our stock price to decline. The difficulties of integrating an acquisition include,
among others:

• issues in integrating information, communications and other systems;

• incompatibility of logistics, marketing and administration methods;

• maintaining employee morale and retaining key employees;

• integrating the business cultures of both companies;

• preserving important strategic client relationships;

• consolidating corporate and administrative

infrastructures and eliminating duplicative

operations; and

• coordinating and integrating geographically separate organizations.

In addition, even if the operations of an acquisition are integrated successfully, we may not realize
the full benefits of the acquisition, including the synergies, cost savings or growth opportunities that we
expect. These benefits may not be achieved within the anticipated time frame, or at all.

Further, acquisitions may cause us to:

• issue common stock that would dilute our current stockholders’ ownership percentage;

• use a substantial portion of our cash resources;

• increase our interest expense, leverage and debt service requirements (if we incur additional

debt to pay for an acquisition);

• assume liabilities, including environmental liabilities, for which we do not have indemnification
from the former owners. Further, indemnification obligations may be subject to dispute or
concerns regarding the creditworthiness of the former owners;

• record goodwill and non-amortizable intangible assets that are subject to impairment testing

and potential impairment charges;

• experience volatility in earnings due to changes in contingent consideration related to

acquisition earn-out liability estimates;

• incur amortization expenses related to certain intangible assets;

• lose existing or potential contracts as a result of conflict of interest issues;

• incur large and immediate write-offs; or

• become subject to litigation.

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

If our goodwill or other intangible assets become impaired, then our profits may be significantly reduced.

Because we have historically acquired a significant number of companies, goodwill and other
intangible assets represent a substantial portion of our assets. At September 29, 2013, our goodwill was
$722.8 million and other intangible assets were $87.0 million. We are required to perform a goodwill
impairment test for potential impairment at least on an annual basis. We also assess the recoverability of
the unamortized balance of our intangible assets when indications of impairment are present based on

expected future profitability and undiscounted expected cash flows and their contribution to our overall
operations. The goodwill impairment test requires us to determine the fair value of our reporting units,
which are the components one level below our reportable segments. In determining fair value, we make
significant judgments and estimates, including assumptions about our strategic plans with regard to our
operations. We also analyze current economic indicators and market valuations to help determine fair
value. To the extent economic conditions that would impact the future operations of our reporting units
change, our goodwill may be deemed to be impaired, and we would be required to record a non-cash
charge that could result in a material adverse effect on our financial position or results of operations.

In the third quarter of fiscal 2013, we performed an interim goodwill impairment test and

recorded a $56.6 million, or $48.1 million, net of tax, goodwill impairment charge in the ECS segment.

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

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

Our backlog is subject to cancellation, unexpected adjustments and economic conditions, and is an
uncertain indicator of future operating results.

Our backlog at September 29, 2013, was $1.9 billion, a decrease of $225.7 million, or 10.6%,
compared to last year-end. We include in backlog only those contracts for which funding has been provided
and work authorizations have been received. We cannot guarantee that the revenue projected in our
backlog will be realized or, if realized, will result in profits. In addition, project cancellations or scope
adjustments may occur, from time to time, with respect to contracts reflected in our backlog. For example,
certain of our contracts with the U.S. federal government and other clients are terminable at the discretion
of the client, with or without cause. These types of backlog reductions could adversely affect our revenue
and margins. In fiscal 2013, the broad-based decline in our backlog resulted from the volatility of current
economic conditions, and increased ambiguity as to whether the U.S. or the global economy will grow
modestly or remain stagnant. These conditions have been, and could continue to be, negatively impacted
by the mandatory federal budget reductions, or sequestrations. As a result of these factors, our backlog as
of any particular date is an uncertain indicator of our future earnings.

If our business partners fail to perform their contractual obligations on a project, we could be exposed to
legal liability, loss of reputation and profit reduction or loss on the project.

We routinely enter into subcontracts and, occasionally, joint ventures, teaming arrangements and
other contractual arrangements so that we can jointly bid and perform on a particular project. Success
under these arrangements depends in large part on whether our business partners fulfill their contractual
obligations satisfactorily. In addition, when we operate through a joint venture in which we are a minority
holder, we have limited control over many project decisions, including decisions related to the joint
venture’s internal controls, which may not be subject to the same internal control procedures that we
employ. If these unaffiliated third parties do not fulfill their contract obligations, the partnerships or joint
ventures may be unable to adequately perform and deliver their contracted services. Under these
circumstances, we may be obligated to pay financial penalties, provide additional services to ensure the
adequate performance and delivery of the contracted services and may be jointly and severally liable for
the other’s actions or contract performance. These additional obligations could result in reduced profits

and revenues or, in some cases, significant losses for us with respect to the joint venture, which could also
affect our reputation in the industries we serve.

If our contractors and subcontractors fail to satisfy their obligations to us or other parties, or if we are
unable to maintain these relationships, our revenue, profitability and growth prospects could be adversely
affected.

We depend on contractors and subcontractors in conducting our business. There is a risk that we
may have disputes with our subcontractors arising from, among other things, the quality and timeliness of
work performed by the subcontractor, client concerns about the subcontractor, or our failure to extend
existing task orders or issue new task orders under a subcontract. In addition, if a subcontractor fails to
deliver on a timely basis the agreed-upon supplies, fails to perform the agreed-upon services or goes out of
business, then we may be required to purchase the services or supplies from another source at a higher
price, and our ability to fulfill our obligations as a prime contractor may be jeopardized. This may reduce
the profit to be realized or result in a loss on a project for which the services or supplies are needed.

We also rely on relationships with other contractors when we act as their subcontractor or joint
venture partner. The absence of qualified subcontractors with which we have a satisfactory relationship
could adversely affect the quality of our service and our ability to perform under some of our contracts.
Our future revenue and growth prospects could be adversely affected if other contractors eliminate or
reduce their subcontracts or teaming arrangement relationships with us, or if a government agency
terminates or reduces these other contractors’ programs, does not award them new contracts or refuses to
pay under a contract.

We may be required to pay liquidated damages if we fail to meet milestone requirements in our contracts.

We may be required to pay liquidated damages if we fail to meet milestone requirements in our
contracts. Failure to meet any of the milestone requirements could result in additional costs, and the
amount of such additional costs could exceed the projected profits on the project. These additional costs
include liquidated damages paid under contractual penalty provisions, which can be substantial and can
accrue on a regular basis.

Changes in resource management, environmental or infrastructure industry laws, regulations and
programs could directly or indirectly reduce the demand for our services, which could in turn negatively
impact our revenue.

Some of our services are directly or indirectly impacted by changes in U.S. federal, state, local or
foreign laws and regulations pertaining to the resource management, environmental and infrastructure
industries. Accordingly, a relaxation or repeal of these laws and regulations, or changes in governmental
policies regarding the funding, implementation or enforcement of these programs, could result in a decline
in demand for our services, which could in turn negatively impact our revenue.

Changes in capital markets could adversely affect our access to capital and negatively impact our business.

Our results could be adversely affected by an inability to access the revolving credit facility under
our credit agreement, as amended and restated on May 7, 2013 (the ‘‘Amended Credit Agreement’’).
Unfavorable financial or economic conditions could impact certain lenders’ willingness or ability to fund our
revolving credit facility. In addition, increases in interest rates or credit spreads, volatility in financial markets
or the interest rate environment, significant political or economic events, defaults of significant issuers and
other market and economic factors may negatively impact the general level of debt issuance, the debt
issuance plans of certain categories of borrowers, the types of credit-sensitive products being offered, and/or
a sustained period of market decline or weakness could have a material adverse effect on us.

Restrictive covenants in our credit agreement may restrict our ability to pursue certain business strategies.

Our Amended Credit Agreement limits or restricts our ability to, among other things:

• incur additional indebtedness;

• create liens securing debt or other encumbrances on our assets;

• make loans or advances;

• pay dividends or make distributions to our stockholders;

• purchase or redeem our stock;

• repay indebtedness that is junior to indebtedness under our credit agreement;

• acquire the assets of, or merge or consolidate with, other companies; and

• sell, lease or otherwise dispose of assets.

Our Amended Credit Agreement also requires that we maintain certain financial ratios, which we
may not be able to achieve. The covenants may impair our ability to finance future operations or capital
needs or to engage in other favorable business activities.

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

Our industry is highly fragmented and intensely competitive. Our competitors are numerous,
ranging from small private firms to multi-billion-dollar public companies. In addition, the technical and
professional aspects of our services generally do not require large upfront capital expenditures and provide
limited barriers against new competitors. Some of our competitors have achieved greater market penetration
in some of the markets in which we compete, and some have substantially more financial resources and/or
financial flexibility than we do. As a result of the number of competitors in the industry, our clients may
select one of our competitors on a project due to competitive pricing or a specific skill set. This competitive
environment could force us to make price concessions or otherwise reduce prices for our services. If we are
unable to maintain our competitiveness, our market share, revenue and profits will decline.

Legal proceedings, investigations and disputes could result in substantial monetary penalties and damages,
especially if such penalties and damages exceed or are excluded from existing insurance coverage.

We engage

in consulting, engineering, program management, construction management,
construction and technical services that can result in substantial injury or damages that may expose us to legal
proceedings, investigations and disputes. For example, in the ordinary course of our business, we may be
involved in legal disputes regarding personal injury claims, employee or labor disputes, professional liability
claims, and general commercial disputes involving project cost overruns and liquidated damages as well as
other claims. In addition, in the ordinary course of our business, we frequently make professional judgments
and recommendations about environmental and engineering conditions of project sites for our clients, and
we may be deemed to be responsible for these judgments and recommendations if they are later determined
to be inaccurate. Any unfavorable legal ruling against us could result in substantial monetary damages or
even criminal violations. We maintain insurance coverage as part of our overall legal and risk management
strategy to minimize our potential liabilities; however, insurance coverage contains exclusions and other
limitations that may not cover our potential liabilities. Generally, our insurance program covers workers’
compensation and employer’s liability, general liability, automobile liability, professional errors and

omissions liability, property, and contractor’s pollution liability (in addition to other policies for specific
projects). Our insurance program includes deductibles or self-insured retentions for each covered claim that
may increase over time. In addition, our insurance policies contain exclusions that insurance providers may
use to deny or restrict coverage. Excess liability and professional liability insurance policies provide for
coverage on a ‘‘claims-made’’ basis, covering only claims actually made and reported during the policy period
currently in effect. If we sustain liabilities that exceed or that are excluded from our insurance coverage or for
which we are not insured, it could have a material adverse impact on our results of operations and financial
condition (see Note 17, ‘‘Commitments and Contingencies’’ of the ‘‘Notes to Consolidated Financial
Statements’’ included in Item 8 for more information).

Unavailability or cancellation of third-party insurance coverage would increase our overall risk exposure as
well as disrupt the management of our business operations.

We maintain insurance coverage from third-party insurers as part of our overall risk management
strategy and because some of our contracts require us to maintain specific insurance coverage limits. If any
of our third-party insurers fail, suddenly cancel our coverage or otherwise are unable to provide us with
adequate insurance coverage, then our overall risk exposure and our operational expenses would increase
and the management of our business operations would be disrupted. In addition, there can be no assurance
that any of our existing insurance coverage will be renewable upon the expiration of the coverage period or
that future coverage will be affordable at the required limits.

Our inability to obtain adequate bonding could have a material adverse effect on our future revenue and
business prospects.

Certain clients require bid bonds and performance and payment bonds. These bonds indemnify
the client should we fail to perform our obligations under a contract. If a bond is required for a particular
project and we are unable to obtain an appropriate bond, we cannot pursue that project. In some instances,
we are required to co-venture with a small or disadvantaged business to pursue certain U.S. federal or state
government contracts. In connection with these ventures, we are sometimes required to utilize our bonding
capacity to cover all of the payment and performance obligations under the contract with the client. We
have a bonding facility but, as is typically the case, the issuance of bonds under that facility is at the surety’s
sole discretion. Moreover, due to events that can negatively affect the insurance and bonding markets,
bonding may be more difficult to obtain or may only be available at significant additional cost. There can
be no assurance that bonds will continue to be available to us on reasonable terms. Our inability to obtain
adequate bonding and, as a result, to bid on new work could have a material adverse effect on our future
revenue and business prospects.

Our failure to adequately recover on claims brought by us against clients for additional contract costs could
have a negative impact on our liquidity and profitability.

We have brought claims against clients for additional costs exceeding the contract price or for
amounts not included in the original contract price. These types of claims occur due to matters such as
client-caused delays or changes from the initial project scope, both of which may result in additional cost.
Often, these claims can be the subject of lengthy arbitration or litigation proceedings, and it is difficult to
accurately predict when these claims will be fully resolved. When these types of events occur and
unresolved claims are pending, we have used working capital in projects to cover cost overruns pending the
resolution of the relevant claims. A failure to promptly recover on these types of claims could have a
negative impact on our liquidity and profitability.

Employee, agent or partner misconduct or our failure to comply with anti-bribery and other laws or
regulations could harm our reputation, reduce our revenue and profits, and subject us to criminal and civil
enforcement actions.

Misconduct, fraud, non-compliance with applicable laws and regulations, or other improper
activities by one of our employees, agents or partners could have a significant negative impact on our
business and reputation. Such misconduct could include the failure to comply with government
procurement regulations, regulations regarding the protection of classified information, regulations
prohibiting bribery and other foreign corrupt practices, regulations regarding the pricing of labor and other
costs in government contracts, regulations on lobbying or similar activities, regulations pertaining to the
internal controls over financial reporting, environmental laws and any other applicable laws or regulations.
For example, the FCPA and similar anti-bribery laws in other jurisdictions generally prohibit companies
and their intermediaries from making improper payments to non-U.S. officials for the purpose of obtaining
or retaining business. Our policies mandate compliance with these regulations and laws, and we take
precautions to prevent and detect misconduct. However, since our internal controls are subject to inherent
limitations, including human error, it is possible that these controls could be intentionally circumvented or
become inadequate because of changed conditions. As a result, we cannot assure that our controls will
protect us from reckless or criminal acts committed by our employees or agents. Our failure to comply with
applicable laws or regulations or acts of misconduct could subject us to fines and penalties, loss of security
clearances, and suspension or debarment from contracting, any or all of which could harm our reputation,
reduce our revenue and profits, and subject us to criminal and civil enforcement actions.

Our business activities may require our employees to travel to and work in countries where there are high
security risks, which may result in employee death or injury, repatriation costs or other unforeseen costs.

Certain of our contracts may require our employees travel to and work in high-risk countries that
are undergoing political, social and economic upheavals resulting from war, civil unrest, criminal activity,
acts of terrorism or public health crises. For example, we currently have employees working in high security
risk countries such as Afghanistan. As a result, we risk loss of or injury to our employees and may be
subject to costs related to employee death or injury, repatriation or other unforeseen circumstances. We
may choose or be forced to leave a country with little or no warning due to physical security risks.

Our failure to implement and comply with our safety program could adversely affect our operating results
or financial condition.

Our safety program is a fundamental element of our overall approach to risk management, and
the implementation of the safety program is a significant issue in our dealings with our clients. We
maintain an enterprise-wide group of health and safety professionals to help ensure that the services we
provide are delivered safely and in accordance with standard work processes. Unsafe job sites and office
environments have the potential to increase employee turnover, increase the cost of a project to our
clients, expose us to types and levels of risk that are fundamentally unacceptable, and raise our operating
costs. The implementation of our safety processes and procedures are monitored by various agencies,
including the U.S. Mine Safety and Health Administration, and rating bureaus and may be evaluated by
certain clients in cases in which safety requirements have been established in our contracts. Our failure to
meet these requirements or our failure to properly implement and comply with our safety program could
result in reduced profitability or the loss of projects or clients, and could have a material adverse effect on
our business, operating results or financial condition.

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

Many of our clients are concerned about potential or actual conflicts of interest in retaining
management consultants. U.S. federal government agencies have formal policies against continuing or

awarding contracts that would create actual or potential conflicts of interest with other activities of a
contractor. These policies, among other things, may prevent us from bidding for or performing government
contracts resulting from or relating to certain work we have performed. In addition, services performed for
a commercial or government client may create a conflict of interest that precludes or limits our ability to
obtain work from other public or private organizations. We have, on occasion, declined to bid on projects
due to conflict of interest issues.

If our reports and opinions are not in compliance with professional standards and other regulations, we
could be subject to monetary damages and penalties.

We issue reports and opinions to clients based on our professional engineering expertise, as well as
our other professional credentials. Our reports and opinions may need to comply with professional
standards, licensing requirements, securities regulations and other laws and rules governing the
performance of professional services in the jurisdiction in which the services are performed. In addition,
we could be liable to third parties who use or rely upon our reports or opinions even if we are not
contractually bound to those third parties. For example, if we deliver an inaccurate report or one that is not
in compliance with the relevant standards, and that report is made available to a third party, we could be
subject to third-party liability, resulting in monetary damages and penalties.

We may be subject to liabilities under environmental laws and regulations.

Our services are subject to numerous U.S. and international environmental protection laws and
regulations that are complex and stringent. For example, we must comply with a number of U.S. federal
government laws that strictly regulate the handling, removal, treatment, transportation and disposal of toxic
and hazardous substances. Under the Comprehensive Environmental Response Compensation and Liability
Act of 1980, as amended (‘‘CERCLA’’), and comparable state laws, we may be required to investigate and
remediate regulated hazardous materials. CERCLA and comparable state laws typically impose strict, joint
and several liabilities without regard to whether a company knew of or caused the release of hazardous
substances. The liability for the entire cost of clean-up could be imposed upon any responsible party. Other
principal U.S. federal environmental, health and safety laws affecting us include, but are not limited to, the
Resource Conversation and Recovery Act, the National Environmental Policy Act, the Clean Air Act, the
Occupational Safety and Health Act, the Federal Mine Safety and Health Act of 1977 (the ‘‘Mine Act’’), the
Toxic Substances Control Act and the Superfund Amendments and Reauthorization Act. Our business
operations may also be subject to similar state and international laws relating to environmental protection.
Further, past business practices at companies that we have acquired may also expose us to future unknown
environmental liabilities. Liabilities related to environmental contamination or human exposure to hazardous
substances, or a failure to comply with applicable regulations, could result in substantial costs to us, including
clean-up costs, fines civil or criminal sanctions and third-party claims for property damage or personal injury
or cessation of remediation activities. Our continuing work in the areas governed by these laws and
regulations exposes us to the risk of substantial liability.

Force majeure events, including natural disasters and terrorist actions could negatively impact the
economies in which we operate or disrupt our operations, which may affect our financial condition, results
of operations or cash flows.

Force majeure or extraordinary events beyond the control of the contracting parties, such as natural
and man-made disasters, as well as terrorist actions, could negatively impact the economies in which we
operate by causing the closure of offices, interrupting projects and forcing the relocation of employees.
Further, despite our implementation of network security measures, our servers are vulnerable to computer
viruses, break-ins and similar disruptions from unauthorized tampering with our computer systems. We
typically remain obligated to perform our services after a terrorist action or natural disaster unless the
contract contains a force majeure clause that relieves us of our contractual obligations in such an

extraordinary event. If we are not able to react quickly to force majeure, our operations may be affected
significantly, which would have a negative impact on our financial condition, results of operations or cash
flows.

We have only a limited ability to protect our intellectual property rights, and our failure to protect our
intellectual property rights could adversely affect our competitive position.

Our success depends, in part, upon our ability to protect our proprietary information and other
intellectual property. We rely principally on trade secrets to protect much of our intellectual property
where we do not believe that patent or copyright protection is appropriate or obtainable. However, trade
secrets are difficult to protect. Although our employees are subject to confidentiality obligations, this
protection may be inadequate to deter or prevent misappropriation of our confidential information. In
addition, we may be unable to detect unauthorized use of our intellectual property or otherwise take
appropriate steps to enforce our rights. Failure to obtain or maintain trade secret protection could
adversely affect our competitive business position. In addition, if we are unable to prevent third parties
from infringing or misappropriating our trademarks or other proprietary information, our competitive
position could be adversely affected.

Systems and information technology interruption could adversely impact our ability to operate.

We rely heavily on computer, information, and communications technology and systems to
operate. From time to time, we experience system interruptions and delays. If we are unable to effectively
deploy software and hardware, upgrade our systems and network infrastructure, and take steps to improve
and protect our systems, systems operations could be interrupted or delayed.

Our computer and communications systems and operations could be damaged or interrupted by
natural disasters, telecommunications failures, acts of war or terrorism and similar events or disruptions. In
addition, we face the threat of unauthorized system access, computer hackers, computer viruses, malicious
code, organized cyber-attacks, and other security breaches and system disruptions. We devote significant
resources to the security of our computer systems, but they may still be vulnerable to threats. Anyone who
circumvents security measures could misappropriate proprietary information or cause interruptions or
malfunctions in system operations. As a result, we may be required to expend significant resources to
protect against the threat of system disruptions and security breaches, or to alleviate problems caused by
disruptions and breaches.

Any of these or other events could cause system interruption, delays, and loss of critical data that
could delay or prevent operations, and could have a material adverse effect on our business, financial
condition, results of operations and cash flows, and could negatively impact our clients.

Delaware law and our charter documents may impede or discourage a merger, takeover or other business
combination even if the business combination would have been in the best interests of our stockholders.

We are a Delaware corporation and the anti-takeover provisions of Delaware law impose various
impediments to the ability of a third party to acquire control of us, even if a change in control would be
beneficial to our stockholders. In addition, our Board of Directors has the power, without stockholder
approval, to designate the terms of one or more series of preferred stock and issue shares of preferred
stock, which could be used defensively if a takeover is threatened. Our incorporation under Delaware law,
the ability of our Board of Directors to create and issue a new series of preferred stock and provisions in
our certificate of incorporation and bylaws, such as those relating to advance notice of certain stockholder
proposals and nominations, could impede a merger, takeover or other business combination involving us
or discourage a potential acquirer from making a tender offer for our common stock, even if the business
combination would have been in the best interests of our current stockholders.

Our stock price could become more volatile and stockholders’ investments could lose value.

