EX-99.1 4 a05-20477_1ex99d1.htm EXHIBIT 99

Exhibit 99.1

 

Tetra Tech Reports Fourth Quarter Results

 

Pasadena, California.  Tetra Tech, Inc. (NASDAQ: TTEK) today announced results for the fourth quarter ended October 2, 2005.  In the quarter, diluted earnings per share was $0.16.  In the fourth quarter, the Company accounted for the divesture of three non-core business units.  The effect of these divestitures is shown as discontinued operations.  In the fourth quarter, diluted earnings per share from continuing operations was $0.22.  Revenue from continuing operations was $351.2 million, and revenue, net of subcontractor costs was $230.4 million in the quarter.  Cash generated from operations was approximately $30 million in the fourth quarter.

 

Fourth Quarter Results

 

Revenue for the fourth quarter was $351.2 million, down 7.4% from $379.3 million for the same quarter last year, primarily due to the exit from wireless communications and reductions in non-core business during fiscal 2005.  Revenue, net of subcontractor costs, for the quarter was $230.4 million, down 10.3% from $257.0 million for the same quarter last year.  Income from operations for the fourth quarter was $18.2 million compared to a loss of $11.7 million for the same period last year.  Loss from discontinued operations, net of tax, was $3.4 million versus $2.4 million for the same period last year.  Net income for the fourth quarter was $9.1 million compared to a net loss of $11.3 million for the same period last year.  Diluted earnings per share from continuing operations was $0.22 compared to a loss of $0.16 for the same period last year.  Diluted loss per share from discontinued operations was $0.06 versus $0.04 last year.  Overall, diluted earnings per share was $0.16 compared to a loss of $0.20 last year.  Of the three discontinued operations, one divestiture was completed during the fourth quarter, and the others are expected to be completed in the first half of fiscal 2006.

 

Twelve-Month Results

 

Revenue for the fiscal year ended October 2, 2005 was $1.3 billion, down 6.5% from $1.4 billion for the same period last year, primarily due to the exit from wireless communications and reductions in non-core business during fiscal 2005.  Revenue, net of subcontractor costs, for fiscal 2005 was $899.2 million, a decrease of 7.8%, from $975.2 million for fiscal 2004.  Including the non-cash impairment charge of $105.6 million, loss from operations for fiscal 2005 was $113.7 million compared to income of $49.6 million for the same period last year.  Loss from discontinued operations, net of tax, was $0.8 million versus income of $0.3 million for the same period last year.  Net loss for fiscal 2005 was $99.5 million compared to net income of $23.7 million for the same period last year.  Diluted loss per share from continuing operations was $1.74 compared to earnings of $0.41 per share for fiscal 2004.  Diluted loss per share from discontinued operations was $0.01 versus $0.0 last year.  Overall, diluted loss per share was $1.75 versus net diluted earnings per share of $0.41 last year.

 


 

In thousands, except EPS (preliminary)

 

 

 

Three Months Ended

 

Twelve Months Ended

 

 

 

Oct. 2, 2005

 

Oct. 3, 2004

 

Oct. 2, 2005*

 

Oct. 3, 2004

 

Revenue

 

$

351,184

 

$

379,252

 

$

1,286,031

 

$

1,376,159

 

 

 

 

 

 

 

 

 

 

 

Revenue, Net of Subcontractor Costs

 

230,424

 

257,004

 

899,179

 

975,209

 

 

 

 

 

 

 

 

 

 

 

Income/(Loss) from Operations

 

18,246

 

(11,707

)

(113,667

)

49,647

 

 

 

 

 

 

 

 

 

 

 

Income/(Loss) from Continuing Operations

 

12,469

 

(8,879

)

(98,678

)

23,469

 

 

 

 

 

 

 

 

 

 

 

Income/(Loss) from Discontinued Operations, Net of Tax

 

(3,413

)

(2,382

)

(791

)

272

 

 

 

 

 

 

 

 

 

 

 

Net Income/(Loss)

 

9,056

 

(11,260

)

(99,469

)

23,742

 

 

 

 

 

 

 

 

 

 

 

