-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HyiyB3uYrd5KqioJtifrhwB2rk/Mx30wpOJoRgmWtWnbYFu3wkvO0vUQMuUmafrh zXAqm1NR2UBIKzpi4h+vmw== 0000912057-97-031208.txt : 19970927 0000912057-97-031208.hdr.sgml : 19970927 ACCESSION NUMBER: 0000912057-97-031208 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970629 FILED AS OF DATE: 19970919 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: TETRA TECH INC CENTRAL INDEX KEY: 0000831641 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ENGINEERING SERVICES [8711] IRS NUMBER: 954148514 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: SEC FILE NUMBER: 000-19655 FILM NUMBER: 97683108 BUSINESS ADDRESS: STREET 1: 670 N ROSEMEAD BOULEVARD CITY: PASEDENA STATE: CA ZIP: 91107-2190 BUSINESS PHONE: 6263514664 MAIL ADDRESS: STREET 1: 670 N ROSEMEAD BLVD CITY: PASADENA STATE: CA ZIP: 91107 10-Q/A 1 10-Q/A UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q/A (AMENDMENT NO. 1) (Mark One) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended JUNE 29, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to --------------- --------------- Commission File Number 0-19655 TETRA TECH, INC. ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 95-4148514 ------------------------------------------ ------------------------------ (State or other jurisdiction of (I.R.S. Employer Identification incorporation or organization) number) 670 N. Rosemead Boulevard, Pasadena, California 91107 ---------------------------------------------------------------- (Address of principal executive offices) (626) 351-4664 --------------------------------------------------- (Registrant's telephone number, including area code) Not Applicable --------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- As of September 8, 1997, the total number of outstanding shares of the Registrant's Common Stock was 16,564,080. The undersigned Registrant hereby amends the following item of its Quarterly Report on Form 10-Q for the quarter ended June 29, 1997, as set forth below: PART I. FINANCIAL INFORMATION ITEM 1. Financial Statements Tetra Tech, Inc. Condensed Consolidated Balance Sheets $ in thousands, except share data June 29, September 29, 1997 1996 ----------- ------------- (Unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents. . . . . . . . . . . . $ 12,793 $ 6,129 Accounts receivable - net. . . . . . . . . . . . 25,433 22,306 Unbilled receivables - net. . . . . . . . . . . 33,769 25,201 Prepaid and other current assets . . . . . . . . 6,353 1,939 Deferred income taxes. . . . . . . . . . . . . . 2,358 2,358 --------- --------- Total Current Assets. . . . . . . . . . . . . 80,706 57,933 PROPERTY AND EQUIPMENT: Leasehold improvements . . . . . . . . . . . . . 990 733 Equipment, furniture and fixtures. . . . . . . . 16,201 13,072 --------- --------- Total . . . . . . . . . . . . . . . . . . . . 17,191 13,805 Accumulated depreciation and amortization. . . . (8,770) (6,790) --------- --------- PROPERTY AND EQUIPMENT - NET . . . . . . . . . . . 8,421 7,015 INTANGIBLE ASSETS - NET. . . . . . . . . . . . . . 63,935 22,047 OTHER ASSETS . . . . . . . . . . . . . . . . . . . 1,301 1,468 --------- --------- TOTAL ASSETS . . . . . . . . . . . . . . . . . . . $ 154,363 $ 88,463 --------- --------- --------- --------- LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable . . . . . . . . . . . . . . . . . $ 11,329 $ 13,423 Accrued compensation . . . . . . . . . . . . . . . 10,892 7,311 Other current liabilities. . . . . . . . . . . . . 6,250 3,356 Payable to stockholder . . . . . . . . . . . . . . 5,479 0 Current portion of long-term obligations . . . . . 8,000 0 Income taxes payable . . . . . . . . . . . . . . . 1,339 1,104 --------- --------- Total Current Liabilities . . . . . . . . . . . 43,289 25,194 --------- --------- REEDEEMABLE PREFERRED STOCK. . . . . . . . . . . . 15,028 0 --------- --------- STOCKHOLDERS' EQUITY: Preferred stock - authorized, 2,000,000 shares of $.01 par value; issued and outstanding 1,231,840 and 0 shares at June 29, 1997 and September 29, 1996, respectively . . . . . . . . . . . . . . 0 0 Common stock - authorized, 20,000,000 shares of $.01 par value; issued and outstanding 16,264,251 and 14,127,002 shares at June 29, 1997 and September 29, 1996, respectively . . . . . . . 163 141 Additional paid-in capital . . . . . . . . . . . 57,096 33,452 Retained earnings. . . . . . . . . . . . . . . . 38,787 29,676 --------- --------- TOTAL STOCKHOLDERS' EQUITY . . . . . . . . . . . . 96,046 63,269 --------- --------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY . . . . $ 154,363 $ 88,463 --------- --------- --------- --------- See accompanying notes to the condensed consolidated financial statements. Tetra Tech, Inc. Condensed Consolidated Statements of Income (Unaudited)