In addition to the macroeconomic factors that have affected the prices of many securities
generally, all of the factors discussed in this section could affect our stock price. Our common stock has
previously experienced substantial price volatility. In addition, the stock market has experienced extreme
price and volume fluctuations that have affected the market price of many companies and that have often
been unrelated to the operating performance of these companies. The overall market and the price of our
common stock may fluctuate greatly. The trading price of our common stock may be significantly affected
by various factors, including:

• quarter-to-quarter variations in our financial results, including revenue, profits, days sales
outstanding, backlog, and other measures of financial performance or financial condition;

• our announcements or our competitors’ announcements of significant events, including

acquisitions;

• resolution of threatened or pending litigation;

• changes in investors’ and analysts’ perceptions of our business or any of our competitors’

businesses;

• investors’ and analysts’ assessments of reports prepared or conclusions reached by third parties;

• changes in environmental legislation;

• investors’ perceptions of our performance of services in countries in which the U.S. military is

engaged, including Afghanistan;

• broader market fluctuations; and

• general economic or political conditions.

Volatility in the financial markets could cause a decline in our stock price, which could trigger an
impairment of the goodwill of individual reporting units that could be material to our consolidated
financial statements. A significant drop in the price of our stock could also expose us to the risk of
securities class action lawsuits, which could result in substantial costs and divert management’s attention
and resources, which could adversely affect our business. Additionally, volatility or a lack of positive
performance in our stock price may adversely affect our ability to retain key employees, many of whom are
granted stock options and shares of restricted stock, the value of which is dependent on the performance of
our stock price.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

At fiscal 2013 year-end, we owned three facilities located in the United States and leased
approximately 330 operating facilities in domestic and foreign locations. Our significant lease agreements
expire at various dates through 2024. We also have some month-to-month leases. We believe that our
current facilities are adequate for the operation of our business and that suitable additional space in
various local markets is available to accommodate any needs that may arise.

The following table summarizes our ten most significant leased properties by location based on

annual rental expenses:

Location

Description

Reportable Segment

Pasadena, CA
Arlington, VA
Calgary, AB, Canada
Edmonton, AB, Canada
Fairfax, VA
Montreal, QC, Canada
Morris Plains, NJ
New York, NY
Pittsburgh, PA
Richmond, BC, Canada

Item 3. Legal Proceedings

Corporate Headquarters
Office Building
Office Building
Office Building
Office Building
Office Building
Office Building
Office Building
Office Building
Office Building

Corporate
ECS
ECS
ECS
ECS
ECS
TSS / RCM
TSS
TSS
ECS

For a description of our material pending legal and regulatory proceedings and settlements, see
Note 17, ‘‘Commitments and Contingencies’’ of the ‘‘Notes to Consolidated Financial Statements’’
included in Item 8.

Item 4. Mine Safety Disclosures

Section 1503 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the
‘‘Dodd-Frank Act’’) requires domestic mine operators to disclose violations and orders issued under the
Mine Act by the U.S. Mine Safety and Health Administration. We do not act as the owner of any mines,
but we may act as a mining operator as defined under the Mine Act where we may be an independent
contractor performing services or construction at such mine. Information concerning mine safety violations
or other regulatory matters required by Section 1503(a) of the Dodd-Frank Act and Item 104
Regulations S-K is included in Exhibit 95.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer

Purchases of Equity Securities

Market Information

Our common stock is traded on the NASDAQ Global Select Market under the symbol TTEK.
There were 1,693 stockholders of record at November 11, 2013. The high and low sales prices per share for

the common stock for the last two fiscal years, as reported by the NASDAQ Global Select Market, are set
forth in the following tables.

Prices

High

Low

Fiscal 2013

First quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Second quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fourth quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$27.10
31.49
30.55
26.03

$23.79
26.00
22.56
22.21

Fiscal 2012

$23.38
26.49
28.00
28.00

$17.31
21.42
23.73
24.17

Our policy is to use cash flows from operations to fund future growth, pay down debt, and, subject
to market conditions, repurchase common stock under a stock buy-back program approved by our Board
of Directors. Accordingly, we have not paid any cash dividends since our inception and we currently have
no plans to pay cash dividends in the foreseeable future. Additionally, our credit agreement limits the
amount of cash dividends that may be declared or paid. For information regarding our stock-based
compensation, see Note 11, ‘‘Stockholders’ Equity and Stock Compensation Plans’’ of the ‘‘Notes to
Consolidated Financial Statements’’ included in Item 8.

Performance Graph

The following graph shows a comparison of our cumulative total returns with those of the
NASDAQ Market Index and our self-constructed Peer Group Index (as defined below). The graph
assumes that the value of an investment in our common stock and in each such index was $100 on
September 29, 2008, and that all dividends have been reinvested. No cash dividends have been declared on
shares of our common stock. Our self-constructed Peer Group Index includes the following companies:
AECOM Technology Corporation; Foster Wheeler AG; Jacobs Engineering Group; Michael Baker
Corporation; URS Corporation; and Willbros Group, Inc. We removed The Shaw Group, Inc. from the
Peer Group Index to reflect the completion of Chicago Bridge & Iron Company N.V.’s acquisition of The
Shaw Group, Inc. in our fiscal 2013. The comparison in the graph below is based on historical data and is
not intended to forecast the possible future performance of our common stock.

COMPARISON OF CUMULATIVE TOTAL RETURN

Tetra Tech, Inc.

NASDAQ Market Index

Peer Group Index

$200

$180

$160

$140

$120

$100

$80

$60

$40

$20

S
R
A
L
L
O
D

2008

2009

2010

2011

2012

2013

ASSUMES $100 INVESTED ON SEPTEMBER 29, 2008
ASSUMES DIVIDENDS REINVESTED
FISCAL YEAR ENDING SEPTEMBER 29, 2013

13NOV201320451540

Tetra Tech, Inc.
NASDAQ Market Index
Peer Group Index

2008

100.00
100.00
100.00

2009

100.94
96.77
88.22

2010

83.13
110.72
75.56

2011

73.52
113.89
57.46

2012

103.02
148.66
71.89

2013

101.92
182.99
101.41

The performance graph above and related text are being furnished solely to accompany this
annual report on Form 10-K pursuant to Item 201(e) of Regulation S-K, and are not being filed for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and are not to be incorporated
by reference into any of our filings with the SEC, whether made before or after the date hereof, regardless
of any general incorporation language in such filing.

Stock Repurchase Program

In June 2013, our Board of Directors authorized a stock repurchase program under which we may
currently repurchase up to $100 million of Tetra Tech common stock (the ‘‘Stock Repurchase Program’’).
In November 2013, our Board of Directors amended the Stock Repurchase Program, effective on
November 18, 2013, to revise the pricing parameters and to extend the program through fiscal 2014. Stock
repurchases may be made on the open market or in privately negotiated transactions with third parties.
Because the repurchases under the Stock Repurchase Program are subject to certain pricing parameters,
there is no guarantee as to the exact number of shares that will be repurchased under the program.

A summary of the repurchase activity for the fiscal year ended September 29, 2013 is as follows:

Period

Total Number
of Shares
Purchased (1)

Average Price
Paid per Share

May 27, 2013 – June 30, 2013 . . . . . . . . . . .
July 1, 2013 – July 28, 2013 . . . . . . . . . . . .
July 29, 2013 – August 25, 2013 . . . . . . . . .
August 26, 2013 – September 29, 2013 . . . . .

175,700
281,700
347,700
50,100

23.60
23.54
23.14
23.46

Total Number
of Shares
Purchased as
Part of Publicly
Announced
Plans or
Programs

175,700
281,700
347,700
50,100

Maximum
Dollar Value
that May Yet
be Purchased
Under the
Plans or
Programs (2)

$ 95,853,324
89,222,303
81,175,573
80,000,000

(1) We purchased approximately 775,000 additional shares in fiscal 2013 that were previously issued pursuant to
awards issued under our stock-based compensation plans. These plans allow our employees to surrender shares of
our common stock as payment toward the exercise cost and tax withholding obligations associated with the
exercise of stock options or the vesting of restricted stock.

(2) We may currently repurchase up to $100 million of Tetra Tech common stock under the Stock Repurchase
Program, which was publicly announced in June 2013. The Stock Repurchase Program will currently expire at the
earliest of (i) the close of business on September 28, 2014, (ii) any optional termination date, (iii) the date on
which any required termination notice is received by our broker, (iv) the close of business on the date that the
maximum $100 million of common stock has been purchased, or (v) the date that our broker becomes aware of
the commencement or impending commencement of any voluntary or involuntary proceedings relating to our
bankruptcy or insolvency.

Item 6. Selected Financial Data

The following selected financial data was derived from our consolidated financial statements. The
selected financial data presented below should be read in conjunction with the information contained in
Item 7, ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations,’’ and
our consolidated financial statements and the notes thereto contained in Item 8, ‘‘Financial Statements
and Supplementary Data,’’ of this report.

Fiscal Year Ended

September 29, September 30, October 2,
2012

2013

2011

October 3,
2010

September 27,
2009

Statements of Operations Data

(in thousands, except per share data)

Revenue . . . . . . . . . . . . . . . . . . . $ 2,613,755
Operating income . . . . . . . . . . . . .
20,218
Net income (loss) attributable to

$ 2,711,075
166,367

$ 2,573,144
146,422

$ 2,201,232
124,474

$ 2,287,484
121,889

Tetra Tech . . . . . . . . . . . . . . . . .

(2,141)

104,380

90,039

76,819

87,028

Diluted net income (loss)

attributable to Tetra Tech per
share . . . . . . . . . . . . . . . . . . . .

Balance Sheet Data

(0.03)

1.63

1.43

1.24

1.43

Total assets . . . . . . . . . . . . . . . . . . $ 1,799,092
Long-term debt, net of current

portion . . . . . . . . . . . . . . . . . . .
Tetra Tech stockholders’ equity . . . .

203,438
997,763

$ 1,671,030

$ 1,593,988

$ 1,381,689

$ 1,097,905

81,047
1,018,970

144,868
854,725

122,510
748,133

6,530
646,478

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following analysis of our financial condition and results of operations should be read in
conjunction with Part 1 of this report, as well as our consolidated financial statements and accompanying
notes in Item 8. The following analysis contains forward-looking statements about our future results of
operations and expectations. Our actual results and the timing of events could differ materially from those
described herein. See Part 1, Item 1A, ‘‘Risk Factors’’ for a discussion of the risks, assumptions and
uncertainties affecting these statements.

OVERVIEW OF RESULTS AND BUSINESS TRENDS

General.

In fiscal 2013, our revenue declined compared to last year and we reported a net loss.
Our financial results were adversely impacted by weakness in our Eastern Canada and global mining
operations, and we incurred significant costs to right-size these businesses during the third quarter of fiscal
2013. We also incurred significant charges on certain projects that further reduced our revenue and
earnings. To a lesser extent, we experienced an expected decline in revenue from U.S. federal government
programs as uncertainty regarding the U.S. federal budget continued to delay project funding. Our
earnings were also negatively affected by a non-cash goodwill impairment charge recorded in the third
quarter of fiscal 2013.

Impact of Recent Business Environment. Current economic conditions have been somewhat
volatile, and there is increased ambiguity as to whether the U.S. or the global economy will grow modestly
or remain stagnant. The uncertainty regarding the U.S. federal budget and the impact of tax increases has
added to the doubt regarding economic conditions generally. These conditions have been, and could
continue to be, negatively impacted by mandatory federal budget reductions, or sequestrations, that
became effective in our fiscal second quarter. In addition, concerns over these conditions appear to be
restraining business owners from making the significant investment commitments needed to fund future
growth.

In Eastern Canada, poor economic conditions, including budget deficits, reduced customer
spending and an ongoing government investigation into political corruption in Quebec, have slowed
procurements and business activity in that region. As a result, we experienced weaker than expected
financial performance in our Eastern Canadian operations and we took actions to right-size the business
that resulted in significant severance and office closure charges in the third quarter of fiscal 2013.

Our work for mining customers also slowed more than expected in the third quarter of fiscal 2013
as these customers responded to lower global growth expectations. This was driven in large part by China’s
report in April 2013 of slower economic growth. As a result, our mining customers experienced a
significant reduction in the global demand for commodities that caused a drop in mineral prices. Due to
the subsequent slowdown in mining activities, we right-sized our global mining business by reducing staff
and closing offices in the third quarter of fiscal 2013.

These events exacerbated negative business trends and adversely impacted our related operations.
Consequently, we recorded a non-cash goodwill impairment charge in the third quarter. Persistent negative
market conditions and financial results could result in additional goodwill impairment. With these trends
and overall uncertainty, it is difficult to confidently predict the future direction in which the U.S. and
global economies are headed. Strong economic expansion generally benefits our business while a tepid
financial recovery could adversely impact demand for our services. It is not possible to predict with
certainty whether or when a recovery may occur, or what impact this would have on our business, results of
operations, cash flows or financial condition.

International. For fiscal 2013, our international business grew 5.1% compared to last year. The
growth was driven by the continued expansion of our services to the oil and gas industry, primarily as a
result of acquisitions. We expect that our international business will continue its growth in fiscal 2014 as a
result of our continued expansion in Canada and South America, together with demand for our oil and gas,
and industrial water services from our largest clients worldwide. However, this growth is expected to be
tempered by anticipated reductions in our Eastern Canada and global mining operations.

U.S. Commercial. For fiscal 2013, our U.S. commercial business declined 3.4% compared to last
year. This decline resulted from a project charge to revenue on a development project in the third quarter
of fiscal 2013. The decline was partially mitigated by the growth in many of our service offerings, including
services provided for oil and gas clients that generates relatively high profit margins. In addition, our solid
waste management operations increased, primarily due to an acquisition in fiscal 2013. We are optimistic
regarding increased spending by our energy-focused clients, particularly in oil and gas, as well as by our
larger industrial clients. As such, we expect that our U.S. commercial business will grow in fiscal 2014. Our
U.S. commercial clients typically react rapidly to economic change. Accordingly, if the U.S. economy
experiences a slowdown or pickup in fiscal 2014, we would expect our U.S. commercial outlook to change
accordingly.

U.S. Federal Government. For fiscal 2013, our U.S. federal business declined 17.7% compared to
last year. This decline resulted from a broad-based slowdown of discretionary U.S. federal government
programs due in part to the impact of U.S. federal budget uncertainty and the on-going sequestration.
Significant project-related charges to revenue in the third quarter further reduced revenue for fiscal 2013.
During periods of economic volatility, our U.S. federal government clients have historically been the most
stable and predictable. However, due to the uncertainty associated with the U.S. federal budget and
sequestration, we remain cautious and expect future revenue to slightly decline.

U.S. State and Local Government. For fiscal 2013, our U.S. state and local government business
grew 22.7% compared to last year. This growth was driven by increased revenue from essential priority
programs. Many state and local government agencies are now experiencing improved financial conditions
compared to recent years. Simultaneously, states are facing major long-term infrastructure needs,
including the need for maintenance, repair and upgrading of existing critical infrastructure and the need to
build new facilities. The funding risks associated with our U.S. state and local government programs are
partially mitigated by legal requirements that drive some of these programs, such as regulatory-mandated
consent decrees. As a result, some programs, such as those focused on municipal water and solid waste,
will progress despite budget pressures as demonstrated by the growth in fiscal 2012 and 2013. Although we
anticipate that many state and local government agencies will continue to face economic challenges, we
expect our U.S. state and local government business to continue its growth in fiscal 2014 because of our
focus on essential programs.

RESULTS OF OPERATIONS

Fiscal 2013 Compared to Fiscal 2012

Consolidated Results of Operations

Fiscal Year Ended

September 29, September 30,

Change

2013

2012

% (2)

($ in thousands)

Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Subcontractor costs . . . . . . . . . . . . . . . . . . . . . . .

2,613,755
(588,923)

2,711,075
(689,005)

Revenue, net of subcontractor costs (1)

. . . . . . . .
Other costs of revenue . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative expenses . . . . . .
Contingent consideration – fair value adjustments . .
Impairment of goodwill . . . . . . . . . . . . . . . . . . . .

Operating income . . . . . . . . . . . . . . . . . . . . . .
Interest expense – net . . . . . . . . . . . . . . . . . . . . .

Income before income tax expense . . . . . . . . . . .
Income tax expense . . . . . . . . . . . . . . . . . . . . . . .

Net income (loss) including noncontrolling

2,024,832
(1,757,842)
(199,732)
9,560
(56,600)

20,218
(7,686)

12,532
(14,038)

2,022,070
(1,663,065)
(210,970)
19,246
(914)

166,367
(5,571)

160,796
(56,064)

(97,320)
100,082

2,762
(94,777)
11,238
(9,686)
(55,686)

(146,149)
(2,115)

(148,264)
42,026

interests . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to noncontrolling interest

(1,506)
(635)

104,732
(352)

(106,238)
(283)

Net income (loss) attributable to Tetra Tech . . . . $

(2,141) $

104,380

(106,521)

(3.6)%
14.5

0.1
(5.7)
5.3
(50.3)
NM

(87.8)
(38.0)

(92.2)
75.0

(101.4)
(80.4)

(102.1)

(1) We believe that the presentation of ‘‘Revenue, net of subcontractor costs’’, which is a non-GAAP financial
measure, enhances investors’ ability to analyze our business trends and performance because it substantially
measures the work performed by our employees. In the course of providing services, we routinely subcontract
various services and, under certain USAID programs, issue grants. Generally, these subcontractor costs and grants
are passed through to our clients and, in accordance with GAAP and industry practice, are included in our
revenue when it is our contractual responsibility to procure or manage these activities. The grants are included as
part of our subcontractor costs. Because subcontractor services can vary significantly from project to project and
period to period, changes in revenue may not necessarily be indicative of our business trends. Accordingly, we
segregate subcontractor costs from revenue to promote a better understanding of our business by evaluating
revenue exclusive of costs associated with external service providers.

(2) NM = not meaningful

Our revenue and operating income were adversely impacted by weakness in certain areas of our
business that resulted in reduced revenue, significant costs to right-size the related operations, and a
non-cash goodwill impairment charge in the third quarter of fiscal 2013. In addition, we recorded project-
related charges that reduced revenue and increased project costs. As a result of these factors, revenue
decreased $97.3 million, or 3.6%, and operating income decreased $146.1 million, or 87.8%, compared to
last year. However, revenue, net of subcontractor costs, was flat because the revenue decline was offset by
an increase in self-performed work compared to last year.

Our fiscal 2013 results reflect the decline in our international business due to the impact of
Eastern Canada, as well as the reduction in our commercial work due to the slow-down in global mining
activities. Revenue and revenue, net of subcontractor costs, on a combined basis for these operations
decreased $104.0 million and $83.0 million, respectively, compared to last year. Further, our revenue and

revenue, net of subcontractor costs, declined $178.6 million and $99.2 million, respectively, in our U.S.
federal government business due to a broad-based slowdown as a result of budgetary constraints, including
the impact of sequestration, primarily impacting discretionary programs.

The project charges that reduced revenue primarily related to adverse developments on certain
projects in the third quarter in fiscal 2013, and our subsequent evaluations and conclusions concerning the
collectability of the related unbilled accounts receivable. These charges included amounts related to
claims, including requests for equitable adjustment, on three programs with U.S. federal and state and
local government clients. In addition, we recorded a project-related charge on a commercial development
contract due to a change in client ownership and the related modification of plans for completion of the
project. These events adversely affected the collectability of certain related receivables and the profitability
expectations for the project. Collectively, the project charges on these four programs reduced our fiscal
2013 revenue and revenue, net of subcontractor costs, by $29.6 million.

The overall revenue decline was partially offset by increased activity on certain U.S. state and local
government projects that were considered essential programs. Our fiscal 2013 revenue and revenue, net of
subcontractor costs, from these activities increased $72.5 million and $50.3 million, respectively, compared
to last year. Acquisitions completed in fiscal 2012 and 2013 contributed additional revenue in the aggregate
amount of $194.1 million in fiscal 2013.

Operating income decreased $146.1 million, or 87.8%, in fiscal 2013 compared to last year. The
decrease largely resulted from a non-cash goodwill impairment charge of $56.6 million in the third quarter
of fiscal 2013. Excluding this charge, our operating income was $76.8 million for fiscal 2013 compared to
$166.4 million in the prior year. The remaining decline in operating income, excluding goodwill
impairment, from last year was primarily due to project-related charges as well as the slowdown in our
Eastern Canada and global mining operations. The project-related charges on the four programs described
above collectively reduced our fiscal 2013 operating income by $40.1 million. In addition, the weaker
results in our Eastern Canada and global mining operations and the resulting charges to right-size these
businesses, as described above, reduced operating income by $48.4 million in fiscal 2013 compared to last
year. These right-sizing costs are not expected to recur at this level.

The decline in operating income also reflected the higher amortization of intangibles of
$2.7 million in fiscal 2013 compared to last year, due to fiscal 2013 acquisitions. Additionally, the gains
related to changes in the estimated fair value of our contingent earn-out liabilities decreased to
$9.6 million in fiscal 2013 from $19.2 million in the prior year.

In fiscal 2013, we recorded $14.0 million of income tax expense compared to $56.1 million in the
prior year. The decrease was primarily due to lower operating income and, to a lesser extent, increased
estimates of R&E credits for fiscal 2013. Our fiscal 2013 effective tax rate was 112.0% compared to 34.9%
for the prior year. The rate increase resulted from a goodwill impairment charge that was substantially not
deductible for tax purposes.

Segment Results of Operations

Engineering and Consulting Services

Fiscal Year Ended

September 29, September 30,

Change

2013

2012

($ in thousands)

Revenue . . . . . . . . . . . . . . . . . . $ 1,035,983
(130,547)
Subcontractor costs . . . . . . . . . .

$ 1,155,256
(164,364)

Revenue, net of subcontractor

costs . . . . . . . . . . . . . . . . . . . $

905,436

Operating income . . . . . . . . . . . $

44,598

990,892

96,220

(119,273)
33,817

(85,456)

(51,622)

(10.3)%
20.6

(8.6)

(53.6)

In fiscal 2013, revenue and revenue, net of subcontractor costs, decreased $119.3 million and
$85.5 million, respectively, compared to last year. These results reflected the decline in our Canadian
operations that are focused on municipal government and mining activities, as well as in our U.S.
operations that are focused on federal government and mining-related business. The aggregate revenue
and revenue, net of subcontractor costs, from these operations were $104.0 million and $83.0 million lower,
respectively, in fiscal 2013 than in the prior year. Our operating income decreased $51.6 million in fiscal
2013 compared to last year. The decrease was primarily attributable to the causes described above,
together with lower staff utilization and $10.3 million of severance and office-related closure costs incurred
in the third quarter of fiscal 2013. Including these right-sizing costs, the combined reduction in operating
income from our Eastern Canada and mining operations was $48.4 million for fiscal 2013.