Basic Earnings (Loss) Per Share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (Loss) from Continuing Operations

 

$

0.22

 

$

(0.16

)

$

(1.74

)

$

0.42

 

 

 

 

 

 

 

 

 

 

 

Income (Loss) from Discontinued Operations

 

(0.06

)

(0.04

)

(0.01

)

—

 

 

 

 

 

 

 

 

 

 

 

Net Income (Loss)

 

$

0.16

 

$

(0.20

)

$

(1.75

)

$

0.42

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings (Loss) Per Share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (Loss) from Continuing Operations

 

$

0.22

 

$

(0.16

)

$

(1.74

)

$

0.41

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from Discontinued Operations

 

(0.06

)

(0.04

)

(0.01

)

—

 

 

 

 

 

 

 

 

 

 

 

Net Income (Loss)

 

$

0.16

 

$

(0.20

)

$

(1.75

)

$

0.41

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Common Shares Outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

57,026

 

56,382

 

56,736

 

55,969

 

Diluted

 

57,546

 

56,382

 

56,736

 

57,288

 

 

*           Results include a non-cash impairment charge in the second quarter of fiscal 2005 of $105.6 million for goodwill and other identifiable intangible assets.

 

Business Outlook

 

The following projections are based on current expectations.  These projections are forward-looking and the actual results could differ materially.  These projections do not include the potential impact of acquisitions or other similar transactions that may be completed after the date of this release.  As previously disclosed, the Company continues to exit from its non-core

 

2


 

construction-related business and is continuing its investigation of certain possible irregular activities at one of its operating units.  Although absolute assurance cannot be given at this time, the Company does not believe that the completion of this investigation will require material changes to its financial statements.  The Business Outlook section should be read in conjunction with the information on forward-looking statements at the end of this release.

 

The divestiture of non-core business will reduce fiscal 2006 revenue, net of subcontractor costs, by approximately 15%.  Tetra Tech expects diluted earnings per share for the first quarter of fiscal 2006 to be in the range of $0.14 to $0.16 before the effect of FASB 123R.  Revenue, net of subcontractor costs, for the first quarter is expected to range from $215 million to $225 million.  For fiscal 2006, Tetra Tech expects diluted earnings per share to be in the range of $0.68 to $0.75 before the effect of FASB 123R.  Revenue, net of subcontractor costs, for fiscal 2006 is expected to range from $850 million to $950 million.

 

The Company continues to examine the effect of FASB 123R, which is expected to be approximately $0.09 to $0.10 diluted earnings per share during fiscal 2006.

 

Webcast

 

Investors will have the opportunity to access a live audio-visual webcast and supplemental financial information concerning the third quarter results through a link posted on the Company’s web site at www.tetratech.com on November 17, 2005 at 8:00 a.m. (PDT).

 

About Tetra Tech (www.tetratech.com)

 

Tetra Tech is a leading provider of consulting, engineering and technical services.  With over 7,000 associates located in the United States and internationally, the Company supports commercial and government clients in the areas of resource management and infrastructure.  Tetra Tech’s services include research and development, applied science and technology, engineering design, program management, construction management, and operations and maintenance.

 

CONTACT: Mike Bieber at (626) 351-4664

 

Forward-Looking Statements

 

This news release contains forward-looking statements that are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  These forward-looking statements include information concerning future events and the future financial performance of Tetra Tech that involve risks and uncertainties.  Readers are cautioned that these forward-looking statements are only predictions and may differ materially from actual future events or results.  Readers are urged to read the documents filed by Tetra Tech with the SEC, specifically the most recent reports on Form 10-K, 10-Q and 8-K, each as it may be amended from time to time, which identify risk factors that could cause actual results to differ materially from the forward-looking statements.  Among the important factors or risks that could cause actual results or events to differ materially from those in the forward-looking statements in this release are: fluctuations in quarterly operating results; the impact of downturns in the financial markets and reductions in government budgets; volatility of common stock value; concentration of revenues from government agencies and funding disruptions by these agencies; failure to properly manage projects; acquisition strategy risks; management of growth strategy; use of the percentage-of-completion method of accounting; adverse resolution of an IRS examination; loss of key