$ in thousands, except share data Three Months Ended Nine Months Ended ------------------------------------------------------ June 29, June 30, June 29, June 30, 1997 1996 1997 1996 ---------- ---------- ---------- --------- Gross Revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 60,922 $ 54,152 $ 171,406 $ 162,243 Subcontractor costs . . . . . . . . . . . . . . . . . . . . . . . . . 12,301 13,838 38,447 43,830 --------- --------- --------- --------- Net Revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,621 40,314 132,959 118,413 Cost of Net Revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . 35,660 30,479 100,077 90,638 --------- --------- --------- --------- Gross Profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,961 9,835 32,882 27,775 Selling, General and Administrative Expenses . . . . . . . . . . . . . . 6,754 5,329 17,390 15,420 --------- --------- --------- --------- Income From Operations . . . . . . . . . . . . . . . . . . . . . . . . . 6,207 4,506 15,492 12,355 Interest Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84 203 127 1,023 Interest Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . (88) (72) (210) (253) --------- --------- --------- --------- Income Before Income Taxes . . . . . . . . . . . . . . . . . . . . . . . 6,211 4,375 15,575 11,585 Income Tax Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,567 1,750 6,464 4,634 --------- --------- --------- --------- Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,644 $ 2,625 $ 9,111 $ 6,951 --------- --------- --------- --------- --------- --------- --------- --------- Net Income Per Common Share. . . . . . . . . . . . . . . . . . . . . . . $ 0.24 $ 0.18 $ 0.61 $ 0.48 --------- --------- --------- --------- --------- --------- --------- --------- Shares Used in Per Share Calculations. . . . . . . . . . . . . . . . . . 15,432 14,565 14,918 14,405 --------- --------- --------- --------- --------- --------- --------- ---------
See accompanying notes to the condensed consolidated financial statements. Tetra Tech, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited)
$ in thousands Nine Months Ended ------------------------ June 29, June 30, 1997 1996 ----------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,111 $ 6,951 Adjustments to reconcile net income to net cash provided by operating. . . . . . . . activities: Depreciation and Amortization. . . . . . . . . . . . . . . . . . . . . . . . . 2,929 2,731 Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (71) (2) Changes in operating assets and liabilities, net of effects of acquisitions: Accounts receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 15,157 Unbilled receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,849) 224 Prepaid and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . (305) (519) Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,844 (7,618) Accrued compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,976) (1,467) Other current liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . (1,214) 525 Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174 410 --------- --------- Net Cash (Used In) Provided By Operating Activities . . . . . . . . . . . . (5,035) 16,392 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,832) (1,751) Proceeds from sale of property and equipment . . . . . . . . . . . . . . . . . . . . 44 45 Payments for business acquisitions, net of cash acquired . . . . . . . . . . . . . . (1,124) (6,748) --------- --------- Net Cash Used In Investing Activities . . . . . . . . . . . . . . . . . . . (2,912) (8,454) CASH FLOWS FROM FINANCING ACTIVITIES: Payments on long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,842) (19,003) Proceeds from issuance of long-term debt . . . . . . . . . . . . . . . . . . . . . . 8,000 5,145 Proceeds from payable to stockholder . . . . . . . . . . . . . . . . . . . . . . . . 5,479 0 Payments on obligations under capital leases . . . . . . . . . . . . . . . . . . . . 0 (6) Net proceeds from issuance of common stock . . . . . . . . . . . . . . . . . . . . . 2,974 542 --------- --------- Net Cash Provided By (Used In) Financing Activities . . . . . . . . . . . . 14,611 (13,322) --------- --------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS . . . . . . . . . . . . . . . . 6,664 (5,384) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD . . . . . . . . . . . . . . . . . . 6,129 13,130 --------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD . . . . . . . . . . . . . . . . . . . . . $ 12,793 $ 7,746 --------- --------- --------- ---------
(Continued) Tetra Tech, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited)
$ in thousands Nine Months Ended ------------------------ June 29, June 30, 1997 1996 --------- --------- SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid during the period for: Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 83 $ 1,077 Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,513 $ 4,225 SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES: In November 1995, the Company purchased all of the capital stock of KCM, Inc. In conjunction with this acquisition, liabilities were assumed as follows: Fair value of assets acquired. . . . . . . . . . . . . . . . . . . . . . . . . $ 20,393 Cash paid. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,645) Issuance of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . (10,313) Other acquisition costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . (415) --------- Liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,020 --------- --------- In December 1996, the Company purchased all of the capital stock of IWA Engineers. In conjunction with this acquisition, liabilities were assumed as follows: Fair value of assets acquired. . . . . . . . . . . . . . . . . . . . . . . . . $ 2,956 Cash paid. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (310) Issuance of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,056) Other acquisition costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . (70) --------- Liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,520 --------- --------- In December 1996, the Company purchased all of the capital stock of FLO Engineering, Inc. In conjunction with this acquisition, liabilities were assumed as follows: Fair value of assets acquired. . . . . . . . . . . . . . . . . . . . . . . . . $ 892 Cash paid. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (139) Issuance of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . (459) Other acquisition costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . (70) --------- Liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 224 --------- --------- In March 1997, the Company purchased all of the capital stock of SCM Consultants, Inc. In conjunction with this acquisition, liabilities were assumed as follows: Fair value of assets acquired. . . . . . . . . . . . . . . . . . . . . . . . . $ 2,859 Cash paid. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (311) Issuance of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,830) Other acquisition costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . (70) --------- Liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 648 --------- ---------
(Continued) Tetra Tech, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited)
$ in thousands Nine Months Ended -------------------------- June 29, June 30, 1997 1996 ----------- ----------- In June 1997, the Company purchased all of the capital stock of Whalen & Company, Inc. and Whalen Service Corps Inc. In conjunction with this acquisition, liabilities were assumed as follows: Fair value of assets acquired. . . . . . . . . . . . . . . . . . . . . . . . . $ 53,282 Cash paid. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,051) Issuance of common and preferred stock . . . . . . . . . . . . . . . . . . . . (33,304) Other acquisition costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,925) ---------- Liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10,002 ---------- ----------
(Concluded) See accompanying notes to the condensed consolidated financial statements. TETRA TECH, INC. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION The accompanying condensed consolidated balance sheets as of June 29, 1997, the condensed consolidated statements of income for the three-month and nine- month periods ended June 29, 1997 and June 30, 1996 and the condensed consolidated statements of cash flows for the nine-month periods ended June 29, 1997 and June 30, 1996 are unaudited, and in the opinion of management include all adjustments, consisting of only normal and recurring adjustments, necessary for a fair presentation of the financial position and the results of operations for the periods presented. The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended September 29, 1996. The results of operations for the three and nine months ended June 29, 1997 are not necessarily indicative of the results to be expected for the fiscal year ending September 28, 1997. The computation of net income per common share is based upon the weighted average number of shares outstanding, including the effects of common stock equivalents (common stock options and Series A Preferred Stock). 2. CASH AND CASH EQUIVALENTS The Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents. Cash totaled $8,705,000 and cash equivalents totaled $4,088,000 at June 29, 1997. 3. ACQUISITIONS On June 11, 1997, the Company acquired 100% of the capital stock of Whalen & Company, Inc. and Whalen Service Corps Inc. (collectively, "WAC"). WAC, a wireless telecommunications firm, provides a full range of wireless telecommunications site development services for PCS, cellular, ESMR, air-to- ground, microwave, paging, fiber optic and switching centers technology. The acquisition was accounted for as a purchase. The purchase has been valued at approximately $43,070,000 consisting of cash and Company common and preferred stock. The common and preferred stock (see Note 5. REDEEMABLE PREFERRED STOCK) was issued in a private placement and had a combined value of $33,304,000. The Company's stock was valued based upon the extended restriction period and economic factors specific to the Company's circumstances which resulted in a fair valuation approximately 28% below the then prevailing market price. On the business day prior to the merger, WAC distributed to its stockholders (i) cash in the amount of $4,138,000 and (ii) accounts receivable having a net value of $18,455,000. On March 20, 1997, the Company acquired 100% of the capital stock of SCM Consultants, Inc. ("SCM"), a consulting and engineering firm, providing design of irrigation, water and wastewater systems, as well as facility and infrastructure engineering services, to State and local government, private and industrial customers. The acquisition was accounted for as a purchase. The purchase was valued at approximately $2,211,000, consisting of cash and Company common stock, as adjusted based upon SCM's Net Asset Value on March 30, 1997 as described in the related purchase agreement. On December 18, 1996, the Company acquired 100% of the capital stock of FLO Engineering, Inc. ("FLO"), a consulting and engineering firm specializing in water resource engineering involving hydraulic engineering and hydrographic data collection. The acquisition was accounted for as a purchase. The purchase was valued at approximately $668,000, consisting of cash and Company common stock, as adjusted based upon FLO's Net Asset Value on December 29, 1996 as described in the related purchase