Technical Support Services

Fiscal Year Ended

September 29, September 30,

Change

2013

2012

($ in thousands)

Revenue . . . . . . . . . . . . . . . . . . $
Subcontractor costs . . . . . . . . . .

932,375
(272,443)

$ 1,020,779
(332,164)

Revenue, net of subcontractor

costs . . . . . . . . . . . . . . . . . . . $

659,932

Operating income . . . . . . . . . . . $

71,842

688,615

71,767

(88,404)
59,721

(28,683)

(8.7)%
18.0

(4.2)

0.1

Revenue and revenue, net of subcontractor costs, declined $88.4 million and $28.7 million,
respectively, in fiscal 2013 compared to last year. These declines were driven by reduced activity on U.S.
federal government programs across several agencies. Revenue and revenue, net of subcontractor costs,
from these programs decreased by $127.8 million and $50.6 million, respectively, compared to last year.
The declines also were attributable to a $12.3 million negative revenue adjustment related to a project
charge on a U.S. commercial development project in the third quarter of fiscal 2013. This charge resulted
from a change in client ownership and the related modification in completion plans for the project. These
revenue declines were partially mitigated by the growth in our work for oil and gas clients. We generated

$42.3 million of revenue in fiscal 2013 compared to $10.6 million last year, from a company we acquired in
the third quarter of fiscal 2012 that provides services for oil and gas clients. The overall decreases in
revenue and revenue, net of subcontractor costs, were also partially mitigated by increased activity on our
state and local government programs. Despite the aforementioned revenue declines, our operating income
in fiscal 2013 was flat compared to last year, due to relatively higher profit margins on oil and gas projects.

Remediation and Construction Management

Fiscal Year Ended

September 29, September 30,

Change

2013

2012

($ in thousands)

Revenue . . . . . . . . . . . . . . . . . . $
Subcontractor costs . . . . . . . . . .

725,689
(266,225)

Revenue, net of subcontractor

costs . . . . . . . . . . . . . . . . . . . $

459,464

Operating income . . . . . . . . . . . $

(6,706)

621,957
(279,394)

342,563

22,374

103,732
13,169

16.7%
4.7

116,901

34.1

(29,080)

(130.0)

Revenue and revenue, net of subcontractor costs, increased $103.7 million and $116.9 million,
respectively, in fiscal 2013 compared to last year. These increases were attributable to additional work in
our U.S. commercial and international oil and gas businesses that resulted from the acquisitions we
completed in the second quarter of fiscal 2013. On a combined basis, these acquisitions contributed
$170.3 million of revenue in fiscal 2013. In addition, our revenue and revenue, net of subcontractor costs,
in our state and local government business continued to grow in fiscal 2013. The overall increases were
partially offset by the aforementioned project-related charges that reduced our fiscal 2013 revenue and
revenue, net of subcontractor costs, by $17.3 million. These project charges related to adverse changes in
the estimated collectability of unbilled accounts receivable and estimated costs at completion. These
included claims and requests for equitable adjustment on three programs with U.S. federal and state and
local government clients. We reported $6.7 million of operating loss in the RCM segment for fiscal 2013.
The project-related charges described above contributed $27.7 million to the fiscal 2013 operating loss.
The remaining decrease in operating income compared to the prior year was attributable to lower
utilization of labor and equipment resources related to decreased revenue.

Fiscal 2012 Compared to Fiscal 2011

Consolidated Results of Operations

Fiscal Year Ended

September 30, October 2,

Change

2012

2011

($ in thousands)

Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Subcontractor costs . . . . . . . . . . . . . . . . . . . . . . .

2,711,075
(689,005)

2,573,144
(780,817)

137,931
91,812

5.4%
11.8

Revenue, net of subcontractor costs . . . . . . . . . .
Other costs of revenue . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative expenses . . . . . .
Contingent consideration – fair value adjustments . .
Impairment of goodwill . . . . . . . . . . . . . . . . . . . .

2,022,070
(1,663,065)
(210,970)
19,246
(914)

Operating income . . . . . . . . . . . . . . . . . . . . . .
Interest expense – net . . . . . . . . . . . . . . . . . . . . .

Income before income tax expense . . . . . . . . . . .
Income tax expense . . . . . . . . . . . . . . . . . . . . . . .

Net income including noncontrolling interests . . .
Net income attributable to noncontrolling interest

166,367
(5,571)

160,796
(56,064)

104,732
(352)

1,792,327
(1,454,374)
(193,286)
1,755
–

146,422
(5,930)

140,492
(47,510)

92,982
(2,943)

Net income attributable to Tetra Tech . . . . . . . . . $

104,380

90,039

229,743
(208,691)
(17,684)
17,491
(914)

19,945
359

20,304
(8,554)

11,750
2,591

14,341

12.8
(14.3)
(9.1)
NM
NM

13.6
6.1

14.5
(18.0)

12.6
88.0

15.9

Overall, our fiscal 2012 operating results improved significantly compared with fiscal 2011.
Revenue and revenue, net of subcontractor costs, increased $137.9 million and $229.7 million, respectively,
in fiscal 2012 compared to the prior year. The growth was driven by strong results in our U.S. commercial
business, the continued expansion of our international business, and contributions from acquisitions
completed during fiscal 2012 and 2011. To a lesser extent, our U.S. state and local government market also
contributed to the growth. Our revenue, net of subcontractor costs, in our U.S. federal government
business increased slightly versus last year; however, the related revenue declined due to decreased
revenue from certain construction management projects for the DoD that had a high level of
subcontracting activities. As a result, our overall revenue, net of subcontractor costs, grew at a higher rate
than revenue compared to last year.

Revenue and revenue, net of subcontractor costs, for our U.S. commercial business increased
$140.7 million and $75.2 million, respectively, in fiscal 2012 compared to fiscal 2011. The growth was
experienced across all of our reportable segments, and was primarily attributable to increased revenue
from industrial, energy and environmental management projects for large multi-national companies.
Revenue and revenue, net of subcontractor costs, for our international business increased $67.7 million
and $112.1 million, respectively, in fiscal 2012 versus the prior year. The growth was driven by increased
activity on our water, environmental and infrastructure design projects in Canada, Australia and South
America, primarily for mining and other commodity-driven businesses. Additionally, revenue, net of
subcontractor costs, grew at a faster pace than revenue due to increased self-performance on international
projects in fiscal 2012. Revenue and revenue, net of subcontractor costs, for fiscal 2012 included
contributions from acquisitions totaling $133.2 million and $122.3 million, respectively. Approximately
one-third of these amounts were contributed by our international acquisitions. Our overall revenue growth
was partially offset by declines in revenue and revenue, net of subcontractor costs, on DoD programs
totaling $135.4 million and $49.6 million, respectively, in fiscal 2012 compared to fiscal 2011. These

reductions resulted primarily from the wind-down of several large New Orleans hurricane protection
projects for USACE and environmental remediation programs for the DoD.

Operating income increased 13.6% in fiscal 2012 compared to fiscal 2011 primarily due to growth
in our revenue and revenue, net of subcontractor costs. In addition, operating income increased at a higher
rate than revenue due to better project performance in fiscal 2012. In fiscal 2011, operating income was
reduced by contract costs incurred for project overruns of $21.0 million on several fixed-priced
construction management projects in the RCM segment, and on an international development program in
the TSS segment. These fiscal 2011 items were partially mitigated by a $10.6 million government
performance-based incentive award fee on a large environmental remediation program in the RCM
segment and a $2.0 million net favorable project settlement in our former EAS segment.

In the fourth quarter of fiscal 2012, operating income was adversely impacted by $16.9 million of
costs related to the reorganization of our operations as described above in the ‘‘Overview of Results and
Business Trends.’’ These costs included $6.4 million of compensation-related expenses for severance and
employee retention. In addition, we recorded $4.4 million of lease exit costs, fixed asset write-downs and
other long-lived asset impairments associated with office space reductions and relocations. Further, we
incurred operational losses of $5.2 million for winding down certain India-based activities that are no
longer supported by our reorganized business model. We also identified one small reporting unit in the
EAS segment in which goodwill was impaired. This reporting unit realized lower than planned operating
income during the fourth quarter of fiscal 2012, and projected future operating losses and negative cash
flows that resulted in a $0.9 million non-cash goodwill impairment charge. Operating income in fiscal 2012
also included net gains of $19.2 million related to changes in the estimated fair value of our contingent
earn-out liabilities during fiscal 2012, $17.3 million of which were recognized in the fourth quarter,
compared to $1.8 million during fiscal 2011.

The $17.3 million net decrease in our contingent consideration liability in the fourth quarter of
fiscal 2012 included $12.5 million related to our determination in that quarter that one of our acquisitions
in the TSS segment would not achieve the operating income we previously expected for the earn-out
period. The remaining fourth quarter net earn-out adjustments primarily related to several of our recent
acquisitions in the ECS segment for which the earn-out periods concluded in the fourth quarter of fiscal
2012.

Income tax expense increased due to higher pre-tax income. Our effective tax rate for fiscal 2012
was 34.9% compared to 33.8% for fiscal 2011. The prior-year tax rate benefitted from the extension of
R&E credits. There was a $1.2 million benefit from R&E credits for the last nine months of fiscal 2010 that
was recorded in the first quarter of fiscal 2011. With the expiration of the R&E credits on December 31,
2011, we have not estimated a benefit from these credits beyond the expiration date.

Segment Results of Operations

Engineering and Consulting Services

Fiscal Year Ended

September 30, October 2,

Change

2012

2011

($ in thousands)

Revenue . . . . . . . . . . . . . . . . . . $ 1,155,256
(164,364)
Subcontractor costs . . . . . . . . . .

$ 1,110,060
(212,298)

Revenue, net of subcontractor

costs . . . . . . . . . . . . . . . . . . . $

990,892

Operating income . . . . . . . . . . . $

96,220

897,762

99,868

45,196
47,934

93,130

(3,648)

4.1%
22.6

10.4

(3.7)

Revenue and revenue, net of subcontractor costs, increased $45.2 million and $93.1 million,
respectively, in fiscal 2012 compared to fiscal 2011. The growth was primarily driven by demand for our
water, environmental and infrastructure design services globally, and our continued international
expansion into Canada, Australia and South America. In fiscal 2012, recent acquisitions contributed
$40.5 million to revenue.

Despite the growth in revenue and revenue, net of subcontractor costs, operating income declined
compared to fiscal 2011. Seasonal inclement weather conditions at our larger Canadian operations during
the first half of fiscal 2012 contributed to the lower operating margin. The adverse working conditions
resulted in lower staff utilization on projects and higher indirect expenses. Operating income was also
negatively impacted by $3.2 million of severance and other discretionary compensation-related costs
associated with reorganization in the fourth quarter of fiscal 2012. Additionally, the wind-down of several
high-profit water and mining-related projects had a negative effect in comparison to fiscal 2012 operating
income. Further, fiscal 2011 operating income benefited from a favorable $2.0 million net project
settlement on a U.S. commercial infrastructure project.

Technical Support Services

Fiscal Year Ended

September 30, October 2,

Change

2012

2011

Revenue . . . . . . . . . . . . . . . . . . $ 1,020,779
(332,164)
Subcontractor costs . . . . . . . . . .

Revenue, net of subcontractor

costs . . . . . . . . . . . . . . . . . . . $

688,615

Operating income . . . . . . . . . . . $

71,767

($ in thousands)

995,249
(395,874)

599,375

69,977

25,530
63,710

89,240

1,790

2.6%
16.1

14.9

2.6

Revenue and revenue, net of subcontractor costs, increased $25.5 million and $89.2 million,
respectively, in fiscal 2012 compared to fiscal 2011. This growth was primarily driven by the expansion of
international development services provided to the DoS. Revenue from DoS services increased
$82.2 million this fiscal year compared to fiscal 2011. Virtually all of the increase in DoS revenue resulted

from an acquisition completed in the fourth quarter of fiscal 2011. An increase in U.S. commercial
business contributed $24.6 million and $21.6 million of additional revenue and revenue, net of
subcontractor costs, compared to fiscal 2011. An acquisition completed in fiscal 2012 contributed
approximately one-half of this commercial growth. Revenue, net of subcontractor costs, grew at a faster
rate than revenue due to reduced workload on, and completion of, certain USAID and EPA programs that
had a high level of subcontracting activities in fiscal 2011.

Operating income increased $1.8 million in fiscal 2012 compared to fiscal 2011 due to increased
revenue, net of subcontractor costs. Acquisitions completed in the fourth quarter of fiscal 2011 and during
fiscal 2012 contributed $6.7 million to the operating income increase. Further, fiscal 2011 operating income
was negatively affected by $1.2 million of contract costs overruns on an international development
program. The overall increase was partially offset by $2.2 million of severance and other discretionary
compensation-related costs associated with our reorganization in the fourth quarter of fiscal 2012, and
$5.2 million of losses for certain India-based activities.

Remediation and Construction Management

Fiscal Year Ended

September 30, October 2,

Change

2012

2011

Revenue . . . . . . . . . . . . . . . . . . $
Subcontractor costs . . . . . . . . . .

621,957
(279,394)

Revenue, net of subcontractor

costs . . . . . . . . . . . . . . . . . . . $

342,563

Operating income . . . . . . . . . . . $

22,374

($ in thousands)

604,651
(309,461)

295,190

13,183

17,306
30,067

47,373

9,191

2.9%
9.7

16.0

69.7

Revenue and revenue, net of subcontractor costs, increased $17.3 million and $47.4 million,
respectively, in fiscal 2012 compared to fiscal 2011. Our U.S. commercial business grew $96.5 million and
$57.2 million in revenue and revenue, net of subcontractor costs, respectively, due primarily to expanded
programs in our mining and energy businesses. Our U.S. state and local government business contributed
$38.5 million and $31.4 million of revenue and revenue, net of subcontractor costs, respectively, due to
several large infrastructure projects. The growth was partially offset by a revenue decline of $107.6 million,
and a corresponding $33.2 million decrease in revenue, net of subcontractor costs, resulting from the
wind-down of several large New Orleans hurricane protection projects for USACE and environmental
remediation programs for the DoD at the end of fiscal 2011. The decline in revenue was larger than the
related decline in revenue, net of subcontractor costs, because the USACE and DoD projects had a
relatively high level of subcontractor costs.

Operating income increased $9.2 million due partially to the increase in revenue, net of
subcontractor costs, compared to fiscal 2011. In addition, fiscal 2011 operating income was adversely
impacted by $20.0 million of contract cost overruns on several fixed-price infrastructure and energy
projects and a $1.3 million charge for lease exit costs. These fiscal 2011 items were partially mitigated by
$10.6 million of government performance-based incentive award fees on a large environmental
remediation program with the DoD. In fiscal 2012, we benefitted from $2.9 million of gains related to the
settlement of project claims and change orders partially offset by $2.4 million of project-related losses.

Non-GAAP Financial Measures

We are providing certain non-GAAP financial measures that we believe are appropriate for
evaluating the operating performance of our business. These non-GAAP measures should not be
considered in isolation from, and are not intended to represent an alternative measure of, operating results
or cash flows from operating activities, as determined in accordance with U.S. GAAP.

EBITDA represents net income (loss) attributable to Tetra Tech plus net interest expense, income
taxes, depreciation and amortization. We believe EBITDA is a useful representation of our operating
performance because of significant amounts of acquisition-related non-cash amortization expense, which
can fluctuate significantly depending on the timing, nature and size of our business acquisitions. Revenue,
net of subcontractor costs, is defined as revenue less subcontractor costs. For more information, see the
‘‘Consolidated Results of Operations’’ discussion above. EBITDA and revenue, net of subcontractor costs,
as we calculate them, may not be comparable to similarly titled measures employed by other companies.

The following is a reconciliation of EBITDA to net income attributable to Tetra Tech as well as

revenue, net of subcontractor costs, for fiscal 2011 through 2013:

Fiscal Year Ended

September 29, September 30, October 2,
2012

2013

2011

($ in thousands)

Net income (loss) attributable to Tetra Tech . . . . $
Interest expense, net . . . . . . . . . . . . . . . . . . . .
Depreciation (1) . . . . . . . . . . . . . . . . . . . . . . . .
Amortization (1) . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense . . . . . . . . . . . . . . . . . . . . .

(2,141)
7,686
29,548
32,370
14,038

104,380
5,571
26,651
29,634
56,064

90,039
5,930
27,137
27,978
47,510

EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . $

81,501

222,300

198,594

Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,613,755
(588,923)
Subcontractor costs . . . . . . . . . . . . . . . . . . . . .

$ 2,711,075
(689,005)

$ 2,573,144
(780,817)

Revenue, net of subcontractors costs . . . . . . . . $ 2,024,832

$ 2,022,070

$ 1,792,327

(1) The total of depreciation and amortization expenses is different from the amounts on the
consolidated statements of cash flows, which include amortization of deferred debt costs.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

Capital Requirements. Our primary sources of liquidity are cash flows from operations and
borrowings under our credit facilities. Our primary uses of cash are to fund working capital, capital
expenditures, repurchases of stock under our Stock Repurchase Program and repayment of debt, as well as
to fund acquisitions and earn-out obligations from prior acquisitions. We believe that our existing cash and
cash equivalents, operating cash flows and borrowing capacity under our Amended Credit Agreement will
be sufficient to meet our capital requirements for at least the next 12 months.

We use a variety of tax planning and financing strategies to manage our worldwide cash and
deploy funds to locations where they are needed. We also indefinitely reinvest our foreign earnings, and
our current plans do not demonstrate a need to repatriate these earnings. Should we require additional
capital in the United States, we may elect to repatriate indefinitely reinvested foreign funds or raise capital

in the United States through debt. If we were to repatriate indefinitely reinvested foreign funds, we would
be required to accrue and pay additional United States taxes less applicable foreign tax credits.

As of September 29, 2013, cash and cash equivalents were $129.3 million, an increase of
$24.5 million compared to the prior-year period. The increase in cash and cash equivalents was primarily
due to net cash provided by operating activities and an increase in net debt borrowings, partially offset by
increased cash payments for business acquisitions.

Operating Activities. Net cash provided by operating activities was $137.8 million, a decrease of
$20.3 million compared to fiscal 2012. The decrease was due to lower EBITDA as a result of lower
earnings in fiscal 2013. Additionally, the decrease resulted from changes in accounts payable, accrued
compensation, prepaid expenses and other assets and income taxes. The overall decrease was partially
mitigated by a favorable change in accounts receivable due to the timing of cash collections.

Investing Activities. Net cash used in investing activities was $196.6 million, an increase of
$116.8 million compared to fiscal 2012. The increase was attributable to net cash payments related to
business acquisitions completed during fiscal 2013. Our capital expenditures were $27.5 million, an
increase of $2.4 million compared to the prior-year period. New equipment was purchased to replace
obsolete equipment and satisfy requirements for project execution.

Financing Activities. Net cash provided by financing activities was $85.6 million, compared to net
cash used in financing activities of $67.4 million in fiscal 2012. Our net borrowings under our Amended
Credit Agreement increased $193.1 million due to the funding of our business acquisitions, working capital
needs, stock repurchases and contingent earn-outs. The net cash provided by financing activities was
partially offset by a $15.6 million increase in contingent earn-out payments and $20.0 million of stock
repurchases compared to fiscal 2012.

Debt Financing. At September 30, 2012, we had a credit agreement that provided for a
$460 million five-year revolving credit facility that matured in March 2016. On May 7, 2013, we entered
into the Amended Credit Agreement and refinanced the indebtedness under the prior credit agreement.
The Amended Credit Agreement is a $665 million senior secured, five-year facility that provides for a
$205 million term loan facility (the ‘‘Term Loan Facility’’) and a $460 million revolving credit facility (the
‘‘Revolving Credit Facility’’). The Amended 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 $200 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 and letters of credit.

The Term Loan Facility was drawn on May 7, 2013 and is subject to quarterly amortization of
principal, with no principal payment due in year 1, $10.3 million payable in both years 2 and 3, and
$15.4 million payable in both years 4 and 5, respectively. 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 Amended Credit Agreement expires on May 7, 2018, or earlier at our
discretion upon payment in full of loans and other obligations.

As of September 29, 2013, we had $205.0 million in borrowings outstanding under the Amended
Credit Agreement, consisting entirely of the Term Loan Facility at a weighted-average interest rate of

1.56% per annum and $12.4 million in standby letters of credit. Our average effective interest rate on
borrowings outstanding at September 29, 2013 under the Amended Credit Agreement, including the
effects of interest rate swap agreements described in Note 14, ‘‘Derivative Financial Instruments’’ of the
‘‘Notes to Consolidated Financial Statements’’ included in Item 8, was 2.43%. At September 29, 2013, we
had $447.6 million of available credit under the Revolving Credit Facility, of which $265.5 million could be
borrowed without a violation of our debt covenants. In addition, we entered into agreements with three
banks to issue up to $40 million in standby letters of credit. The aggregate amount of standby letters of
credit outstanding under these additional facilities was $6.5 million, of which $6.4 million was issued in
currencies other than the U.S. dollar.

The Amended Credit Agreement contains certain affirmative and restrictive covenants, and
customary events of default. The financial covenants provide for a maximum Consolidated Leverage Ratio
of 2.50 to 1.00 (total funded debt/EBITDA, as defined in the Amended Credit Agreement) and a
minimum Consolidated Fixed Charge Coverage Ratio of 1.25 to 1.00 (EBITDA, as defined in the
Amended Credit Agreement minus capital expenditures/cash interest plus taxes plus principal payments of
indebtedness including capital leases, notes and post-acquisition payments).

On September 27, 2013, we entered into Amendment No. 1 (‘‘Amendment No. 1’’) to the
Amended Credit Agreement to amend the definition of ‘‘Consolidated EBITDA’’ for purposes of the
financial covenants contained in the Amended Credit Agreement to add back to Consolidated Net Income
for the fiscal quarters ending September 29, 2013, December 29, 2013 and March 30, 2014 (i) up to
$34 million in non-recurring charges incurred during the fiscal quarter ended June 30, 2013 in connection
with corporate restructurings and (ii) up to $36 million in non-cash charges incurred during the fiscal
quarter ended June 30, 2013 in connection with the Four Programs referenced in our Form 8-Ks, filed with
the SEC on June 18, 2013 and August 7, 2013, and Form 10-Q for the fiscal quarter ended June 30, 2013.
Amendment No. 1 also provides that Consolidated EBITDA will be calculated without giving effect to the
add-backs referenced above for purposes of determining our applicable margin in effect at any time.