 

3


 

personnel or the inability to attract and retain qualified personnel; implementation of the enterprise resource planning system; international operations risks; credit risks associated with commercial clients; violations of government contractor regulations; competitive bidding for government contracts; the affect of a negative government audit; the inability to accurately estimate contract risks, revenue and costs; backlog cancellation and adjustments; client base consolidation; failure of partners to perform on joint projects; inability to find qualified subcontractors; changes in existing environmental laws, regulations or programs; competition; restrictive covenants in debt agreements; risks of professional and other liabilities; adverse resolution of litigation; conflict of interest issues; changes in accounting for equity-related compensation; expenses associated with corporate governance; and disruption of operations due to computer viruses or terrorism.  Any projections in this release are based on limited information currently available to Tetra Tech, which is subject to change.  Although any such projections and the factors influencing them will likely change, Tetra Tech will not necessarily update the information, since Tetra Tech will only provide guidance at certain points during the year.  Readers should not place undue reliance on forward-looking statements since such information speaks only as of the date of this release.

 

4


 

TETRA TECH, INC.

Condensed Consolidated Statements of Operations

(Unaudited - in thousands, except per share data)

 

 

 

Three Months Ended

 

Twelve Months Ended

 

 

 

October 2, 2005

 

October 3, 2004

 

%
Change

 

October 2, 2005

 

October 3, 2004

 

%
Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

351,184

 

$

379,252

 

-7.4

 

$

1,286,031

 

$

1,376,159

 

-6.5

 

Subcontractor costs

 

120,760

 

122,248

 

-1.2

 

386,852

 

400,950

 

-3.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue, net of subcontractor costs

 

230,424

 

257,004

 

-10.3

 

899,179

 

975,209

 

-7.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other contract costs

 

183,919

 

238,187

 

-22.8

 

791,788

 

823,950

 

-3.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

46,505

 

18,817

 

147.1

 

107,391

 

151,259

 

-29.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

28,259

 

30,524

 

-7.4

 

115,446

 

101,612

 

13.6

 

Impairment of goodwill and other intangible assets

 

—

 

—

 

—

 

105,612

 

—

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

18,246

 

(11,707

)

255.9

 

(113,667

)

49,647

 

-329.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense - net

 

2,338

 

2,691

 

-13.1

 

11,163

 

9,675

 

15.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations before income tax expense

 

15,908

 

(14,398

)

210.5

 

(124,830

)

39,972

 

-412.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense (benefit)

 

3,439

 

(5,519

)

162.3

 

(26,152

)

16,503

 

-258.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations

 

12,469

 

(8,879

)

240.4

 

(98,678

)

23,469

 

-520.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from discontinued operations, net of tax (1)

 

(3,413

)

(2,381

)

43.3

 

(791

)

273

 

-389.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

9,056

 

$

(11,260

)

180.4

 

$

(99,469

)

$

23,742

 

-519.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations

 

$

0.22

 

$

(0.16

)

237.5

 

$

(1.74

)

$

0.42

 

(514.3

)

Income (loss) from discontinued operations, net of tax

 

(0.06

)

(0.04

)

41.7

 

(0.01

)

0.00

 

(385.8

)

Net income (loss)

 

$

0.16

 

$

(0.20

)

180.0

 

$

(1.75

)

$

0.42

 

(516.7

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations

 

$

0.22

 

$

(0.16

)

237.5

 

$

(1.74

)

$

0.41

 

(524.4

)

Income (loss) from discontinued operations, net of tax

 

(0.06

)

(0.04

)

40.4

 

(0.01

)

0.00

 

(392.6

)

Net income (loss)

 

$

0.16

 

$

(0.20

)

180.0

 

$

(1.75

)

$

0.41

 

(526.8

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

57,026

 

56,382

 

1.1

 

56,736

 

55,969

 

1.4

 

Diluted

 

57,546

 

56,382

 

2.1

 

56,736

 

57,288

 

-1.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Percentage of revenue, net of subcontractor costs:

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue, net of subcontractor costs

 

100.0

%

100.0

%

 

 