agreement. On December 11, 1996, the Company acquired 100% of the capital stock of IWA Engineers ("IWA"), an architecture and engineering firm providing a wide range of planning, engineering, and design capabilities in water, wastewater, and facility design, and serving State and local government and private customers. The acquisition was accounted for as a purchase. The purchase was valued at approximately $1,436,000, consisting of cash and Company common stock, as adjusted based upon IWA's Net Asset Value on December 29, 1996 as described in the related purchase agreement. On November 7, 1995, the Company acquired 100% of the capital stock of KCM, Inc. ("KCM"), an engineering services firm specializing in areas of water quality, water and wastewater systems, surface water management, fisheries and facilities. The acquisition was accounted for as a purchase. The purchase was valued at approximately $13,373,000 consisting of cash and Company common stock issued in a private placement. The Company's stock was valued based upon the extended restriction period and economic factors specific to the Company's circumstances which resulted in a fair valuation approximately 26% below the then prevailing market price. The results of operations from each of the acquired entities have been included in the Company's condensed consolidated financial statements from the effective dates of the acquisitions. The purchase price of the acquisitions in excess of the fair value of the net assets acquired is being amortized over a period of 30 years and is included under the caption "INTANGIBLE ASSETS - NET" in the accompanying condensed consolidated balance sheets. The final determination of such excess amount is subject to a final determination of the value of the consideration paid and the net assets acquired. The effect of unaudited pro forma operating results of the SCM, FLO and IWA transactions, had they been acquired on October 2, 1995, is not material. The effect of unaudited pro forma operating results assuming that the Company had acquired KCM and WAC on October 2, 1995 is presented in Note 6. PRO FORMA OPERATING RESULTS. 4. ACCOUNTS RECEIVABLE The Accounts Receivable valuation allowance includes amounts to provide for doubtful accounts and for the potential disallowance of billed and unbilled costs. The allowance for doubtful accounts as of June 29, 1997 and September 29, 1996 was $1,178,000 and $1,062,000, respectively. The allowance for disallowed costs as of June 29, 1997 and September 29, 1996 was $9,943,000 and $10,039,000, respectively. Disallowance of billed and unbilled costs is primarily associated with contracts with the U.S. government which contain clauses that subject contractors to several levels of audit. Management believes that resolution of these matters will not have a material adverse impact on the Company's financial position or results of operations. 5. REDEEMABLE PREFERRED STOCK On June 11, 1997, the Company issued Series A convertible preferred stock in conjunction with the WAC acquisition ("Series A Stock"). The Series A Stock carries dividend and voting rights substantially identical to those of common stock and will be converted to common stock on a share for share basis immediately upon the filing of an amendment to the Company's Certificate of Incorporation. The amendment will increase the number of authorized shares of common stock to a number sufficient to permit the conversion of all Series A Stock. If an amendment to the Company's Certificate of Incorporation is not executed by December 10, 1997, the holders of the Series A Stock may put the Series A Stock to the Company for cash at the average closing price of the Company's common stock on the five days ending one day prior to the exercise of the put. The Series A Stock is presented at its fair value of $15,028,000 as of June 29, 1997. Had the Series A Stock been put to the Company for cash at June 29, 1997, the cash obligation would have been $27,408,000. The Company is currently taking all necessary steps to convert the Series A Stock to common stock prior to December 10, 1997. 6. SUBSEQUENT EVENT On July 11, 1997, the Company acquired 100% of the capital stock of CommSite Development Corporation ("CDC"), a wireless telecommunications site development service firm. The purchase price of $5,700,000 consisted of Company common stock and is subject to a purchase price adjustment as described in the related purchase agreement. The acquisition will be accounted for as a purchase. The effect of unaudited pro forma operating results, had CDC been acquired on October 2, 1995, is presented in Note 6. Pro Forma Operating Results. 7. PRO FORMA OPERATING RESULTS The following table presents summarized unaudited pro forma operating results assuming that the Company had acquired KCM, WAC and CDC (the historical information for WAC and CDC is unaudited) on October 2, 1995: Pro Forma Nine Months Ended ---------------------------- June 29, 1997 June 30, 1996 --------------- ------------- ($ in thousands, except per share data) Gross revenue $219,040 $203,155 Income from operations 27,411 21,434 Net income 15,780 12,244 Net income per share 0.87 0.69 Weighted average shares outstanding 18,038 17,696 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Dated: September 18, 1997 TETRA TECH, INC. By: /s/ James M. Jaska -------------------------- James M. Jaska Vice President and Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----