At September 29, 2013, we were in compliance with these covenants with a consolidated leverage
ratio of 1.33x and a consolidated fixed charge coverage ratio of 2.21x. Our obligations under the Amended
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 Amended Credit Agreement, and (ii) our accounts receivable, general intangibles and
intercompany loans, and those of our subsidiaries that are guarantors or borrowers.

Inflation. We believe our operations have not been, and, in the foreseeable future, are not
expected to be, materially adversely affected by inflation or changing prices due to the average duration of
our projects and our ability to negotiate prices as contracts end and new contracts begin.

Contractual Obligations. The following sets forth our contractual obligations at September 29,

Total

Year 1

Years 2 - 3

Years 4 - 5

Beyond

(in thousands)

2013:

Debt:

Credit facility . . . . . . . . . . . $
Other debt . . . . . . . . . . . . .
Interest (1)
. . . . . . . . . . . . .
Capital leases . . . . . . . . . . . .
Operating leases (2) . . . . . . . . .
Contingent earn-outs (3)
. . . . .
Deferred compensation liability .
Unrecognized tax benefits (4)
. .

205,000
969
22,997
1,911
224,024
81,789
16,107
17,005

2,563
950
5,492
874
71,293
23,281
–
–

25,625
19
10,348
1,032
89,434
58,508
–
4,506

176,812
–
7,157
5
38,669
–
–
–

–
–
–
–
24,628
–
16,107
12,499

Total . . . . . . . . . . . . . . . . . $

569,802

104,453

189,472

222,643

53,234

(1)

Interest primarily related to the credit facility is based on a weighted-average interest rate at September 29, 2013,
on borrowings that are presently outstanding.

(2) Predominantly represents real estate leases.
(3) Represents the estimated fair value recorded for contingent earn-out obligations for acquisitions consummated
after fiscal 2009. The remaining maximum contingent earn-out obligations for these acquisitions are
$101.3 million.

(4) Represents liabilities for unrecognized tax benefits related to uncertain tax positions, excluding amounts related
primarily to outstanding refund claims. We are unable to reasonably predict the timing of tax settlements, as tax
audits can involve complex issues and the resolution of those issues may span multiple years, particularly if subject
to negotiation or litigation. For more information, see Note 8, ‘‘Income Taxes’’ of the ‘‘Notes to Consolidated
Financial Statements’’ included in Item 8.

Income Taxes

We review the realizability of deferred tax assets on a quarterly basis by assessing the need for a
valuation allowance. As of September 29, 2013, we performed our assessment of net deferred tax assets.
Significant management judgment is required in determining the provision for income taxes and, in
particular, any valuation allowance recorded against our deferred tax assets. Applying the applicable
accounting guidance requires an assessment of all available evidence, positive and negative, regarding the
realizability of the net deferred tax assets. Based upon recent results, we concluded that a cumulative loss
in recent years exists in foreign jurisdictions. We have historically relied on the following factors in our
assessment of the realizability of our net deferred tax assets:

• taxable income in prior carryback years as permitted under the tax law;

• future reversals of existing taxable temporary differences;

• consideration of available tax planning strategies and actions that could be implemented, if

necessary; and

• estimates of future taxable income from our operations.

We considered these factors in our estimate of the reversal pattern of deferred tax assets, using
assumptions that we believe are reasonable and consistent with operating results. However, as a result of
projected cumulative pre-tax losses for the 36 months ended September 29, 2013, we concluded that our
estimates of future taxable income and certain tax planning strategies did not constitute sufficient positive

evidence to assert that it is more likely than not that certain deferred tax assets would be realizable before
expiration. Although we project earnings in the business beyond 2013, we did not rely on these projections
when assessing the realizability of our deferred tax assets.

Off-Balance Sheet Arrangements

In the ordinary course of business, we may use off-balance sheet arrangements if we believe that
such an arrangement would be an efficient way to lower our cost of capital or help us manage the overall
risks of our business operations. We do not believe that such arrangements have had a material adverse
effect on our financial position or our results of operations.

The following is a summary of our off-balance sheet arrangements:

• Letters of credit and bank guarantees are used primarily to support project performance and
insurance programs. We are required to reimburse the issuers of letters of credit and bank
guarantees for any payments they make under the outstanding letters of credit or bank
guarantees. Our Amended Credit Agreement and additional letter of credit facilities cover the
issuance of our standby letters of credit and bank guarantees and are critical for our normal
operations. If we default on the Amended Credit Agreement or additional credit facilities, our
inability to issue or renew standby letters of credit and bank guarantees would impair our ability
to maintain normal operations. We had $12.5 million in standby letters of credit outstanding
under our Amended Credit Agreement and $6.5 million in standby letters of credit outstanding
under our additional letter of credit facilities.

• We have guaranteed a bank overdraft facility at one of our foreign affiliates in the amount of

$0.9 million.

• From time to time, we provide guarantees and indemnifications related to our services. If our
services under a guaranteed or indemnified project are later determined to have resulted in a
material defect or other material deficiency, then we may be responsible for monetary damages
or other legal remedies. When sufficient information about claims on guaranteed or
indemnified projects is available and monetary damages or other costs or losses are determined
to be probable, we recognize such guaranteed losses.

• In the ordinary course of business, we enter into various agreements as part of certain
unconsolidated subsidiaries, joint ventures, and other jointly executed contracts where we are
jointly and severally liable. We enter into these agreements primarily to support the project
execution commitments of these entities. The potential payment amount of an outstanding
performance guarantee is typically the remaining cost of work to be performed by or on behalf
of third parties under engineering and construction contracts. However, we are not able to
estimate other amounts that may be required to be paid in excess of estimated costs to complete
contracts and, accordingly, the total potential payment amount under our outstanding
performance guarantees cannot be estimated. For cost-plus contracts, amounts that may
become payable pursuant to guarantee provisions are normally recoverable from the client for
work performed under the contract. For lump sum or fixed-price contracts, this amount is the
cost to complete the contracted work less amounts remaining to be billed to the client under the
contract. Remaining billable amounts could be greater or less than the cost to complete. In
those cases where costs exceed the remaining amounts payable under the contract, we may have
recourse to third parties, such as owners, co-venturers, subcontractors or vendors, for claims.

• In the ordinary course of business, our clients may request that we obtain surety bonds in
connection with contract performance obligations that are not required to be recorded in our

consolidated balance sheets. We are obligated to reimburse the issuer of our surety bonds for
any payments made thereunder. Each of our commitments under performance bonds generally
ends concurrently with the expiration of our related contractual obligation.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of our financial statements in conformity with U.S. GAAP requires us to make
estimates and assumptions in the application of certain accounting policies that affect amounts reported in
our consolidated financial statements and accompanying footnotes included in Item 8 of this report. In
order to understand better the changes that may occur to our financial condition, results of operations and
cash flows, readers should be aware of the critical accounting policies we apply and estimates we use in
preparing our consolidated financial statements. Although such estimates and assumptions are based on
management’s best knowledge of current events and actions we may undertake in the future, actual results
could differ materially from those estimates.

Our significant accounting policies are described in the ‘‘Notes to Consolidated Financial
Statements’’ included in Item 8. Highlighted below are the accounting policies that management considers
most critical to investors’ understanding of our financial results and condition, and that require complex
judgments by management.

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. This method of revenue recognition requires us to prepare
estimates of costs to complete contracts in progress. In making such estimates, judgments are required to
evaluate contingencies such as potential variances in schedule; the cost of materials and labor productivity;
and the impact of change orders, liability claims, contract disputes and achievement of contractual
performance standards. Changes in total estimated contract cost and losses, if any, could materially impact
our results of operations or financial position. 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.

our actual out-of-pocket costs of 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 fee or mark-up. 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 based upon the amounts we expect to realize using the
percentage-of-completion method. 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, anticipated losses and
others 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.

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 claim resolution occurs.

Insurance Matters, Litigation and Contingencies

In the normal course of business, we are subject to certain contractual guarantees and litigation.
Generally, such guarantees relate to project schedules and performance. Most of the litigation involves us
as a defendant in contractual disagreements, workers’ compensation, personal injury and other similar
lawsuits. We maintain insurance coverage for various aspects of our business and operations. However, we
have elected to retain a portion of losses that may occur through the use of various deductibles, limits and
retentions under our insurance programs. This practice may subject us to some future liability for which we
are only partially insured or are completely uninsured.

We record in our consolidated balance sheets amounts representing our estimated liability for
self-insurance claims. We utilize actuarial analyses to assist in determining the level of accrued liabilities to
establish for our employee medical and workers’ compensation self-insurance claims that are known and
have been asserted against us, as well as for self-insurance claims that are believed to have been incurred
based on actuarial analyses but have not yet been reported to our claims administrators at the balance
sheet date. We include any adjustments to such insurance reserves in our consolidated results of
operations.

Except as described in Note 17, ‘‘Commitments and Contingencies’’ of the ‘‘Notes to Consolidated
Financial Statements’’ included in Item 8, we do not have any litigation or other contingencies that have
had, or are currently anticipated to have, a material impact on our results of operations or financial
position. As additional information about current or future litigation or other contingencies becomes
available, management will assess whether such information warrants the recording of additional expenses
relating to those contingencies. Such additional expenses could potentially have a material impact on our
results of operations and financial position.

Stock-Based Compensation

Our stock-based compensation plans include stock options, restricted stock, restricted stock units
(‘‘RSUs’’) and an employee stock purchase plan for our eligible employees and outside directors. Stock-
based compensation cost is measured at the grant date based on the fair value of the award and is
recognized as expense over the requisite service period. Determining the fair value of stock-based awards
at the grant date requires management to make assumptions and apply judgment to determine the fair
value of our awards. These assumptions and judgments include future employee turnover rates, along with
estimating the future volatility of our stock price, future stock option exercise behaviors and, for
performance-based awards, the achievement of company performance goals. Our stock-based
compensation expense was $8.8 million, $10.8 million and $10.6 million for fiscal 2013, 2012 and 2011,
respectively.

Goodwill and Intangibles

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.

Identifiable intangible assets include backlog, non-compete agreements, client relations, trade
names, patents and other assets. The costs of these intangible assets are amortized over their contractual
or economic lives, which range from one to ten years. 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 perform our annual goodwill impairment review at the beginning of our fiscal fourth quarter.
Our annual review at July 1, 2013 (i.e., the first day of our fiscal fourth quarter), 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. During our annual impairment review, we identified three reporting
units in the ECS segment with goodwill totaling $216 million that had a fair value in excess of carrying
value equal to or less than 20%. In the third quarter of fiscal 2013, the goodwill of each of these reporting

units was written down to estimated fair value through an impairment charge. 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’’ of the
‘‘Notes to Consolidated Financial Statements’’ in Item 8 for further discussion).

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.

The goodwill impairment review involves the determination of the fair value of our reporting
units, which for us are the components one level below our reportable segments. This process requires us
to make significant judgments and estimates, including assumptions about our strategic plans with regard
to our operations as well as the interpretation of current economic indicators and market valuations.
Furthermore, the development of the present value of future cash flow projections includes assumptions
and estimates derived from a review of our expected revenue growth rates, profit margins, business plans,
cost of capital and tax rates. We also make certain assumptions about future market conditions, market
prices, interest rates and changes in business strategies. Changes in assumptions or estimates could
materially affect the determination of the fair value of a reporting unit. This could eliminate the excess of
fair value over carrying value of a reporting unit entirely and, in some cases, result in impairment. Such
changes in assumptions could be caused by a loss of one or more significant contracts, reductions in
government or commercial client spending, or a decline in the demand for our services due to changing
economic conditions. In the event that we determine that our goodwill is impaired, we would be required
to record a non-cash charge that could result in a material adverse effect on our results of operations or
financial position.

We use two methods to determine the fair value of our reporting units: (i) the Income Approach
and (ii) the Market Approach. While each of these approaches is initially considered in the valuation of
the business enterprises, the nature and characteristics of the reporting units indicate which approach is
most applicable. The Income Approach utilizes the discounted cash flow method, which focuses on the
expected cash flow of the reporting unit. In applying this approach, the cash flow available for distribution
is calculated for a finite period of years. Cash flow available for distribution is defined, for purposes of this
analysis, as the amount of cash that could be distributed as a dividend without impairing the future
profitability or operations of the reporting unit. The cash flow available for distribution and the terminal
value (the value of the reporting unit at the end of the estimation period) are then discounted to present
value to derive an indication of the value of the business enterprise. The Market Approach is comprised of
the guideline company method and the similar transactions method. The guideline company method
focuses on comparing the reporting unit to select reasonably similar (or ‘‘guideline’’) publicly traded
companies. Under this method, valuation multiples are (i) derived from the operating data of selected
guideline companies; (ii) evaluated and adjusted based on the strengths and weaknesses of the reporting
units relative to the selected guideline companies; and (iii) applied to the operating data of the reporting
unit to arrive at an indication of value. In the similar transactions method, consideration is given to prices
paid in recent transactions that have occurred in the reporting unit’s industry or in related industries. For
our annual impairment analysis at July 1, 2013, we weighted the Income Approach and the Market
Approach at 70% and 30%, respectively. The Income Approach was given a higher weight because it has
the most direct correlation to the specific economics of the reporting unit, as compared to the Market
Approach, which is based on multiples of broad-based (i.e., less comparable) companies.

Contingent Consideration. Certain 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. For acquisitions
completed prior to fiscal 2010, contingent earn-out payments are accrued as ‘‘Estimated earn-out
liabilities’’ when the related operating income thresholds have been achieved, and a corresponding
increase in goodwill is recorded. These contingent earn-out payments are reflected as cash flows used in
investing activities on the consolidated statements of cash flows in the period paid.

For acquisitions consummated in or after fiscal 2010, 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
‘‘Estimated contingent earn-out liabilities’’ and ‘‘Other long-term 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 shareholders 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 (See Note 2, ‘‘Basis of Presentation
and Preparation – Fair Value of Financial Instruments’’ of the ‘‘Notes to Consolidated Financial
Statements’’ included in Item 8). 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.

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
differences 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 on deferred tax

assets, management reviews both positive and negative evidence, including current and historical results of
operations, future income projections and potential tax planning strategies. Based on our assessment, we
have concluded that a portion of the deferred tax assets at September 29, 2013 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. For more information related to our unrecognized tax benefits, see Note 8, ‘‘Income Taxes’’ of
the ‘‘Notes to Consolidated Financial Statements’’ included in Item 8.

RECENT ACCOUNTING PRONOUNCEMENTS

For a discussion of recent accounting standards and the effect they could have on the consolidated
financial statements, see Note 2, ‘‘Basis of Presentation and Preparation’’ of the ‘‘Notes to Consolidated
Financial Statements’’ included in Item 8.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

We do not enter into derivative financial instruments for trading or speculation purposes. In the
normal course of business, we have exposure to both interest rate risk and foreign currency transaction and
translation risk, primarily related to the Canadian dollar (‘‘CAD’’).

We are exposed to interest rate risk under our Amended Credit Agreement. We can borrow, at
our option, under both the Term Loan Facility and Revolving Credit Facility. 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. Borrowings at the base rate have no designated term
and may be repaid without penalty any time prior to the Facility’s maturity date. Borrowings at a
Eurodollar rate have a term no less than 30 days and no greater than 90 days. Typically, at the end of such
term, such borrowings may be rolled over at our discretion into either a borrowing at the base rate or a
borrowing at a Eurodollar rate with similar terms, not to exceed the maturity date of the Facility. The
Facility matures on May 7, 2018. At September 29, 2013 we had borrowings outstanding under the
Amended Credit Agreement of $205.0 million at a weighted-average interest rate of 1.56%, of which the
entire amount was outstanding under the Term Loan Facility.

In fiscal 2013, we entered into three interest rate swap agreements with three banks to fix the
variable interest rate on $153.8 million of our Term Loan Facility. The objective of these interest rate swaps
was to eliminate the variability of our cash flows on the amount of interest expense we pay under our
Amended Credit Facility. Our average effective interest rate on borrowings outstanding under the
Amended Credit Agreement, including the effects of interest rate swap agreements, at September 29, 2013
was 2.43%. For more information, see Note 14, ‘‘Derivative Financial Instruments’’ of the ‘‘Notes to
Consolidated Financial Statements’’ in Item 8. In October 2013, we entered into two interest rate swap
agreements with two banks to fix the variable interest rate on $51.2 million of our Term Loan Facility,
resulting in an effective interest rate at existing Eurocurrency rate pricing margins of 2.7% on the entire
Term Loan Facility.

Most of our transactions are in U.S. dollars; however, some of our subsidiaries conduct business in
foreign currencies, primarily the CAD. Therefore, we are subject to currency exposure and volatility
because of currency fluctuations. We attempt to minimize our exposure to these fluctuations by matching

revenue and expenses in the same currency for our contracts. For fiscal 2013, we recognized foreign
currency losses of $0.8 million compared to gains of $0.1 million for the prior year. Foreign currency gains
and losses were recognized as part of ‘‘Selling, general and administrative expenses’’ in our consolidated
statements of operations.

We have foreign currency exchange rate exposure in our results of operations and equity primarily
as a result of the currency translation related to our Canadian subsidiaries where the local currency is the
functional currency. To the extent the U.S. dollar strengthens against the CAD, the translation of these
foreign currency denominated transactions will result in reduced revenue, operating expenses, assets and
liabilities. Similarly, our revenue, operating expenses, assets and liabilities will increase if the U.S. dollar
weakens against the CAD. For fiscal 2013 and 2012, 26.7% and 24.5% of our consolidated revenue,
respectively, was generated by our international business, and such revenue was primarily denominated in
CAD. For fiscal 2013, the effect of foreign exchange rate translation on the consolidated balance sheets
was a reduction in equity of $29.2 million compared to an increase in equity of $26.3 million in fiscal 2012.
These amounts were recognized as an adjustment to equity through other comprehensive income.

In fiscal 2009, we entered into an intercompany promissory note with a wholly-owned Canadian
subsidiary in connection with the acquisition of Wardrop Engineering, Inc. The intercompany note
receivable is denominated in CAD and has a fixed rate of interest payable in CAD. In the second quarter
of fiscal 2010, we entered into a forward contract for CAD $4.2 million (equivalent to U.S. $3.9 million at
the date of inception) that matured on January 28, 2013. In the third quarter of fiscal 2011, we entered into
a forward contract for CAD $4.2 million (equivalent to U.S. $4.2 million at the date of inception) with a
maturity date of January 27, 2014. Our objective was to eliminate variability of our cash flows on the
amount of interest income we receive on the promissory note from changes in foreign currency exchange
rates. In the second quarter of fiscal 2013, we settled one of the foreign currency forward contracts for U.S.
$3.9 million and terminated the remaining forward contract. For more information, see Note 14,
‘‘Derivative Financial Instruments’’ of the ‘‘Notes to Consolidated Financial Statements’’ in Item 8.

Item 8. Financial Statements and Supplementary Data

INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE

Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consolidated Balance Sheets at September 29, 2013, and September 30, 2012 . . . . . . . . . . . . . .

Page

Consolidated Statements of Operations for each of the three years in the period ended

September 29, 2013, September 30, 2012 and October 2, 2011 . . . . . . . . . . . . . . . . . . . . . .

Consolidated Statements of Comprehensive Income (Loss) for each of the three years in the

period ended September 29, 2013, September 30, 2012 and October 2, 2011 . . . . . . . . . . . .

Consolidated Statements of Equity for each of the three years in the period ended

September 29, 2013, September 30, 2012 and October 2, 2011 . . . . . . . . . . . . . . . . . . . . . .

Consolidated Statements of Cash Flows for each of the three years in the period ended

September 29, 2013, September 30, 2012 and October 2, 2011 . . . . . . . . . . . . . . . . . . . . . .

Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Schedule II – Valuation and Qualifying Accounts and Reserves . . . . . . . . . . . . . . . . . . . . . . . . .

127

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders of Tetra Tech, Inc.:

In our opinion, the accompanying consolidated balance sheets and the related consolidated
statements of operations, comprehensive income (loss), equity and cash flows present fairly, in all material
respects, the financial position of Tetra Tech, Inc. and its subsidiaries at September 29, 2013 and
September 30, 2012, and the results of their operations and their cash flows for each of the three years in
the period ended September 29, 2013, in conformity with accounting principles generally accepted in the
United States of America. In addition, in our opinion, the financial statement schedule listed in the
accompanying index presents fairly, in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements. Also in our opinion, the Company
maintained, in all material respects, effective internal control over financial reporting as of September 29,
2013 based on criteria established in Internal Control – Integrated Framework (1992) issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s
management is responsible for these financial statements and the financial statement schedule, for
maintaining effective internal control over financial reporting and for its assessment of the effectiveness of
internal control over financial reporting, included in Management’s Report on Internal Control over
Financial Reporting, appearing under Item 9A of this Form 10-K. Our responsibility is to express opinions
on these financial statements, on the financial statement schedule and on the Company’s internal control
over financial reporting based on our integrated audits. We conducted our audits in accordance with the
standards of the Public Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audits to obtain reasonable assurance about whether the financial statements
are free of material misstatement and whether effective internal control over financial reporting was
maintained in all material respects. Our audits of the financial statements included examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and evaluating the overall
financial statement presentation. Our audit of internal control over financial reporting included obtaining
an understanding of internal control over financial reporting, assessing the risk that a material weakness
exists, and testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk. Our audits also included performing such other procedures as we considered necessary in the
circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles. A company’s internal
control over financial reporting includes those policies and procedures that (i) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the
assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted accounting principles,
and that receipts and expenditures of the company are being made only in accordance with authorizations
of management and directors of the company; and (iii) provide reasonable assurance regarding prevention
or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have
a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or
detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to
the risk that controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.