100.0

%

100.0

%

 

 

Other contract costs

 

79.8

%

92.7

%

 

 

88.1

%

84.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

20.2

%

7.3

%

 

 

11.9

%

15.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

12.3

%

11.9

%

 

 

12.8

%

10.4

%

 

 

Impairment of goodwill and other intangible assets

 

0.0

%

0.0

%

 

 

11.7

%

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

7.9

%

-4.6

%

 

 

-12.6

%

5.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense - net

 

1.0

%

1.0

%

 

 

1.2

%

1.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations before income tax expense

 

6.9

%

-5.6

%

 

 

-13.8

%

4.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense (benefit)

 

1.5

%

-2.1

%

 

 

-2.9

%

1.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations

 

5.4

%

-3.5

%

 

 

-10.9

%

2.4

%

 

 

 

(1) Net of tax of $2.2 million and tax of $0.5 million for the three months and twelve months ended October 2, 2005.  Net of tax benefit of $1.1 million and tax expense of $0.2 million for the three months and twelve months ended October 3, 2004.  Fiscal 2005 includes $0.9 million pre-tax or $2.4 million after-tax for the gain on disposal of discontinued operations for the three and twelve month periods.

 


 

TETRA TECH, INC.

Condensed Consolidated Balance Sheets

(in thousands, except par value)

 

 

 

October 2,
2005

 

October 3,
2004

 

Assets

 

 

 

 

 

Current Assets:

 

 

 

 

 

Cash and cash equivalents

 

$

26,174

 

$

43,212

 

Accounts receivable - net

 

315,364

 

357,181

 

Prepaid expenses and other current assets

 

21,139

 

22,134

 

Income tax receivable

 

14,141

 

6,774

 

Current assets of discontinued operations

 

14,037

 

23,367

 

Total current assets

 

390,855

 

452,668

 

 

 

 

 

 

 

Property and equipment:

 

 

 

 

 

Equipment, furniture, and fixtures

 

73,260

 

79,900

 

Leasehold improvements

 

9,021

 

9,266

 

Total

 

82,281

 

89,166

 

 

 

 

 

 

 

Accumulated depreciation and amortization

 

(50,498

)

(51,374

)

Property and equipment - net

 

31,783

 

37,792

 

 

 

 

 

 

 

Deferred income taxes

 

7,431

 

—

 

Income tax receivable

 

33,800

 

33,800

 

Goodwill

 

159,175

 

254,553

 

Intangible and other assets - net

 

18,832

 

25,400

 

Noncurrent assets of discontinued operations

 

6,167

 

4,295

 

 

 

 

 

 

 

Total assets

 

$

648,043

 

$

808,508

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts Payable

 

$

91,750

 

$

103,511

 

Accrued compensation

 

51,306

 

54,812

 

Billing in excess of costs

 

48,611

 

28,941

 

Deferred income taxes

 

5,125

 

4,891

 

Current portion of long-term obligations

 

17,800

 

58,868

 

Other current liabilites

 

47,391

 

47,436

 

Current liabilities of discontinued operations

 

7,260

 

9,381

 

Total current liabilities

 

269,243

 

307,840

 

 

 

 

 

 

 

Deferred income taxes

 

—

 

10,823

 

Long-term obligations

 

74,138

 

92,062

 

Noncurrent liabilities of discontinued operations

 

47

 

283

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ Equity:

 

 

 

 

 

Preferred stock - authorized, 2,000 shares of $0.01 par value; no shares issued and outstanding as of October 2, 2005 and October 3, 2004

 

—

 

—

 

Exchangeable Stock of subsidiary

 

—

 

1,426

 

Common stock - authorized, 85,000 shares of $0.01 par value; issued and outstanding 57,048 and 56,305 shares as of October 2, 2005 and October 3, 2004, respectively

 

570

 

563

 

Additional Paid in Capital

 

251,112

 

243,490

 

Accumulated other comprehensive income

 

757

 

375

 

Retained earnings

 

52,176

 

151,646

 

 

 

 

 

 

 

Total stockholders’ equity

 

304,615

 

397,500

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

648,043

 

$

808,508