/s/ PRICEWATERHOUSECOOPERS LLP

Los Angeles, California
November 20, 2013

TETRA TECH, INC.
Consolidated Balance Sheets
(in thousands, except par value)

Current assets:

ASSETS

Cash and cash equivalents
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable – net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . .
Income taxes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Property and equipment – net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in and advances to unconsolidated joint ventures . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets – net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other long-term assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

September 29,
2013

September 30,
2012

129,305
660,847
61,446
20,044

871,642

88,026
2,198
722,792
86,929
27,505

104,848
700,480
48,168
5,817

859,313

74,309
3,279
635,958
74,231
23,940

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,799,092

1,671,030

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Billings in excess of costs on uncompleted contracts . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current portion of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . .
Estimated contingent earn-out liabilities . . . . . . . . . . . . . . . . . . . . .
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Deferred income taxes
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term estimated contingent earn-out liabilities . . . . . . . . . . . . . . .
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Commitments and contingencies

Equity:

Preferred stock – Authorized, 2,000 shares of $0.01 par value; no

shares issued and outstanding at September 29, 2013, and
September 30, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Common stock – Authorized, 150,000 shares of $0.01 par value; issued
and outstanding, 64,134 and 63,837 shares at September 29, 2013,
and September 30, 2012, respectively . . . . . . . . . . . . . . . . . . . . . .
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive income . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Tetra Tech stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

142,813
114,810
79,507
18,170
4,311
23,281
100,241

483,133

30,525
203,438
58,508
24,685

154,003
128,086
90,909
20,809
2,031
35,407
72,549

503,794

24,268
81,047
16,132
25,922

–

641
443,099
1,858
552,165

997,763
1,040

998,803

638
433,009
31,017
554,306

1,018,970
897

1,019,867

Total liabilities and equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,799,092

1,671,030

See accompanying Notes to Consolidated Financial Statements.

TETRA TECH, INC.
Consolidated Statements of Operations
(in thousands, except per share data)

Fiscal Year Ended

September 29,
2013

September 30,
2012

October 2,
2011

Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Subcontractor costs . . . . . . . . . . . . . . . . . . . . . . . . .
Other costs of revenue . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . .
Selling, general and administrative expenses
Contingent consideration – fair value adjustments
. . . .
. . . . . . . . . . . . . . . . . . . . . .
Impairment of goodwill

2,613,755
(588,923)
(1,757,842)
(199,732)
9,560
(56,600)

Operating income . . . . . . . . . . . . . . . . . . . . . . . . .

Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . .

Income before income tax expense . . . . . . . . . . . . .

Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . .

Net income (loss) including noncontrolling interests
.
Net income attributable to noncontrolling interests . .

20,218

1,003
(8,689)

12,532

(14,038)

(1,506)
(635)

Net income (loss) attributable to Tetra Tech . . . . . . . $

(2,141)

Net income (loss) attributable to Tetra Tech per share:

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $

Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $

Weighted-average common shares outstanding:

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(0.03)

64,544

2,711,075
(689,005)
(1,663,065)
(210,970)
19,246
(914)

166,367

873
(6,444)

160,796

(56,064)

104,732
(352)

104,380

1.65

1.63

63,217

63,934

2,573,144
(780,817)
(1,454,374)
(193,286)
1,755
–

146,422

879
(6,809)

140,492

(47,510)

92,982
(2,943)

90,039

1.45

1.43

62,053

62,775

See accompanying Notes to Consolidated Financial Statements.

TETRA TECH, INC.
Consolidated Statements of Comprehensive Income (Loss)
(unaudited – in thousands)

Fiscal Year Ended

September 29,
2013

September 30,
2012

October 2,
2011

Net income (loss) including noncontrolling interests . . . . $

(1,506)

104,732

92,982

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustments . . . . . . . .
Gain (loss) on cash flow hedge valuations . . . . . . .

Other comprehensive income (loss), net of tax . . . .

(28,817)
(389)

(29,206)

26,486
(194)

26,292

Comprehensive income (loss) including

noncontrolling interests . . . . . . . . . . . . . . .

(30,712)

131,024

Net income attributable to noncontrolling interests . . .
Foreign currency translation adjustments, net of tax . .

Comprehensive income attributable to

noncontrolling interests . . . . . . . . . . . . . . .

(635)
47

(588)

(352)
(29)

(381)

(13,955)
438

(13,517)

79,465

(2,943)
(492)

(3,435)

Comprehensive income (loss) attributable to

Tetra Tech . . . . . . . . . . . . . . . . . . . . . . . . $

(31,300)

130,643

76,030

See accompanying Notes to Consolidated Financial Statements.

TETRA TECH, INC.
Consolidated Statements of Equity
Fiscal Years Ended October 2, 2011, September 30, 2012, and September 29, 2013
(in thousands)

Common Stock

Additional
Paid-in
Shares Amount Capital

Accumulated
Other

Total

Comprehensive Retained Tetra Tech Non-Controlling

Income

Earnings

Equity

Interests

Total
Equity

BALANCE AT OCTOBER 3, 2010 . . . . . . . 61,755

618

368,865

18,763

359,887

748,133

–

748,133

Comprehensive income, net of tax:

Net income . . . . . . . . . . . . . . . . . . . .
Foreign currency translation adjustments . .
Gain on cash flow hedge valuations . . . . .

Comprehensive income, net of tax . . . . . . .

Adjustments for consolidation of variable

interest entities

. . . . . . . . . . . . . . . . .

Noncontrolling interest from business

acquisitions . . . . . . . . . . . . . . . . . . . .
Acquisition of noncontrolling interests . . . . .
Distributions paid to noncontrolling interests .
Stock-based compensation . . . . . . . . . . . .
Stock options exercised . . . . . . . . . . . . . .
Shares issued for Employee Stock Purchase

Plan . . . . . . . . . . . . . . . . . . . . . . . .
Tax benefit for stock options . . . . . . . . . . .

6,883

10,582
8,000

5,246
(156)

443

297

(14,447)
438

90,039

90,039
(14,447)
438

2,943
492

76,030

3,435

92,982
(13,955)
438

79,465

670

438
(2,316)
(1,702)

6,883

10,582
8,004

5,249
(156)

438
4,567
(1,702)
10,582
8,004

5,249
(156)

BALANCE AT OCTOBER 2, 2011 . . . . . . . 62,495

625

399,420

4,754

449,926

854,725

525

855,250

Comprehensive income, net of tax:

Net income . . . . . . . . . . . . . . . . . . . .
Foreign currency translation adjustments . .
. . . . .
Loss on cash flow hedge valuations

Comprehensive income, net of tax . . . . . . .

Distributions paid to noncontrolling interests .
Stock-based compensation . . . . . . . . . . . .
Stock options exercised . . . . . . . . . . . . . .
Shares issued for Employee Stock Purchase

Plan . . . . . . . . . . . . . . . . . . . . . . . .
Tax benefit for stock options . . . . . . . . . . .

1,053

289

10,839
17,525

5,297
(72)

104,380

26,457
(194)

104,380
26,457
(194)

130,643

10,839
17,535

5,300
(72)

352
29

381

(9)

104,732
26,486
(194)

131,024

(9)
10,839
17,535

5,300
(72)

BALANCE AT SEPTEMBER 30, 2012 . . . . . 63,837

638

433,009

31,017

554,306 1,018,970

897

1,019,867

Comprehensive income, net of tax:

Net income (loss) . . . . . . . . . . . . . . . .
Foreign currency translation adjustments . .
. . . . .
Loss on cash flow hedge valuations

Comprehensive income (loss), net of tax . . . .

Distributions paid to noncontrolling interests .
Stock-based compensation . . . . . . . . . . . .
Stock options exercised . . . . . . . . . . . . . .
Shares issued for Employee Stock Purchase

Plan . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . .
. . . . . . . . . .

Stock repurchases
Tax expense for stock options

899

253
(855)

3
(9)

8,775
14,872

5,548
(19,991)
886

(2,141)

(28,770)
(389)

(2,141)
(28,770)
(389)

(31,300)

8,775
14,881

5,551
(20,000)
886

635
(47)

588

(445)

(1,506)
(28,817)
(389)

(30,712)

(445)
8,775
14,881

5,551
(20,000)
886

BALANCE AT SEPTEMBER 29, 2013 . . . . . 64,134 $ 641

$ 443,099 $

1,858

$552,165 $ 997,763 $

1,040

$ 998,803

See accompanying Notes to Consolidated Financial Statements.

TETRA TECH, INC.
Consolidated Statements of Cash Flows
(in thousands)

Fiscal Year Ended

September 29, September 30,

2013

2012

October 2,
2011

Cash flows from operating activities:

Net income (loss) including noncontrolling interests

. . . . . . . . . . . . . . . . . .

(1,506)

104,732

92,982

Adjustments to reconcile net income (loss) to net cash from operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on settlement of foreign currency forward contract . . . . . . . . . . . . .
Equity in income of unconsolidated joint ventures . . . . . . . . . . . . . . . . .
Distributions of earnings from unconsolidated joint ventures . . . . . . . . . .
Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Excess tax benefits from stock-based compensation . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for doubtful accounts
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment of goodwill
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value adjustments to contingent consideration . . . . . . . . . . . . . . . .
Fair value adjustment to assets held for sale . . . . . . . . . . . . . . . . . . . .
Foreign exchange (gain) loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lease termination costs and related asset impairment
. . . . . . . . . . . . . .
(Gain) loss on disposal of property and equipment . . . . . . . . . . . . . . . .

Changes in operating assets and liabilities, net of effects of business acquisitions:
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Billings in excess of costs on uncompleted contracts
. . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes receivable/payable . . . . . . . . . . . . . . . . . . . . . . . . . . . .

62,605
270
(3,461)
4,458
8,775
(886)
(11,468)
13,818
56,600
(9,560)
–
754
7,188
(287)

87,367
(11,782)
(34,191)
(16,385)
(16,830)
21,489
(19,218)

Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . .

137,750

Cash flows from investing activities:

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital expenditures
Payments for business acquisitions, net of cash acquired . . . . . . . . . . . . .
Payment in settlement of foreign currency forward contract . . . . . . . . . . .
Receipt in settlement of foreign currency forward contract
. . . . . . . . . . .
Changes in restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in unconsolidated joint ventures . . . . . . . . . . . . . . . . . . . .
Proceeds from sale of property and equipment . . . . . . . . . . . . . . . . . . .

Net cash used in investing activities

. . . . . . . . . . . . . . . . . . . . . . . .

Cash flows from financing activities:
Payments on long-term debt
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments of earn-out liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment of debt issuance cost
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Distributions paid to noncontrolling interests . . . . . . . . . . . . . . . . . . . .
Excess tax benefits from stock-based compensation . . . . . . . . . . . . . . . .
Repurchases of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net proceeds from issuance of common stock . . . . . . . . . . . . . . . . . . .

Net cash provided by (used in) financing activities . . . . . . . . . . . . . . .

Effect of foreign exchange rate changes on cash . . . . . . . . . . . . . . . . . . . . .

Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents at beginning of year

(27,545)
(171,329)
(4,177)
3,907
470
(20)
2,089

(196,605)

(171,400)
296,389
(33,672)
(2,136)
(445)
886
(20,000)
15,993

85,615

(2,303)

24,457
104,848

56,902
286
(2,916)
3,194
10,839
(624)
(5,512)
4,768
914
(19,246)
3,437
(139)
1,261
191

(39,960)
26,284
(14,529)
15,678
2,425
7,371
2,665

158,021

(25,106)
(55,014)
(4,192)
3,906
–
(430)
1,037

(79,799)

(120,792)
52,672
(18,055)
–
(9)
624
–
18,166

(67,394)

3,526

14,354
90,494

Cash and cash equivalents at end of year . . . . . . . . . . . . . . . . . . . . . . . . .

129,305

104,848

Supplemental information:
Cash paid during the year for:

Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
Income taxes, net of refunds received . . . . . . . . . . . . . . . . . . . . . . . . $

5,049
35,796

$
$

5,279
58,126

$
$

See accompanying Notes to Consolidated Financial Statements.

55,684
293
(4,877)
4,802
10,582
(104)
1,720
3,733
–
(1,755)
–
1,288
1,281
(231)

2,046
(28,324)
(34,013)
11,157
(1,669)
6,475
10,553

131,623

(18,901)
(269,996)
(4,216)
3,923
(5,000)
(530)
879

(293,841)

(43,047)
67,618
–
–
(1,702)
104
–
8,378

31,351

428

(130,439)
220,933

90,494

4,226
33,715

TETRA TECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Description of Business

We are a leading provider of consulting, engineering, program management, construction
management, construction and technical services that focuses on addressing fundamental needs for water,
the environment, energy, infrastructure and natural resources. We are a full-service company that leads
with science. We typically begin at the earliest stage of a project by identifying technical solutions to
problems 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, research and
technology, engineering, design, construction management, construction, operations and maintenance, and
information technology.

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. Certain prior year amounts
for Tetra Tech, Inc. and its reportable segments have been revised to conform to the current year
presentation. In the first quarter of fiscal 2013, we implemented a reorganization of our operations to
improve future growth and profitability, including the consolidation and realignment of certain operating
activities to achieve efficiencies in our segment management. This reorganization included the elimination
of the EAS reportable segment, and the re-assignment of its operations to the ECS and TSS segments (see
Note 18, ‘‘Reportable Segments’’ for further discussion). All significant intercompany balances and
transactions have been eliminated in consolidation.

Fiscal Year. We report results of operations based on 52 or 53-week periods ending on the Sunday

nearest September 30. Fiscal years 2013, 2012 and 2011 each contained 52 weeks.

Use of Estimates. The preparation of financial statements in conformity with 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 2013,
2012 and 2011, we recognized net favorable (unfavorable) operating income adjustments of ($40.1)
million, $0.5 million and ($8.6) million, respectively, due to changes in estimates.

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.

TETRA TECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Basis of Presentation and Preparation (Continued)

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: FFP and 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.

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.

TETRA TECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Basis of Presentation and Preparation (Continued)

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 $4.5 million and $5.0 million was
included in ‘‘Prepaid expenses and other current assets’’ on consolidated balance sheets at fiscal 2013 and
2012 year-ends, respectively. For cash held by our consolidated joint ventures, see Note 16, ‘‘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 September 29, 2013 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 primarily with the U.S. federal government. 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 judgment regarding our operating
performance related to the adequacy of the services performed and delivered, the status of change orders
and claims, our experience settling change orders and claims, and the financial condition of our clients.
Billings in excess of costs on uncompleted contracts represent the amounts 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 operations. Expenditures

TETRA TECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Basis of Presentation and Preparation (Continued)

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.

TETRA TECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Basis of Presentation and Preparation (Continued)

We perform our annual goodwill impairment review at the beginning of our fiscal fourth quarter.
Our last annual review at July 1, 2013 (i.e., the first day of our fiscal fourth quarter), 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. 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 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. For acquisitions
completed prior to fiscal 2010, contingent earn-out payments are accrued as ‘‘Estimated earn-out
liabilities’’ when the related operating income thresholds have been achieved, and a corresponding
increase in goodwill is recorded. These contingent earn-out payments are reflected as cash flows used in
investing activities on the consolidated statements of cash flows in the period paid. At September 29, 2013,
there was no contingent consideration remaining for acquisitions completed prior to fiscal 2010 that would
be recorded as an addition to goodwill, if earned.

For acquisitions consummated during or subsequent to fiscal 2010, 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 ‘‘Estimated contingent earn-out liabilities’’ and ‘‘Long-term estimated

TETRA TECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Basis of Presentation and Preparation (Continued)

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.

Assets Held for Sale. Assets that meet the held for sale classification criteria are valued at the lower
of their carrying amount or estimated fair value less cost to sell. If the carrying amount of the asset exceeds
its estimated fair value less cost to sell, an impairment loss is recognized. Depreciation, depletion and
amortization expense is not recorded on assets once they are classified as held for sale.

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.

TETRA TECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Basis of Presentation and Preparation (Continued)

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 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 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 operations.

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

TETRA TECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Basis of Presentation and Preparation (Continued)

allowance, management reviews both positive and negative evidence, including current and historical
results of operations, future income projections and potential tax planning strategies. Based on our
assessment, we have concluded that a portion of the deferred tax assets at September 29, 2013 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.

In the fourth quarter of fiscal 2013, we identified and corrected errors relating to prior years that
increased both income tax expense and our net loss for the year by $3.3 million. The out-of-period
adjustments related to book versus tax valuations of fixed assets and acquired intangible assets. Had all
adjustments been recorded in their appropriate periods, net loss attributable to Tetra Tech for fiscal 2013
would have increased to net income of $1.1 million. We do not believe that the accounting errors are
material to our 2013 annual results or to our previously issued annual or interim financial statements. As a
result, we did not adjust any prior period amounts.

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 2013 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 47%, 26% and 27% of our fiscal 2013 revenue was
generated from our U.S government, U.S. commercial and international clients, respectively (see Note 18,
‘‘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 CAD. 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’’ on the consolidated balance sheets.

Recently Adopted and Issued Accounting Guidance.

In June 2011, the Financial Accounting
Standards Board (‘‘FASB’’) issued new guidance on the presentation of comprehensive income. We are
required to present components of net income and other comprehensive income in either one single
continuous statement or in two separate consecutive statements. This guidance was effective for us in the
first quarter of fiscal 2013 and it did not have an impact on our consolidated financial statements.

TETRA TECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Basis of Presentation and Preparation (Continued)

In September 2011, the FASB issued updated guidance to simplify goodwill impairment testing.
The amendment permits us to first assess qualitative factors to determine whether it is necessary to
perform the two-step quantitative goodwill impairment test. The guidance was effective for us in July 2013
when we perform our annual goodwill impairment test. This guidance did not have an impact on our
consolidated financial statements.

In December 2011, the FASB issued new guidance to enhance disclosures about financial
instruments and derivative instruments that are either offset on the statement of financial position or
subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they
are offset on the statement of financial position. We are required to provide both net and gross
information for these assets and liabilities in order to facilitate comparability between financial statements
prepared on the basis of U.S. GAAP and financial statements prepared on the basis of International
Financial Reporting Standards. This guidance will be effective for us in the first quarter of fiscal 2014 on a
retrospective basis. We are currently evaluating the impact on our consolidated financial statements.

In February 2013, the FASB issued an update to the reporting of reclassifications out of
accumulated other comprehensive income. We are required to disclose additional information about
changes in and significant items reclassified out of accumulated other comprehensive income. The
guidance is effective for us in the first quarter of fiscal 2014. We do not expect the adoption of this
guidance to have an impact on our consolidated financial statements.

In July 2013, the FASB issued an update on an inclusion of the Fed Funds Effective Swap as a
benchmark interest rate (Overnight Interest Swap Rate) for hedge accounting purposes. This guidance
permits the Fed Funds Effective Swap Rate to be used as a U.S. benchmark interest rate for hedge
accounting purposes under U.S. GAAP. This guidance will be effective prospectively for qualifying new or
redesigned hedging relationships entered into on or after July 17, 2013. We do not expect a material impact
to our consolidated financial statements.

In July 2013, the FASB issued an update on the financial statement presentation of unrecognized
tax benefits. We are required to present a liability related to an unrecognized tax benefit as a reduction of a
deferred tax asset for a net operating loss carryforward, a similar tax loss or a tax credit carryforward if
such settlement is required or expected in the event the uncertain tax position is disallowed. This guidance
will be effective for us in the first quarter of fiscal 2015. We do not expect the adoption of this guidance to
have an impact on our consolidated financial statements.

Stock Repurchase Program

In June 2013, our Board of Directors authorized the Stock Repurchase Program under which we
may currently repurchase up to $100 million of Tetra Tech common stock. In November 2013, our Board of
Directors amended the Stock Repurchase Program, effective on November 18, 2013, to revise the pricing
parameters and to extend the program through fiscal 2014. Stock repurchases may be made on the open
market or in privately negotiated transactions with third parties. Because the repurchases under the Stock
Repurchase Program are subject to certain pricing parameters, there is no guarantee as to the exact
number of shares that will be repurchased under the program. At September 29, 2013, we had repurchased
through open market purchases a total of 855,200 shares at an average price of $23.39 per share, for a total
cost of $20.0 million.

TETRA TECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Accounts Receivable – Net

Net accounts receivable and billings in excess of costs on uncompleted contracts consisted of the

following at September 29, 2013 and September 30, 2012:

Fiscal Year Ended

September 29, September 30,

2013

2012

(in thousands)

Billed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Unbilled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contract retentions

Total accounts receivable – gross . . . . . . . . . . . . . . . . . . . .

375,149
306,969
23,353

705,471

Allowance for doubtful accounts

. . . . . . . . . . . . . . . . . . . . .

(44,624)

Total accounts receivable – net . . . . . . . . . . . . . . . . . . . . . $

660,847

Current billings in excess of costs on uncompleted contracts . . . $
Non-current billings in excess of costs on uncompleted

79,507

contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

–

Total billings in excess of costs on uncompleted contracts . . . $

79,507

362,331
355,793
17,908

736,032

(35,552)

700,480

90,909

4,410

95,319

Billed accounts receivable represent amounts billed to clients that have not been collected.
Unbilled accounts receivable represent revenue recognized but not yet billed pursuant to contract terms or
billed after the period end date. Most of our unbilled receivables at September 29, 2013 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 is determined based on a review of client-specific accounts, and contract
issues resulting from current events and economic circumstances. 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. Non-current billings in excess of costs on uncompleted contracts
are reported as part of our ‘‘Other long-term liabilities’’ on our consolidated balance sheets.

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 progresses without obtaining 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.

TETRA TECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Accounts Receivable – Net (Continued)

include
Unbilled accounts receivable at September 29, 2013 and September 30, 2012
approximately $41 million and $21 million, respectively, related to claims, including requests for equitable
adjustment, on contracts that provide for price redetermination, primarily with U.S. federal government
agencies. We regularly evaluate these 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 reliably estimated. We recognized losses of approximately $30.2 million related to the evaluation
of collectability of claims in fiscal 2013 primarily related to contractual disputes with government clients.
No losses related to claims were recognized in fiscal 2012.

Billed accounts receivable related to U.S. federal government contracts were $50.5 million and
$65.9 million at September 29, 2013 and September 30, 2012, respectively. U.S. federal government
unbilled receivables, net of progress payments, were $79.3 million and $100.4 million at September 29,
2013 and September 30, 2012, respectively. Other than the U.S. federal government, no single client
accounted for more than 10% of our accounts receivable at September 29, 2013 and September 30, 2012.

Mergers and Acquisitions

At the beginning of the first quarter of fiscal 2011, we acquired all of the outstanding capital stock
of BPR, Inc. (‘‘BPR’’), a Canadian scientific and engineering services firm that provides multidisciplinary
consulting and engineering support for water, energy, industrial plants, buildings and infrastructure
projects. This acquisition further expanded our geographic presence in Eastern Canada, and enabled us to
provide clients with additional services throughout Canada. BPR is part of our ECS segment. The
estimated fair value of the purchase price was $185.7 million as of the acquisition date, of which payments
of $157.0 million were financed with borrowings under our credit facility and available cash resources, and
$28.7 million was the estimated fair value of contingent earn-out liabilities on acquisition with a maximum
of $39.2 million upon the achievement of specified financial objectives over a two-year period from the
acquisition date. The goodwill related to the BPR acquisition represented the value paid for the assembled
work force, the international geographic presence in Eastern Canada, and engineering and consulting
expertise. The following table summarizes the estimated fair values of the assets acquired and liabilities
assumed as of the date of acquisition:

Amount

(in thousands)

Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible and other assets . . . . . . . . . . . . . . . . . . . . . . . .
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . .
Noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . .

77,698
7,178
128,140
36,988
(42,481)
(9,622)
(12,222)

Net assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . .

185,679

In fiscal 2011, we made other acquisitions that enhanced our service offerings and expanded our
geographic presence in the ECS and TSS segments. The aggregate purchase price for these acquisitions
was approximately $100 million as of the respective acquisition dates. Of this amount, $68.7 million was

TETRA TECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Mergers and Acquisitions (Continued)

paid to the sellers, $4.5 million was accrued in accordance to the purchase agreements, and $26.9 million
was the estimated fair value of contingent earn-out obligations with an aggregate maximum of
$32.3 million upon the achievement of specified financial objectives.

In fiscal 2012, we made acquisitions that enhanced our service offerings and expanded our
geographic presence in our ECS and TSS segments. The aggregate purchase price for these acquisitions
was $63.2 million as of the respective acquisition dates. Of this amount, $42.2 million was paid to the
sellers, $2.0 million was accrued in accordance to the purchase agreements, and $19.0 million was the
estimated fair value of contingent earn-out obligations with an aggregate maximum of $20.0 million upon
the achievement of specified financial objectives.

On December 31, 2012, we acquired American Environmental Group, Ltd. (‘‘AEG’’),
headquartered in Richfield, Ohio. AEG provides environmental, design, construction and maintenance
services primarily to solid and hazardous waste, environmental, energy and utility clients. On January 28,
2013, we acquired Parkland Pipeline Contractors Ltd., Parkland Pipeline Equipment Ltd., Park L
Projects Ltd. and Parkland Projects Ltd. (collectively, ‘‘Parkland’’), headquartered in Alberta, Canada.
Parkland serves the oil and gas industry in Western Canada, and specializes in the technical support,
engineering support and construction of pipelines and oilfield facilities. AEG and Parkland are both
included in our RCM segment. We also made other acquisitions that enhanced our service offerings and
expanded our geographic presence in our ECS and TSS segments during fiscal 2013. The aggregate fair
value of the purchase prices for fiscal 2013 acquisitions was $248.9 million. Of this amount, $171.6 million
was paid to the sellers, $2.0 million was recorded as liabilities in accordance with the purchase agreements,
and $75.3 million was the estimated fair value of contingent earn-out obligations, with an aggregate
maximum of $86.7 million upon the achievement of specified financial objectives.

Goodwill additions resulting from the above business combinations are primarily attributable to
the existing workforce of the acquired companies and synergies expected to arise after the acquisitions.
The results of these acquisitions were included on the consolidated financial statements from their
respective closing dates. None of the acquisitions were considered material, individually or in the
aggregate, for the respective reporting periods. As a result, no pro forma information has been provided.
The purchase price allocations related to fiscal 2013 acquisitions are preliminary, and subject to
adjustment, based on the valuation and final determination of net assets acquired. We do not believe that
any adjustments will have a material effect on the consolidated results of operations.

At September 29, 2013, there was a total maximum of $101.3 million of outstanding contingent
consideration related to acquisitions completed during or subsequent to fiscal 2010. Of this amount,

TETRA TECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Mergers and Acquisitions (Continued)

$81.8 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

September 29, September 30, October 2,
2012

2013

2011

Beginning balance (at fair value) . . . . . . . . . . . . . . . . $
Estimated earn-out liabilities for acquisitions during the
fiscal year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Earn-out liabilities for acquisitions completed prior to

fiscal 2010.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increases due to re-measurement of fair value reported
in interest expense . . . . . . . . . . . . . . . . . . . . . . . .

Net decreases due to re-measurement of fair value

reported as gains in operating income . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .

Foreign exchange impact
Earn-out payments:

Reported as cash used in operating activities . . . . . .
Reported as cash used in investing activities . . . . . . .
Reported as cash used in financing activities . . . . . . .
Settlement of receivables due from sellers . . . . . . . . . .

(in thousands)

51,539

75,159

20,504

75,253

18,981

250

2,433

(9,560)
(2,480)

(695)
(1,279)
(33,672)
–

9,974

1,374

(19,246)
3,027

(601)
(11,773)
(18,055)
(7,301)

55,622

21,978

1,612

(1,755)
(743)

–
(22,059)
–
–

Ending balance (at fair value) . . . . . . . . . . . . . . . . . . $

81,789

51,539

75,159

TETRA TECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Goodwill and Intangible Assets

The following table summarizes the changes in the carrying value of goodwill:

ECS

TSS

EAS

RCM

Total

(in thousands)

Balance at October 2, 2011 . . . . . . . . . . . . . $ 405,678

82,091

17,710

63,935

$ 569,414

Inter-segment transfer (1):

Fiscal 2012 realignment . . . . . . . . . . . . .
Fiscal 2013 realignment . . . . . . . . . . . . .
Goodwill additions . . . . . . . . . . . . . . . . . .
Foreign exchange impact . . . . . . . . . . . . . .
Goodwill impairment . . . . . . . . . . . . . . . .

Balance at September 30, 2012 . . . . . . . . . . .
Goodwill additions . . . . . . . . . . . . . . . . . .
Foreign exchange impact . . . . . . . . . . . . . .
Goodwill impairment . . . . . . . . . . . . . . . .

(29,338)
2,605
15,367
18,910
(914)

412,308
14,364
(16,464)
(56,600)

45,435
15,105
31,236
–
–

173,867
3,594
118
–

–
(17,710)
–
–
–

–
–
–
–

(16,097)
–
1,945
–
–

49,783
145,064
(3,242)
–

–
–
48,548
18,910
(914)

635,958
163,022
(19,588)
(56,600)

Balance at September 29, 2013 . . . . . . . . . . . $ 353,608

$ 177,579

–

$ 191,605

$ 722,792

(1) Prior-year amounts have been reclassified due to realignment of certain operating activities in our reportable

segments in fiscal 2012 and fiscal 2013. See Note 18, ‘‘Reportable Segments’’ for further information.

Goodwill additions are primarily attributable to acquisitions described in Note 5, ‘‘Mergers and
Acquisitions’’ for the respective fiscal years. Additionally, fiscal 2012 goodwill additions include earn-out
payments associated with an acquisition consummated prior to fiscal 2010, which was accounted for as an
increase to goodwill under previous accounting rules. Substantially all of the goodwill additions are not
deductible for income tax purposes. Foreign exchange impact relates to our foreign subsidiaries with
functional currencies that are different than our reporting currency. The gross amounts of goodwill,
excluding accumulated impairment, for ECS were $413.2 million and $411.1 million for fiscal 2012 and
2013 year-ends, respectively.

During the third quarter of fiscal 2013, certain of our reporting units experienced declines in their
actual and projected financial performance. In Eastern Canada, poor economic conditions, including
budget deficits, reduced customer spending, and an on-going government investigation into political
corruption in Quebec slowed procurements and business activity in that region. In addition, our work for
mining customers continued to slow at a faster pace than previously anticipated due to reduced demand
and significant declines in prices for certain metals. To a lesser extent, we also experienced reduced
performance from reporting units with a concentration of work for certain agencies of the U.S. federal
government as a result of customer budgetary constraints. As a result of these factors, during the third
quarter of fiscal 2013, we performed an interim goodwill impairment test for three reporting units in our
ECS segment, as follows:

• Tetra Tech Canada (‘‘TTC’’), with operations primarily in Eastern Canada, particularly Quebec;

• Global Mining Practice (‘‘GMP’’), with operations primarily in the U.S., Canada, Australia and

South America; and

TETRA TECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Goodwill and Intangible Assets (Continued)

• Advanced Management Technology, Inc. (‘‘AMT’’), a U.S. federal government contractor

primarily doing business with the FAA.

We performed the first step of the impairment test for each of these reporting units during the
third quarter of fiscal 2013, and in each case determined that the carrying value of the reporting unit
exceeded its fair value indicating potential goodwill impairment. The significant change to the assumptions
used in the interim test in the third quarter of fiscal 2013 compared to the last annual impairment test as of
July 2, 2012 was the projected revenue, operating income and cash flows for each reporting unit tested.

We performed the second step of the goodwill impairment test to measure the amount of the
impairment loss, if any, of the applicable reporting units. The second step of the test requires the allocation
of the reporting unit’s fair value to its assets and liabilities, including any unrecognized intangible assets, in
a hypothetical analysis that calculates the implied fair value of goodwill as if the reporting unit was being
acquired in a business combination. If the implied fair value of goodwill is less than the carrying value, the
difference is recorded as an impairment loss. Based on the results of the step two analyses, we recorded a
$56.6 million, or $48.1 million, net of tax, goodwill impairment charge in the third quarter of fiscal 2013
related to the TTC, GMP and AMT reporting units. The carrying amounts of these reporting units,
including goodwill were as follows:

June 30, 2013

TTC

GMP

AMT

(in thousands)

Carrying value before impairment
Goodwill impairment . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . $ 245,634
(27,900)

$ 116,184
(11,900)

Carrying value after impairment

. . . . . . . . . . . . . . . . $ 217,734

$ 104,284

56,474
(16,800)

39,674

As of June 30, 2013, the goodwill amounts after the impairment charges for the TTC, GMP and

AMT reporting units were $111.1 million, $72.3 million and $32.6 million, respectively.

TETRA TECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Goodwill and Intangible Assets (Continued)

The gross amount and accumulated amortization of our acquired identifiable intangible assets
with finite useful lives included in ‘‘Intangible assets – net’’ on the consolidated balance sheets, were as
follows:

Fiscal Year Ended

September 29, 2013

September 30, 2012

Weighted-
Average
Remaining
Life
(in years)

Gross
Amount

Accumulated
Amortization

Gross
Amount

Accumulated
Amortization

($ in thousands)

Non-compete agreements . . . . . . . . . .
Client relations . . . . . . . . . . . . . . . . .
Backlog . . . . . . . . . . . . . . . . . . . . . .
Technology and trade names . . . . . . . .

2.6
4.5
0.4
2.9

6,160
128,839
68,968
4,204

(5,247)
(49,189)
(64,675)
(2,131)

5,467
99,096
59,931
3,034

(4,685)
(31,477)
(55,908)
(1,227)

Total . . . . . . . . . . . . . . . . . . . . . . .

208,171

$ (121,242)

167,528

(93,297)

In fiscal 2013, the increases in gross amounts were attributable to the fiscal 2013 acquisitions
described in Note 5, ‘‘Mergers and Acquisitions’’ and, to a lesser extent, foreign currency translation
adjustments. Amortization expense for these intangible assets for fiscal 2013, 2012 and 2011 was
$32.4 million, $29.6 million and $28.0 million, respectively. Estimated amortization expense for the
succeeding five years and beyond is as follows:

Amount

(in thousands)

2014 . . . . . . .
2015 . . . . . . .
2016 . . . . . . .
2017 . . . . . . .
2018 . . . . . . .
Beyond . . . . .

26,815
19,328
15,875
13,626
6,333
4,952

Total . . . . . .

86,929

100

TETRA TECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Property and Equipment

The property and equipment consisted of the following:

Fiscal Year Ended

September 29, September 30,

2013

2012

(in thousands)

Land and buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Equipment, furniture and fixtures . . . . . . . . . . . . . . . . . . . . . .
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5,565
210,172
26,429

Total property and equipment . . . . . . . . . . . . . . . . . . . . . . .
Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . .

242,166
(154,140)

5,537
177,710
26,180

209,427
(135,118)

Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . $

88,026

74,309

The depreciation expense related to property and equipment, including assets under capital leases,

was $29.5 million, $26.7 million and $27.1 million for fiscal 2013, 2012 and 2011, respectively.

In fiscal 2012, one of our properties met the held for sale classification criteria at fiscal
2012 year-end. This property consists of land and a building at a net book value of $5.8 million. We
estimated the fair value of this property using market values for similar properties, and this is considered a
Level 3 measurement as defined in FASB’s guidance on ‘‘Fair Value Measurements and Disclosures.’’
After adjustment to fair value, the $2.4 million carrying value of this property was reclassified to ‘‘Prepaid
expenses and other current assets’’ in the consolidated balance sheet at September 30, 2012. Additionally,
we recorded the related non-cash impairment charge of $3.4 million in our corporate ‘‘Selling, general and
administrative expenses’’ in the consolidated statement of operations for fiscal 2012.

In connection with exit activities related to vacating leased facilities, we recorded a loss of
$7.2 million in the second half of fiscal 2013. The loss consisted of an accrued liability of $4.8 million for
estimated contract termination costs associated with the long-term non-cancelable leases of those facilities,
reduced by $0.3 million of write-offs of prorated portions of existing deferred items previously recognized
in connection with the leases, and $2.7 million in net write-offs of fixed assets, primarily leasehold
improvements, furniture and fixtures, that were no longer in use after vacating the facilities. The loss is
recorded in other costs of revenue on the consolidated statements of operations (see Note 10, ‘‘Leases’’ for
further information).

101

TETRA TECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Income Taxes

The income before income taxes, by geographic area, was as follows:

Fiscal Year Ended

September 29, September 30, October 2,
2012

2011

2013

Income (loss) before income taxes:

United States
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . $

60,547
(48,015)

Total income before income taxes . . . . . . . . $

12,532

141,035
19,761

160,796

126,912
13,580

140,492

(in thousands)

Income tax expense consisted of the following:

September 29,
2013

Fiscal Year Ended

September 30,
2012

(in thousands)

October 2,
2011

Current:

Federal
. . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . .

11,155
2,705
11,646

Total current income tax

expense . . . . . . . . . . . . .

25,506

Deferred:
Federal
. . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . .

Total deferred income tax

(2,965)
(637)
(7,866)

expense (benefit) . . . . . .

(11,468)

46,058
6,949
8,569

61,576

(200)
(622)
(4,690)

(5,512)

30,246
5,948
9,596

45,790

6,755
1,069
(6,104)

1,720

Total income tax expense . . . . . .

14,038

56,064

47,510

102

TETRA TECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Income Taxes (Continued)

Total income tax expense was different from the amount computed by applying the U.S. federal

statutory rate to pre-tax income as follows:

September 29, 2013

September 30, 2012

October 2, 2011

Fiscal Year Ended

($ in thousands)

Tax at federal statutory rate . . . . . . . . . . . . . . $ 4,386
1,316
State taxes, net of federal benefit
. . . . . . . . . .
(6,622)
R&E credits . . . . . . . . . . . . . . . . . . . . . . . . .
(828)
Domestic production deduction . . . . . . . . . . . .
(4,263)
Tax differential on foreign earnings . . . . . . . . .
3,255
Corrections of prior-year errors . . . . . . . . . . . .
11,288
Goodwill and contingent consideration . . . . . . .
443
Stock compensation . . . . . . . . . . . . . . . . . . . .
4,947
Valuation allowance . . . . . . . . . . . . . . . . . . . .
116
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

35.0% $ 56,278
4,932
10.5
(360)
(52.8)
(774)
(6.6)
(4,444)
(34.0)
–
26.0
(1,552)
90.0
80
3.5
2,512
39.5
(608)
0.9

35.0% $ 49,172
4,376
3.1
(1,689)
(0.2)
(770)
(0.5)
(4,140)
(2.8)
–
–
–
(1.0)
301
0.1
(cid:4)
1.6
260
(0.4)

Total income tax expense . . . . . . . . . . . . . . . . $ 14,038

112.0% $ 56,064

34.9% $ 47,510

35.0%
3.1
(1.2)
(0.6)
(3.0)
(cid:4)
(cid:4)
0.2
(cid:4)
0.3

33.8%

Our fiscal year 2013 effective tax rate was 112.0% compared to 34.9% for fiscal 2012. The higher
effective tax rate resulted primarily from impairment charges and valuation allowance. We are currently
under examination by the Internal Revenue Service for the fiscal years 2005 through 2009, and by the
California Franchise Tax Board for fiscal years 2004 through 2005, with respect to R&E credits. 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 2004.

103

TETRA TECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Income Taxes (Continued)

Temporary differences comprising the net deferred

income tax

liability shown on the

accompanying consolidated balance sheets were as follows:

Fiscal Year Ended

September 29,
2013

September 30,
2012

(in thousands)

Deferred Tax Asset:

State taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reserves and contingent liabilities . . . . . . . . . . . . . . . . . . . . . . . . .
Allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss carry-forwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation allowance on loss carry-forwards . . . . . . . . . . . . . . . . . . .

Total deferred tax asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Deferred Tax Liability:

Unbilled revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total deferred tax liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

452
5,883
7,345
14,425
10,778
9,563
(7,459)

40,987

(47,281)
(7,522)
(24,933)
(9,946)

(89,682)

975
4,689
2,039
13,298
10,980
2,926
(2,512)

32,395

(45,417)
(2,251)
(21,695)
(8,109)

(77,472)

Net deferred tax liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(48,695)

(45,077)

We have performed an assessment of positive and negative evidence regarding the realization of
the deferred tax assets at September 29, 2013. This assessment included the evaluation of scheduled
reversals of deferred tax liabilities, availability of carry-backs, 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 loss carry-forwards in foreign
jurisdictions for which a valuation allowance of $7.5 million has been provided.

At September 29, 2013, undistributed earnings of our foreign subsidiaries, primarily in Canada,
amounting to approximately $23.5 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. Determination of the
amount of unrecognized deferred U.S. income tax liability is not practicable; however, the potential
foreign tax credit associated with the deferred income would be available to partially reduce the resulting
U.S. tax liabilities.

At September 29, 2013, we had $25.9 million of unrecognized tax benefits. Included in the balance
of unrecognized tax benefits at the end of fiscal year 2013 were $24.1 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

104

TETRA TECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Income Taxes (Continued)

the unrecognized tax benefits in the next 12 months. A reconciliation of the beginning and ending amount
of unrecognized tax benefits is as follows:

September 29,
2013

Fiscal Year Ended

September 30,
2012

(in thousands)

October 2,
2011

Beginning balance . . . . . . . . . . . . . . . . . . . . . . .
Additions for current year tax positions . . . . . . . .
Additions for prior year tax positions . . . . . . . . . .
Reductions for prior year tax positions . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . .
Settlements

24,092
2,661
4,951
(5,818)
–

25,940
6,273
19
(8,072)
(68)

21,806
8,007
2,554
(6,315)
(112)

Ending balance . . . . . . . . . . . . . . . . . . . . . . . . .

25,886

24,092

25,940

We recognize potential interest and penalties related to unrecognized tax benefits in income tax
expense. The amount of interest expense (net of interest income) accrued at September 29, 2013 and
September 30, 2012, was $2.3 million and $3.1 million, respectively.

Long-Term Debt

Long-term debt consisted of the following:

Fiscal Year Ended

September 29,
2013

September 30,
2012

(in thousands)

Credit facilities . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total long-term debt . . . . . . . . . . . . . . . . . . . . . .

205,000
2,749

207,749

Less: Current portion of long-term debt . . . . . . . . . .

(4,311)

79,233
3,845

83,078

(2,031)

Long-term debt, less current portion . . . . . . . . . . . .

203,438

81,047

At September 30, 2012, we had a credit agreement that provided for a $460 million five-year
revolving credit facility that matured in March 2016. On May 7, 2013, we entered into the Amended Credit
Agreement and refinanced the indebtedness under the prior credit agreement. The Amended Credit
Agreement is a $665 million senior secured, five-year facility that provides for a $205 million Term Loan
Facility and a $460 million Revolving Credit Facility. The Amended 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 $200 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 and letters of credit. Borrowings under the Amended
Credit Agreement are collateralized by our accounts receivable, the stock of certain of our subsidiaries,

105

TETRA TECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Long-Term Debt (Continued)

and intercompany loans. The Amended Credit Agreement expires on May 7, 2018, or earlier at our
discretion upon payment in full of loans and other obligations. We had borrowings outstanding under the
Amended Credit Agreement at September 29, 2013 of $205.0 million, entirely under the Term Loan
Facility, at a weighted-average interest rate of 1.56% per annum. Borrowings during fiscal 2013 under our
credit facilities were at a weighted-average interest rate of 1.84% per annum. At September 29, 2013, there
was $12.4 million outstanding in standby letters of credit under the Amended Credit Agreement. At
September 29, 2013, we had $447.6 million of available credit under the Revolving Credit Facility, of which
$265.5 million could be borrowed without a violation of our debt covenants.

The Term Loan Facility is subject to quarterly amortization of principal, with no principal payment
due in year 1, $10.3 million payable in both years 2 and 3, and $15.4 million payable in both years 4 and 5,
respectively, with any unpaid balance due at maturity. 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 Amended Credit Agreement contains certain affirmative and restrictive covenants, and
customary events of default. The financial covenants provide for a maximum Consolidated Leverage Ratio
of 2.50 to 1.00 and a minimum Consolidated Fixed Charge Coverage Ratio of 1.25 to 1.00. Our obligations
under the Amended 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 Amended Credit Agreement, and (ii) our accounts receivable,
general intangibles and intercompany loans, and those of our subsidiaries that are guarantors or borrowers.
As of September 29, 2013, we met all compliance requirements of these covenants.

On September 27, 2013, we entered into Amendment No. 1 to the Amended Credit Agreement to
amend the definition of ‘‘Consolidated EBITDA’’ for purposes of the financial covenants contained in the
Amended Credit Agreement to add back to Consolidated Net Income for the fiscal quarters ending
September 29, 2013, December 29, 2013 and March 30, 2014 (i) up to $34 million in non-recurring charges
incurred during the fiscal quarter ended June 30, 2013 in connection with corporate restructurings and
(ii) up to $36 million in non-cash charges incurred during the fiscal quarter ended June 30, 2013 in
connection with the Four Programs referenced in our Form 8-Ks, filed with the SEC on June 18, 2013 and
August 7, 2013, and Form 10-Q for the fiscal quarter ended June 30, 2013. Amendment No. 1 also provides
that Consolidated EBITDA will be calculated without giving effect to the add-backs referenced above for
purposes of determining our applicable margin in effect at any time.

In fiscal 2013, other debt includes capital leases of $1.8 million, property and equipment loans of
$0.1 million, and a bank overdraft facility of $0.9 million at one of our foreign affiliates. In fiscal 2012,
other debt includes capital leases of $2.8 million, property and equipment loans of $0.5 million, and a bank
overdraft facility of $0.5 million at one of our foreign affiliates.

106

TETRA TECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Long-Term Debt (Continued)

We have three letter of credit agreements with three banks to issue up to $40 million in standby
letters of credit. The amount of standby letters of credit outstanding under these facilities at September 29,
2013 was $6.5 million, of which $6.4 million was issued in currencies other than the U.S. dollar.

The following table presents scheduled maturities of our long-term debt:

Amount

(in thousands)

2014 . . . . . . . . . .
2015 . . . . . . . . . .
2016 . . . . . . . . . .
2017 . . . . . . . . . .
2018 . . . . . . . . . .

4,311
10,868
15,753
15,379
161,438

Total . . . . . . . .

207,749

10.

Leases

We lease office and field equipment, vehicles and buildings under various operating leases. In
fiscal 2013, 2012 and 2011, we recognized $80.8 million, $76.6 million and $71.9 million of expense
associated with operating leases, respectively. Amounts payable under non-cancelable operating and
capital lease commitments are as follows during the following fiscal years:

Operating

Capital

(in thousands)

2014 . . . . . . . . . . . . . . . . . . . . . . . .
2015 . . . . . . . . . . . . . . . . . . . . . . . .
2016 . . . . . . . . . . . . . . . . . . . . . . . .
2017 . . . . . . . . . . . . . . . . . . . . . . . .
2018 . . . . . . . . . . . . . . . . . . . . . . . .
Beyond . . . . . . . . . . . . . . . . . . . . . .

71,293
54,169
35,265
23,898
14,771
24,628

Total . . . . . . . . . . . . . . . . . . . . . .

224,024

Less: Amounts representing interest .

Net present value . . . . . . . . . . . . .

874
648
384
5
–
–

1,911

(132)

1,779

We vacated certain facilities under long-term non-cancelable leases and recorded contract
termination costs of $4.5 million in fiscal 2013, $1.3 million in fiscal 2012 and $1.3 million in fiscal 2011.
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 2019.

107

TETRA TECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

10.

Leases (Continued)

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. We expect the remaining lease payments to be paid
through the various lease expiration dates that continue until 2021. The following is a reconciliation of the
beginning and ending balances of these liabilities related to lease contract termination costs:

ECS

TSS

Total

Balance at September 30, 2012 . .
Costs incurred and charged to
expense . . . . . . . . . . . . . .
Adjustments (1) . . . . . . . . . . .

Balance at September 29, 2013 . .

–

3,744
(34)

3,710

(in thousands)

2,940

1,055
(1,432)

2,563

2,940

4,799
(1,466)

6,273

(1) Adjustments of the actual timing and potential termination costs or realization of sublease

income.

11.

Stockholders’ Equity and Stock Compensation Plans

At September 29, 2013, we had the following stock-based compensation plans:

• 2003 Outside Director Stock Option Plan. Non-employee directors may be granted options to
purchase an aggregate of up to 400,000 shares of our common stock at prices not less than 100%
of the market value on the date of grant. Exercise prices of all options granted were at the
market value on the date of grant. These options vest and become exercisable on the first
anniversary of the grant date if the director has not ceased to be a director prior to such date,
and expire no later than ten years from the grant date.

• 2005 Equity Incentive Plan (‘‘EIP’’). Key employees and non-employee directors may be granted
equity awards, including stock options, restricted stock and RSUs, with respect to an aggregate
of 6,086,216 shares of our common stock. 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.

In accordance with our Executive Compensation Policy, our Compensation Committee has
awarded restricted stock to executive officers and non-employee directors under the EIP.
Restricted stock grants generally vest over a minimum three-year period, and may be
performance-based, determined by EPS growth, or service-based.

108

TETRA TECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

11.

Stockholders’ Equity and Stock Compensation Plans (Continued)

• 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).

The stock-based compensation and related income tax benefits were as follows:

September 29,
2013

Fiscal Year Ended

September 30,
2012

(in thousands)

October 2,
2011

Total stock-based compensation .
Income tax benefit related to

stock-based compensation . . . .

Stock-based compensation, net
of tax benefit . . . . . . . . . . .

8,775

(3,048)

5,727

10,839

(4,288)

6,551

10,582

(3,804)

6,778

Stock Options

Stock option activity for the fiscal year ended September 29, 2013 was as follows:

Number of
Options
(in thousands)

Weighted-
Average
Exercise Price
per Share

Weighted-
Average
Remaining
Contractual
Term
(in years)

Aggregate
Intrinsic Value
(in thousands)

Outstanding on September 30,
2012 . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . .
Cancelled . . . . . . . . . . . .

Outstanding at September 29,
2013 . . . . . . . . . . . . . . . .

4,876
287
(793)
(106)

4,264

Vested or expected to vest at

September 29, 2013 . . . . . .

4,229

Exercisable on September 29,
2013 . . . . . . . . . . . . . . . .

3,079

21.50
24.24
20.18
23.72

21.88

21.90

21.16

109

3.7

5.4

17,502

17,268

14,829

TETRA TECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

11.

Stockholders’ Equity and Stock Compensation Plans (Continued)

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 2012 and the exercise price, times the
number of shares) that would have been received by the in-the-money option holders if they had exercised
their options on September 29, 2013. This amount will change based on the fair market value of our stock.
At September 29, 2013, we expect to recognize $6.3 million of unrecognized compensation cost related to
stock option grants over a weighted-average period of 1.7 years. At September 29, 2013, there were
approximately 3.4 million options available for future awards.

The weighted-average fair value of stock options granted during fiscal 2013, 2012 and 2011 was
$8.74, $8.37 and $9.08, respectively. The aggregate intrinsic value of options exercised during fiscal 2013,
2012 and 2011 was $6.4 million, $6.1 million and $2.3 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:

September 29,
2013

Dividend yield . . . . . . . . . . . . .
Expected stock price volatility . .
.
Risk-free rate of return, annual

–
41.7% - 42.2%
0.6% - 1.3%

Fiscal Year Ended

September 30,
2012

–
41.9% - 44.0%
0.7% - 1.1%

October 2,
2011

–
41.8 - 42.7%
1.3 - 2.1%

For purposes of the Black-Scholes model, forfeitures were estimated based on historical
experience. For the fiscal 2013, 2012 and 2011 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 $16.0 million, $18.2 million and
$8.4 million for fiscal 2013, 2012 and 2011, 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 2013, 2012 and 2011
was $3.7 million, $3.2 million and $1.4 million, respectively.

Restricted Stock and RSUs

In fiscal 2013, 2012 and 2011, we awarded 108,350 shares, 105,567 shares and 94,606 shares,
respectively, of restricted stock to certain of our executive officers and non-employee directors. Of the
aggregate total of 308,523 awards, vesting as to 10,000 shares is time-based, and is dependent on the
officer’s continued employment, or the non-employee director’s continued service, with us, but otherwise
vest over a three-year period. As to the remaining 298,523 shares, vesting is performance-based, such that
the percentage of awarded shares that ultimately vests, from 0% to 140%, is dependent on fiscal year
earnings per share growth rates for the three fiscal years that end after the award date. In fiscal 2013, 2012
and 2011, an additional 4,947 shares, 5,305 shares and 8,356 shares of restricted stock, respectively, were
awarded for performance-based adjustments in excess of 100% vesting. Restricted stock forfeitures result
from employment terminations prior to vesting, and from performance-based vesting of less than 100%.

110

TETRA TECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

11.

Stockholders’ Equity and Stock Compensation Plans (Continued)

Forfeited shares return to the pool of authorized shares available for award. As of September 29, 2013,
there were 938,114 shares available for future awards of restricted stock.

Restricted stock activity for the fiscal year ended September 29, 2013 was as follows:

Number of
Shares
(in thousands)

Weighted-
Average Grant
Date Fair
Value

Nonvested balance at September 30, 2012 . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Nonvested balance at September 29, 2013 . . . . . . . . .

Vested or expected to vest at September 29, 2013 . . .

190
113
(96)
(4)

203

23.08
24.23
23.45
22.85

23.55

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.

In fiscal 2013, we also awarded 226,655 RSUs to our employees at the fair value of $24.32 per
share on the award date. All of the RSUs have time-based vesting over a four-year period. At
September 29, 2013, there were 333,140 RSUs outstanding. RSU forfeitures result from employment
terminations prior to vesting. Forfeited shares return to the pool of authorized shares available for award.

In the first quarter of fiscal 2012, we also awarded 181,348 RSUs to our employees at the fair
value of $22.53 per share on the award date. All of the RSUs have time-based vesting over a four-year
period.

The stock-based compensation expense related to restricted stock and RSUs for fiscal years 2013,
2012 and 2011 was $2.2 million, $3.0 million and $1.7 million, respectively, and was included in the total
stock-based compensation expense. At September 29, 2013, there was $7.1 million of unrecognized
compensation costs related to restricted stock and RSUs that will be substantially recognized by the end of
fiscal 2017.

111

TETRA TECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

11.

Stockholders’ Equity and Stock Compensation Plans (Continued)

RSU activity for the fiscal year ended September 29, 2013 was as follows:

Number of
Shares
(in thousands)

Weighted-
Average Grant
Date Fair
Value

Nonvested balance at September 29, 2013 . . . . . . . . .

172
227
(43)
(23)

333

22.53
24.32
22.53
23.27

23.70

ESPP

The following table summarizes shares purchased, weighted-average purchase price, cash received

and the aggregate intrinsic value for shares purchased under the ESPP:

Fiscal Year Ended

September 29, September 30, October 2,
2012

2011

2013

(in thousands, except for purchase price)

Shares purchased . . . . . . . . . . . . . . . . . . . . . .
Weighted-average purchase price . . . . . . . . . . . . $
Cash received from exercise of purchase rights . . $
Aggregate intrinsic value . . . . . . . . . . . . . . . . . $

253
21.96
5,551
1,140

289
18.35
5,300
935

$
$
$

246
21.30
5,249
926

$
$
$

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

Dividend yield . . . . . . . . . . . . . . . . . . . . . . . .
Expected stock price volatility . . . . . . . . . . . . . .
Risk-free rate of return, annual . . . . . . . . . . . . .
Expected life (in years) . . . . . . . . . . . . . . . . . .

September 29, September 30, October 2,
2012
(cid:4)
34.7%
0.1%
1

2011
(cid:4)
38.0%
0.3%
1

2013
(cid:4)
27.1%
0.1%
1

For fiscal 2013, 2012 and 2011, 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.

112

TETRA TECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

11.

Stockholders’ Equity and Stock Compensation Plans (Continued)

Included in stock-based compensation expense for fiscal 2013, 2012 and 2011 was $0.8 million,
$0.9 million and $1.0 million, respectively, related to the ESPP. The unrecognized stock-based
compensation costs for awards granted under the ESPP at September 29, 2013 and September 30, 2012,
were $0.2 million and $0.2 million, respectively. At September 29, 2013, ESPP participants had
accumulated $3.1 million to purchase our common stock.

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 2013, 2012 and 2011, employer contributions
to the plans were $9.5 million, $14.7 million and $14.1 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 and RSU awards, and non-employee director fees, which are
generally invested by us in individual variable life insurance contracts we own that are designed to
informally fund savings plans of this nature. At September 29, 2013 and September 30, 2012, the
consolidated balance sheets reflect assets of $17.2 million and $13.4 million, respectively, related to the
deferred compensation plan in ‘‘Other long-term assets,’’ and liabilities of $16.1 million and $12.9 million,
respectively, related to the deferred compensation plan in ‘‘Other long-term liabilities.’’

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

September 29, September 30, October 2,
2012

2011

2013

(in thousands, except per share data)

Net income (loss) attributable to Tetra Tech . . . . . . . . . . . . . . . . . $

(2,141)

104,380

90,039

Weighted-average common shares outstanding – basic . . . . . . . .
Effect of diluted stock options and unvested restricted stock . . . .

Weighted-average common stock outstanding – diluted . . . . . . . .

64,544
–

64,544

63,217
717

63,934

62,053
722

62,775

Net income (loss) attributable to Tetra Tech per share:

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $

(0.03)

Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $

(0.03)

1.65

1.63

1.45

1.43

The computation of diluted loss per share for fiscal 2013 excludes 0.5 million of potential common
shares due to their anti-dilutive effect. For fiscal 2012 and 2011, 1.9 million and 2.6 million options were
excluded from the calculation of dilutive potential common shares, respectively. These options were not

113

TETRA TECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13.

Earnings Per Share (Continued)

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.

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.

In fiscal 2009, we entered into an intercompany promissory note with a wholly-owned Canadian
subsidiary in connection with the acquisition of Wardrop Engineering, Inc. The intercompany note
receivable is denominated in CAD and has a fixed rate of interest payable in CAD. In the second quarter
of fiscal 2010, we entered into a forward contract for CAD $4.2 million (equivalent to U.S. $3.9 million at
the date of inception) that matured on January 28, 2013. In the third quarter of fiscal 2011, we entered into
a forward contract for CAD $4.2 million (equivalent to U.S. $4.2 million at the date of inception) with a
maturity date of January 27, 2014. Our objective was to eliminate variability of our cash flows on the
amount of interest income we receive on the promissory note from changes in foreign currency exchange
rates. These contracts were designated as cash flow hedges. Accordingly, changes in the fair value of the
contracts were recorded in ‘‘Other comprehensive income’’. In the second quarter of fiscal 2013, we settled
one of the foreign currency forward contracts for U.S. $3.9 million and terminated the remaining forward
contract. As a result, we recognized immaterial gains and losses in our consolidated statements of
operations for fiscal 2013, 2012 and 2011.

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. At
September 29, 2013, the effective portion of our interest rate swap agreements designated as cash flow
hedges before tax effect was $0.9 million, of which $0.9 million is expected to be reclassified from
accumulated other comprehensive income to interest expense within the next 12 months.

As of September 29, 2013, the notional principal, fixed rates and related expiration dates of our

outstanding interest rate swap agreements are as follows:

Notional Amount
(in thousands)

51,250
51,250
51,250

Fixed
Rate

1.36%
1.34%
1.35%

Expiration
Date

May 2018
May 2018
May 2018

114

TETRA TECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

14.

Derivative Financial Instruments (Continued)

The fair values of our outstanding derivative instruments were as follows (in thousands):

Fair Value of Derivative
Instruments as of

Balance Sheet Location

September 29,
2013

September 30,
2012

Derivatives designated as hedging instruments:

Foreign currency forward contracts . . . . . . . . . . . . Other current liabilities
Interest rate swap agreements . . . . . . . . . . . . . . . Other current liabilities

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

–
987

987

348
–

348

The impact of the effective portions of derivative instruments in cash flow hedging relationships
on income and other comprehensive income from our foreign currency forward contracts and interest rate
swap agreements was immaterial for the fiscal years ended September 30, 2012 and September 29, 2013.
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
2013, 2012 and 2011.

15.

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’’ for more
information).

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 ‘‘Critical Accounting Policies and Estimates’’). The carrying value of our
long-term debt approximated fair value at September 29, 2013 and September 30, 2012. For fiscal 2013, we
had a net borrowing of $205.0 million under our amended credit agreement to fund our business
acquisitions, working capital needs and contingent earn-outs (see Note 9, ‘‘Long-Term Debt’’ for more
information).

16.

Joint Ventures

Consolidated Joint Ventures

The aggregate revenue of the consolidated joint ventures was $15.6 million, $19.3 million and
$74.3 million for fiscal 2013, 2012 and 2011, respectively. The assets and liabilities of these consolidated
joint ventures were immaterial at fiscal 2013, 2012 and 2011 year-ends. These assets are restricted for use

115

TETRA TECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

16.

Joint Ventures (Continued)

only by those joint ventures and are not available for our general operations. Restricted cash and cash
equivalents at September 29, 2013 and September 30, 2012 were $1.2 million and $1.6 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 operations. For fiscal 2013, 2012 and 2011, we
reported $3.5 million, $2.9 million and $4.9 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
$24.0 million and $21.8 million, respectively, at September 29, 2013, and $19.0 million and $15.7 million,
respectively, at September 30, 2012.

17.

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.

We acquired BPR, a Quebec-based engineering firm on October 4, 2010. Subsequently, we have

been informed of the following with respect to pre-acquisition activities at BPR:

On April 17, 2012, authorities in the province of Quebec, Canada charged two employees of BPR
Triax, a subsidiary of BPR, and BPR Triax, under the Canadian Criminal Code with allegations of
corruption. Discovery procedures associated with the charges are currently ongoing, and the legal process
is expected to continue into fiscal 2014. We have conducted an internal investigation concerning this
matter and, based on the results of our investigation, we believe these allegations are limited to activities at
BPR Triax prior to our acquisition of BPR.

During late March 2013, the then-president of BPR gave testimony to the Charbonneau
Commission, which is investigating possible corruption in the engineering industry in Quebec. He stated
that during 2007 and 2008, he and other former BPR shareholders paid personal funds to a political party
official in exchange for the award of five government contracts. Further, prior to the testimony, we were
not aware of the misconduct. We have accepted the resignation of BPR’s former president, and are
evaluating the impact of these pre-acquisition actions on our business and results of operations.

116

TETRA TECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

17.

Commitments and Contingencies (Continued)

During March 2013, following the resignation of BPR’s former president, we learned that criminal
charges had been filed against BPR and its former president in France. The charges relate to allegations
that, in 2009, a BPR subsidiary had hired an employee of another firm to be CEO of that BPR subsidiary
as a part of a corrupt scheme that allegedly damaged, among others, the employee’s former employer. A
trial in this matter is scheduled for May 2014.

On April 19, 2013, a class action proceeding was filed in Montreal in which BPR, BPR’s former
president, and other Quebec-based engineering firms and individuals are named as defendants. The
plaintiff class includes all individuals and entities that have paid real estate or municipal taxes to the city of
Montreal. The allegations include participation in collusion to share contracts awarded by the City of
Montreal, conspiracy to reduce competition and fix prices, payment of bribes to officials, making illegal
political contributions, and bid rigging.

On June 28, 2013, a purported class action lawsuit was filed against Tetra Tech and two of our
officers in United States District Court for the Central District of California. The action was purportedly
brought on behalf of purchasers of our publicly traded securities between May 3, 2012 and June 18, 2013.
The complaint alleges generally that we and those officers violated Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934 and related rules because we allegedly failed to take unspecified,
‘‘necessary’’ charges to our accounts receivables and earnings during the class period. In addition, the
complaint alleges that the financial guidance we offered during the class period was intentionally or
recklessly false and misleading. The complaint alleges unspecified damages based on the decline in the
market price of our shares following the issuance of revised guidance on June 18, 2013. On October 30,
2013, plaintiff filed an amended complaint for the same purported class period making essentially the same
allegations. We believe the case is without merit and intend to defend it vigorously.

The financial impact to us of the matters discussed above is unknown at this time.

18.

Reportable Segments

In the first quarter of fiscal 2013, we implemented a reorganization of our operations to improve
future growth and profitability. These activities included the consolidation and realignment of certain
operating activities to improve organizational effectiveness and achieve efficiencies in our segment
management. This reorganization included the elimination of the EAS segment. Operating activities
previously reported in this segment were realigned to operations with similar client types, project types and
financial metrics in the ECS and TSS segments. Segment results for the prior year have been revised to
conform to the current-year presentation.

Our reportable segments for fiscal 2013 were as follows:

Engineering and Consulting Services. ECS provides front-end science, consulting engineering and
project management services in the areas of surface water management, water infrastructure, solid waste
management, mining, geotechnical sciences, arctic engineering, industrial processes and oil sands,
transportation and information technology.

Technical Support Services. TSS provides management consulting and engineering services and
strategic direction in the areas of environmental assessments/hazardous waste management, climate

117

TETRA TECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

18.

Reportable Segments (Continued)

change, international development, international reconstruction and stabilization, energy, oil and gas,
technical government consulting, and building and facilities.

Remediation and Construction Management. RCM provides full-service support, including
construction and construction management, to all of our client sectors, including the U.S. federal
government in the United States and internationally, and commercial clients worldwide, in the areas of
environmental remediation, infrastructure development, solid waste management, energy, and oil and gas.

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.

118

TETRA TECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

18.

Reportable Segments (Continued)

The following tables set forth summarized financial information concerning our reportable

segments:

Reportable Segments

Fiscal Year Ended

September 29, September 30,

2013

2012

October 2,
2011

(in thousands)

Revenue

ECS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
TSS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
RCM . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Elimination of inter-segment revenue . . . . . . .

1,035,983
932,375
725,689
(80,292)

1,155,256
1,020,779
621,957
(86,917)

1,110,060
995,249
604,651
(136,816)

Total revenue . . . . . . . . . . . . . . . . . . . . . $

2,613,755

2,711,075

2,573,144

Operating Income

ECS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
TSS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
RCM . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate (1)
. . . . . . . . . . . . . . . . . . . . . . .

44,598
71,842
(6,706)
(89,516)

Total operating income . . . . . . . . . . . . . . . $

20,218

Depreciation

ECS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
TSS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
RCM . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate . . . . . . . . . . . . . . . . . . . . . . . . .

10,494
2,839
13,160
3,055

96,220
71,767
22,374
(23,994)

166,367

10,126
3,227
10,233
3,065

Total depreciation . . . . . . . . . . . . . . . . . . $

29,548

26,651

99,868
69,977
13,183
(36,606)

146,422

12,067
2,028
10,101
2,941

27,137

(1)

Includes goodwill impairment charge, amortization of intangibles, other costs and other income
not allocable to segments. The goodwill impairment charge of $56.6 million for fiscal 2013 was
recorded at Corporate. The intangible asset amortization expense for fiscal 2013, 2012 and
2011 was $32.4 million, $29.6 million and $28.0 million, respectively. Corporate results also
included income for fair value adjustments to contingent consideration liabilities of
$9.6 million, $19.2 million and $1.8 million for 2013, 2012 and 2011, respectively.

119

TETRA TECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

18.

Reportable Segments (Continued)

September 29, September 30,

2013

2012

(in thousands)

Total Assets

ECS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TSS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
RCM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

912,996
673,864
435,053
(222,821)

915,571
638,405
311,051
(193,997)

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,799,092

1,671,030

(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

September 29, 2013

September 30, 2012

October 2, 2011

Revenue

Long-Lived
Assets (2)

Revenue

Long-Lived
Assets (2)

Revenue

Long-Lived
Assets (2)

(in thousands)

United States
Foreign countries (1)

. . . . . . . . . . . . . $ 1,915,780
697,975

. . . . . . . . .

$ 110,313
90,435

$ 2,046,700
664,375

$ 100,958
70,010

$ 1,976,452
596,692

$ 102,316
78,198

(1)

Includes revenue generated from our foreign operations, primarily in Canada, and revenue generated from
non-U.S. clients. Long-lived assets consist primarily of amounts from our Canadian operations.

(2) Excludes goodwill and intangible assets.

Major Clients

Other than the U.S. federal government, we had no single client that accounted for more than

10% of our revenue. All of our segments generated revenue from all client sectors.

120

TETRA TECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

18.

Reportable Segments (Continued)

The following table presents our revenue by client sector:

Fiscal Year Ended

September 29,
2013

September 30,
2012

October 2,
2011

(in thousands)

Client Sector

International (1)
. . . . . . . . . . . . . . . . . $
. . . . . . . . . . . . . . . . .
U.S commercial
U.S. federal government (2)
. . . . . . . . .
U.S. state and local government . . . . . .

697,975
693,677
829,790
392,313

664,375
718,457
1,008,424
319,819

596,692
577,782
1,115,729
282,941

Total

. . . . . . . . . . . . . . . . . . . . . . . $

2,613,755

2,711,075

2,573,144

(1)

(2)

Includes revenue generated from foreign operations, primarily in Canada, and revenue
generated from non-U.S. clients.
Includes revenue generated under U.S. federal government contracts performed outside the
United States.

19.

Quarterly Financial Information – Unaudited

In the opinion of management, the following unaudited quarterly data for fiscal years ended
September 29, 2013 and September 30, 2012 reflect all adjustments necessary for a fair statement of the
results of operations.

In the third quarter of fiscal 2013, we reported operating losses of $99.9 million, which included a
non-cash goodwill impairment charge of $56.6 million. Additionally, we incurred project charges, including
claims related to adverse developments on three programs in the RCM segment with U.S. federal and state
and local government clients. We also recorded a project-related charge on a commercial development
project in the TSS segment due to a change in client ownership and the related modification of plans for
completion of the project. Collectively, project charges on these four programs reduced operating income

121

TETRA TECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

19.

Quarterly Financial Information – Unaudited (Continued)

by $35.5 million. Further, the weaker results in our Eastern Canada and global mining operations and the
resulting charges to right-size these businesses caused a reduction of $28.2 million in operating income.

First
Quarter

Second
Quarter

Third
Quarter

Fourth
Quarter

(in thousands, except per share data)

Fiscal Year 2013

Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Operating income (loss) . . . . . . . . . . . . . . . . .
Net income (loss) attributable to Tetra Tech . . .

658,545
41,809
26,224

Net income (loss) attributable to Tetra Tech per

share (1):
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . $

Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . $

Weighted-average common shares outstanding:

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . .

0.41

63,864

64,608

Fiscal Year 2012

Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Operating income . . . . . . . . . . . . . . . . . . . . .
Net income attributable to Tetra Tech . . . . . . .

682,627
36,093
22,610

Earnings per share attributable to Tetra Tech (1):

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . $

Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . $

Weighted-average common shares outstanding:

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . .

0.36

62,433

63,068

641,999
37,667
24,820

0.38

64,551

65,472

624,345
35,543
22,284

0.35

63,072

63,817

614,835
(99,884)
(78,385)

(1.21)

64,832

684,698
46,261
29,054

0.46

0.45

63,387

64,179

698,376
40,626
25,200

0.39

64,272

64,853

719,405
48,470
30,432

0.48

0.47

63,623

64,396

(1) The sum of the quarterly EPS may not add up to the full-year EPS due to rounding.

122

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Evaluation of disclosure controls and procedures and changes in internal control over financial

reporting

At September 29, 2013, we carried out an evaluation of the effectiveness of the design and
operation of our disclosure controls and procedures. Based on our management’s evaluation (with the
participation of our principal executive officer and principal financial officer), our principal executive
officer and principal financial officer have concluded that, as of the end of the period covered by this
report, our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the
Exchange Act), were effective.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over
financial reporting. As defined in Exchange Act Rule 13a-15(f), internal control over financial reporting is a
process designed by, or under the supervision of, our principal executive and principal financial officer and
effected by our Board of Directors, management and other personnel to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of consolidated financial statements for
external purposes in accordance with U.S. GAAP. Internal controls include those policies and procedures
that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the
transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded
as necessary to permit preparation of financial statements in accordance with U.S. GAAP and that our
receipts and expenditures are being made only in accordance with authorizations of our management and
directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of our assets that could have a material effect on our consolidated financial
statements.

Under the supervision and with the participation of our management, including our Chief
Executive Officer and Chief Financial Officer, we assessed the effectiveness of our internal control over
financial reporting at September 29, 2013, based on the criteria in Internal Control – Integrated Framework
(1992) issued by the COSO. Based upon this assessment, management has concluded that our internal
control over financial reporting was effective at September 29, 2013, at a reasonable assurance level.

PricewaterhouseCoopers LLP, the independent registered public accounting firm that audited the
consolidated financial statements included in this Form 10-K, has issued a report on our internal control
over financial reporting. This report, dated November 20, 2013, appears on page 79 of this Form 10-K.

123

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the three months
ended September 29, 2013 that have materially affected, or are reasonably likely to materially affect, our
internal control over financial reporting.

Item 9B. Other Information

None.

Item 10. Directors, Executive Officers and Corporate Governance

PART III

The information required by this item relating to our directors and nominees, regarding
compliance with Section 16(a) of the Exchange Act, and regarding our Audit Committee is included under
the captions ‘‘Proposal No. 1 – Election of Directors – General’’ and ‘‘Business Experience of Nominees,’’
‘‘Ownership of Securities – Section 16(a) Beneficial Ownership Reporting Compliance,’’ and ‘‘Proposal
No. 1 – Election of Directors – Board Committees and Meetings’’ in our Proxy Statement related to the
2014 Annual Meeting of Stockholders and is incorporated by reference.

Pursuant to General Instruction G(3) of Form 10-K, the information required by this item relating
to our executive officers is included under the caption ‘‘Executive Officers of the Registrant’’ in Part I of
this Report.

We have adopted a code of ethics that applies to our principal executive officer and all members of
our finance department, including our principal financial officer and principal accounting officer. This
code of ethics, entitled ‘‘Finance Code of Professional Conduct,’’ is posted on our website. The Internet
address for our website is www.tetratech.com, and the code of ethics may be found through a link to the
Investor Relations section of our website.

We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K for any amendment
to, or waiver from, a provision of this code of ethics by posting any such information on our website, at the
address and location specified above.

Item 11. Executive Compensation

The information required by this item is included under the captions ‘‘Proposal No. 1 – Election of
Directors – Director Compensation’’ and ‘‘Executive Compensation and Related Information’’ in our
Proxy Statement related to the 2014 Annual Meeting of Stockholders and is incorporated by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related

Stockholder Matters

The information required by this item relating to security ownership of certain beneficial owners
and management, and securities authorized for issuance under equity compensation plans, is included
under the caption ‘‘Ownership of Securities’’ in our Proxy Statement related to the 2014 Annual Meeting
of Stockholders and is incorporated by reference.

124

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required by this item relating to review, approval or ratification of transactions
with related persons is included under the captions ‘‘Review, Approval or Ratification of Transactions with
Related Persons’’ and ‘‘Certain Transactions with Related Persons,’’ and the information required by this
item relating to director independence is included under the caption ‘‘Proposal No. 1 – Election of
Directors – Independent Directors,’’ in each case in our Proxy Statement related to the 2014 Annual
Meeting of Stockholders and is incorporated by reference.

Item 14. Principal Accounting Fees and Services

The information required by this item is included under the captions ‘‘Proposal No. 4 –
Ratification of Independent Registered Public Accounting Firm – Principal Accountant Fees and Services’’
and ‘‘Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of
Independent Registered Public Accounting Firm’’ in our Proxy Statement related to the 2014 Annual
Meeting of Stockholders and is incorporated by reference.

125

PART IV

Item 15. Exhibits, Financial Statement Schedules

(a.)

1. Financial Statements

The Index to Financial Statements and Financial Statement Schedule on page 78 is
incorporated by reference as the list of financial statements required as part of this
Report.

2. Financial Statement Schedule

The Index to Financial Statements and Financial Statement Schedule on page 78 is
incorporated by reference as the list of financial statement schedules required as part of
this Report.

3. Exhibits

The exhibit list in the Index to Exhibits on pages 130 - 131 is incorporated by reference
as the list of exhibits required as part of this Report.

126

TETRA TECH, INC.
SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

For the Fiscal Years Ended
October 2, 2011, September 30, 2012 and September 29, 2013
(in thousands)

Balance at
Beginning of Costs, Expenses

Additions
(Charged to

Period

and Revenue) Deductions (1)

Other (2)

Balance at
End of Period

Allowance for doubtful accounts:

Fiscal 2011 . . . . . . . . . . . . . . . $

32,926

3,733

(6,478)

2,063

32,244

Fiscal 2012 . . . . . . . . . . . . . . .

32,244

4,768

Fiscal 2013 . . . . . . . . . . . . . . .

35,552

13,818

(2,356)

(4,452)

896

35,552

(295)

44,623

Income tax valuation allowance:

Fiscal 2011 . . . . . . . . . . . . . . . $

5,526

–

Fiscal 2012 . . . . . . . . . . . . . . .

–

Fiscal 2013 . . . . . . . . . . . . . . .

2,512

4,947

(cid:4)

–

(5,526)

–

(cid:4)

–

2,512

7,459

(1) Primarily represents uncollectible accounts written off, net of recoveries.
(2)

Includes allowances from new business acquisitions, loss in foreign jurisdictions and currency adjustments, and
represents valuation allowance adjustments related to net operating loss carry-forwards.

127

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the
registrant has duly caused this Report on Form 10-K to be signed on its behalf by the undersigned,
thereunto duly authorized.

Dated: November 20, 2013

TETRA TECH, INC.

By:

/s/ DAN L. BATRACK

Dan L. Batrack
Chairman, Chief Executive Officer and
President

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Dan L. Batrack and Steven M. Burdick, jointly and severally, his
attorney-in-fact, each with the full power of substitution, for such person, in any and all capacities, to sign
any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agent full power and authority to do and perform each and every act and
thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he
might do or could do in person, hereby ratifying and confirming all that each of said attorneys-in-fact and
agents, or his substitute, may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report on Form 10-K
has been signed below by the following persons on behalf of the registrant and in the capacities and on the
dates indicated.

Signature

Title

Date

/s/ DAN L. BATRACK

Chairman, Chief Executive Officer and
President

November 20, 2013

Dan L. Batrack

(Principal Executive Officer)

/s/ STEVEN M. BURDICK

Chief Financial Officer and Treasurer

November 20, 2013

Steven M. Burdick

(Principal Financial Officer)

/s/ BRIAN N. CARTER

Senior Vice President, Corporate Controller

November 20, 2013

Brian N. Carter

(Principal Accounting Officer)

/s/ ALBERT E. SMITH

Director

November 19, 2013

Albert E. Smith

/s/ HUGH M. GRANT

Director

November 19, 2013

Hugh M. Grant

128

Signature

Title

/s/ PATRICK C. HADEN

Director

Patrick C. Haden

Date

November 19, 2013

/s/ J. CHRISTOPHER LEWIS

Director

November 19, 2013

J. Christopher Lewis

/s/ J. KENNETH THOMPSON

Director

J. Kenneth Thompson

November 19, 2013

/s/ RICHARD H. TRULY

Director

November 19, 2013

Richard H. Truly

/s/ KIRSTEN M. VOLPI

Director

November 19, 2013

Kirsten M. Volpi

/s/ KIMBERLY E. RITRIEVI

Director

November 19, 2013

Kimberly E. Ritrievi

129

INDEX TO EXHIBITS

3.1

3.2

10.1

10.2

10.3

10.4

10.5

10.6

10.7

10.8

Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to
the Company’s Current Report on Form 8-K dated February 26, 2009).

Amended and Restated Bylaws of the Company (as of April 24, 2009) (incorporated by reference
to Exhibit 3.1 to the Company’s Current Report on Form 8-K dated April 24, 2009).

Amended and Restated Credit Agreement dated as of May 7, 2013 among Tetra Tech, Inc., Tetra
Tech Canada Holding Corporation, the lenders party thereto and Bank of America, N.A., as
Administrative Agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report
on Form 8-K dated May 9, 2013).

Amendment No. 1 dated as of September 27, 2013 to the Amended and Restated Credit
Agreement dated as of May 7, 2013 among Tetra Tech, Inc., Tetra Tech Canada Holding
Corporation, the lenders party thereto and Bank of America, N.A., as Administrative Agent
(incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated
September 27, 2013).

Amended and Restated Security Agreement dated as of May 7, 2013 made by Tetra Tech, Inc. and
certain of its subsidiaries in favor of Bank of America, N.A., as Administrative Agent
(incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated
May 9, 2013).

Security Agreement dated as of May 7, 2013 made by Tetra Tech Canada Holding Corporation and
certain of its subsidiaries in favor of Bank of America, N.A., as Administrative Agent
(incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K dated
May 9, 2013).

Amended and Restated Pledge Agreement dated as of May 7, 2013 made by Tetra Tech, Inc. and
certain of its subsidiaries in favor of Bank of America, N.A., as Administrative Agent
(incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K dated
May 9, 2013).

Pledge Agreement dated as of May 7, 2013 made by Tetra Tech Canada Holding Corporation and
certain of its subsidiaries in favor of Bank of America, N.A., as Administrative Agent
(incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K dated
May 9, 2013).

Employee Stock Purchase Plan (as amended and restated effective October 15, 2012)
((incorporated by reference to Exhibit 10.2 to the Company’s Annual Report on Form 10-K for the
fiscal year ended September 30, 2012).

2005 Equity Incentive Plan (as amended through November 7, 2011) (incorporated by reference to
the Company’s Proxy Statement for its 2012 Annual Meeting of Stockholders held on February 28,
2012).*

10.9

First Amendment to the 2005 Equity Incentive Plan (as amended through November 7, 2011). +*

10.10 Form of Stock Option Agreement to be used for employees in connection with the 2005 Equity
Incentive Plan (incorporated by reference to Exhibit 10.19 to the Company’s Annual Report on
Form 10-K for the fiscal year ended October 2, 2005).*

10.11 Form of Restricted Stock Agreement to be used in connection with the 2005 Equity Incentive Plan
(incorporated by reference to Exhibit 10.20 to the Company’s Annual Report on Form 10-K for
the fiscal year ended October 2, 2005).*

10.12 Form of Stock Appreciation Rights Agreement to be used in connection with the 2005 Equity
Incentive Plan (incorporated by reference to Exhibit 10.21 to the Company’s Annual Report on
Form 10-K for the fiscal year ended October 2, 2005).*

130

10.13 Form of Restricted Stock Unit Agreement to be used in connection with the 2005 Equity Incentive
Plan (incorporated by reference to Exhibit 10.22 to the Company’s Annual Report on Form 10-K
for the fiscal year ended October 2, 2005).*

10.14 Form of Stock Option Agreement to be used for non-employee directors in connection with the
2005 Equity Incentive Plan (incorporated by reference to Exhibit 4.3 to Post-Effective Amendment
No. 4 to the Company’s Registration Statement on Form S-8).*

10.15

2003 Outside Director Stock Option Plan (as amended through July 30, 2007) (incorporated by
reference to Exhibit 10.13 to the Company’s Annual Report on Form 10-K for the fiscal year
ended September 30, 2007).*

10.16 Form of Option Agreement used in connection with the 2003 Outside Director Stock Option Plan
(incorporated by reference to Exhibit 10.21 to the Company’s Quarterly Report on Form 10-Q for
the fiscal quarter ended March 30, 2003).*

10.17 Form of Indemnity Agreement entered into between the Company and each of its directors and
executive officers (incorporated by reference to Exhibit 10.20 to the Company’s Annual Report on
Form 10-K for the fiscal year ended October 3, 2004).*

10.18 Executive Compensation Policy (as amended through November 14, 2013).+*

10.19 Deferred Compensation Plan (incorporated by reference to Exhibit 10.17 to the Company’s

Annual Report on Form 10-K for the fiscal year ended September 30, 2007).*

10.20 Amendment to Deferred Compensation Plan dated November 14, 2013.+*

10.21 Change of Control Agreement with Dan L. Batrack dated March 26, 2013 (incorporated by
reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 8-Q for the fiscal quarter
ended March 31, 2013).*

10.22 Form of Change of Control Agreement for executive officers other than Dan L. Batrack dated
March 26, 2013 (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on
Form 8-Q for the fiscal quarter ended March 31, 2013).*

10.23 Executive Compensation Plan (as amended and restated November 14, 2013). +*

21.

23.

24.

31.1

31.2

32.1

32.2

95.

101

Subsidiaries of the Company.+

Consent of Independent Registered Public Accounting Firm (PricewaterhouseCoopers LLP).+

Power of Attorney (included on page 128 of this Annual Report on Form 10-K).

Chief Executive Officer Certification pursuant to Rule 13a-14(a)/15d-14(a).+

Chief Financial Officer Certification pursuant to Rule 13a-14(a)/15d-14(a).+

Certification of Chief Executive Officer pursuant to Section 1350.+

Certification of Chief Financial Officer pursuant to Section 1350.+

Mine Safety Disclosures.+

The following financial information from our Company’s Annual Report on Form 10-K, for the
period ended September 29, 2013, formatted in eXtensible Business Reporting Language:
(i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated
Statement of Comprehensive Income (Loss), (iv) Consolidated Statements of Equity,
(v) Consolidated Statements of Cash Flows, (vi) Notes to Consolidated Financial Statements.+(1)

Indicates a management contract or compensatory arrangement.

*
+ Filed herewith.
(1) Pursuant to Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this Annual
Report on Form 10-K shall not be deemed to be ‘‘filed’’ for purposes of Section 18 of the Exchange
Act or otherwise subject to the liability of the section, and shall not be deemed part of a registration
statement, prospectus or other document filed under the Securities Act or the Exchange Act, except as
shall be expressly set forth by specific reference in such filings.

131

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8
(Nos. 333-184958, 333-174032, 333-158932, 333-148712, 333-145201, 333-145199, 333-85558, 333-53036 and
333-11757) of Tetra Tech, Inc. of our report dated November 20, 2013 relating to the financial statements,
financial statement schedule and the effectiveness of internal control over financial reporting, which
appears in this Form 10-K.

EXHIBIT 23

/s/ PRICEWATERHOUSECOOPERS LLP

Los Angeles, California
November 20, 2013

EXHIBIT 31.1

Chief Executive Officer Certification Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002

I, Dan L. Batrack, certify that:

I have reviewed this Annual Report on Form 10-K of Tetra Tech, Inc.;

Based on my knowledge, this report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the financial condition, results of operations
and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer(s) and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that material information relating
to the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;

Evaluated the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on such evaluation; and

(c)

(d)

Disclosed in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth
fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee
of registrant’s board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to adversely affect the registrant’s
ability to record, process, summarize and report financial information; and

(a)

employees who have a significant role in the registrant’s internal control over financial reporting.

(b)

Any fraud, whether or not material, that involves management or other

Dated: November 20, 2013

/s/ Dan L. Batrack

Dan L. Batrack
Chairman, Chief Executive Officer and President
(Principal Executive Officer)

EXHIBIT 31.2

Chief Financial Officer Certification Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002

I, Steven M. Burdick, certify that:

I have reviewed this Annual Report on Form 10-K of Tetra Tech, Inc.;

(a)

(b)

(c)

(d)

(a)

employees who have a significant role in the registrant’s internal control over financial reporting.

(b)

Any fraud, whether or not material, that involves management or other

Dated: November 20, 2013

/s/ Steven M. Burdick

Steven M. Burdick
Chief Financial Officer and Treasurer
(Principal Financial Officer)

Certification of Chief Executive Officer Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

EXHIBIT 32.1

In connection with the Annual Report of Tetra Tech, Inc. (the ‘‘Company’’) on Form 10-K for the
fiscal year ended September 29, 2013, as filed with the Securities and Exchange Commission on the date
hereof (the ‘‘Report’’), I, Dan L. Batrack, Chief Executive Officer of the Company, hereby certify,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
that, to my knowledge:

1. The Report fully complies with the requirements of Section 13(a) of the Securities Exchange

Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial

condition and results of operations of the Company.

Dated: November 20, 2013

/s/ DAN L. BATRACK

Dan L. Batrack
Chairman, Chief Executive Officer and President
(Principal Executive Officer)

A signed original of this written statement required by Section 906, or other document
authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the
electronic version of this written statement required by Section 906, has been provided to Tetra Tech, Inc.
and will be retained by Tetra Tech, Inc. and furnished to the Securities and Exchange Commission or its
staff upon request.

The foregoing certification is being furnished to the Securities and Exchange Commission as an

exhibit to the Form 10-K and shall not be considered filed as part of the Form 10-K.

Certification of Chief Financial Officer Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

EXHIBIT 32.2

In connection with the Annual Report of Tetra Tech, Inc. (the ‘‘Company’’) on Form 10-K for the
fiscal year ended September 29, 2013, as filed with the Securities and Exchange Commission on the date
hereof (the ‘‘Report’’), I, Steven M. Burdick, Chief Financial Officer and Treasurer of the Company,
hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002, that, to my knowledge:

1. The Report fully complies with the requirements of Section 13(a) of the Securities Exchange

Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial

condition and results of operations of the Company.

Dated: November 20, 2013

/s/ STEVEN M. BURDICK

Steven M. Burdick
Chief Financial Officer and Treasurer
(Principal Financial Officer)

The foregoing certification is being furnished to the Securities and Exchange Commission as an

exhibit to the Form 10-K and shall not be considered filed as part of the Form 10-K.

(This page has been left blank intentionally.)