Back to GetFilings.com
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------
FORM 10-K
(MARK ONE)
[X] Annual report pursuant to section 13 or 15(d) of the Securities Exchange
Act of 1934 for the fiscal year ended September 29, 1996.
[_] 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 incorporation or organization) (I.R.S. Employer Identification No.)
670 N. Rosemead Blvd.
Pasadena, California 91107
(Address of registrant's principal executive offices) (Zip Code)
(Registrant's telephone number, including area code:) (818) 351-4664
Securities registered pursuant to Section 12(b) of the Act: (Name of each exchange on which registered)
(Title of each class)
None None
Securities registered pursuant to Section 12(g) of the Act:
(Title of Class)
Common Stock, $.01 par value
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 [x] No [_]
The aggregate market value of the voting stock held by non-affiliates of the
registrant on December 2, 1996 was $237,721,388.
The number of shares of Common Stock, $.01 par value, outstanding (the only
class of common stock of the registrant outstanding) was 14,141,365 on December
2, 1996.
Portions of registrant's Annual Report to Stockholders for the fiscal year ended
September 29, 1996 are incorporated by reference in Part II of this report.
Portions of registrant's Proxy Statement for its 1997 Annual Meeting of
Stockholders are incorporated by reference in Part III of this report.
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K 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. [_]
PART I
ITEM 1. BUSINESS.
This Annual Report on Form 10-K contains forward-looking statements within
the meaning of Section 27A of The Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. These statements are in the fourth paragraph
under "Overview," in the first paragraph under "Marketing," in the sole
paragraph under "Backlog," in the last paragraph under "Environmental
Legislation," in the last paragraph under "Potential Liability and Insurance,"
in the last paragraph under "Properties," and in the sole paragraph under "Legal
Proceedings." Actual results could differ materially from those projected in the
forward-looking statements as a result of the risk factors set forth below under
"Risk Factors."
INTRODUCTION
Tetra Tech, Inc. ("Tetra Tech" or the "Company") provides nationally
recognized comprehensive environmental engineering and consulting services
addressing complex water contamination and other environmental problems. These
services are directed to a broad base of public and private sector clients and
include substantially all types of engineering and consulting services in the
environmental area, such as water chemistry, geohydrology, soil science, water
and wastewater treatment, hydrodynamics, geology, air quality and civil
engineering.
The Company was incorporated in Delaware in February 1988 to acquire the
assets of the Water Management Group of Tetra Tech, Inc. (the "Predecessor"), a
subsidiary of Honeywell Inc. ("Honeywell"), in a management buy-out in March
1988. The Predecessor was founded in 1966 as a coastal and marine engineering
business. Honeywell acquired the Predecessor in 1982, by which time the
Predecessor had developed an integrated water and environmental science and
engineering business. In November 1988, the Company acquired GeoTrans, Inc., a
groundwater service firm, and in March 1990, the Company acquired M.H. Loe
Company ("Loe"), an underground storage tank removal and remediation company. In
October 1991, Loe was merged into the Company. As of October 1993, the Company
acquired Simons, Li & Associates, Inc., a firm engaged primarily in advanced
water resources and environmental engineering, and in June 1994, the Company
acquired Hydro-Search, Inc., a groundwater hydrology and remediation firm. In
September 1995, the Company acquired PRC Environmental Management, Inc., an
environmental engineering and consulting firm which provides services ranging
from policy analysis to innovative remedial technology evaluation, including
feasibility studies, remedial investigations and design, economic and financial
analyses, environmental audits, risk management services, and regulatory
compliance assistance. In November 1995, Tetra Tech acquired KCM, Inc., an
engineering firm specializing in the areas of water quality, water and
wastewater systems, surface water management, fisheries and facilities. Since
1966, the Company's business has expanded through the establishment of an
international network of over 70 offices, allowing the development of technical
and marketing expertise in a variety of geographic areas.
OVERVIEW
Tetra Tech works in partnership with government and industry to balance the
need for economic growth with sustainable development of natural resources. The
Company responds to its partnerships by recognizing the uniqueness of each
client; by recognizing the requirements and needs of the client; setting
priorities and ensuring proper allocation and control of resources applied to a
problem; as well as monitoring results. The Company's goal is to help the client
build environmental performance into each aspect of their organizational
activities to enhance both environmental and fiscal performance. Tetra Tech
achieves this goal by assisting clients to be more effective in pollution
prevention, better manage the spectrum of environmental compliance, and apply
innovative and cost-effective solutions to remediation or corrective action to
problems impacting our environment.
Tetra Tech has a commitment to people and results, technical excellence and
teamwork and cost-effective solutions for its clients' technical problems. The
challenges of today's environmental issues requires an integrated multi-
disciplinary approach to assist clients in making informed decisions and to
implement them in the most cost-effective way. These challenges are driven by:
1
. Complex and continuously evolving environmental regulations and the
need for a more strategic approach to meet national and international
environmental challenges in a way that allows the government and
industry to be cost-effective and competitive in the markets they
serve.
. Increased emphasis on pollution prevention and waste minimization as
a necessary part of a long-term solution to sound natural resource
management.
. Competition for limited resources and the need for new and more
effective technology to achieve pollution prevention, resource
management and remediation goals more cost-effectively.
Public concern with water resources and other environmental issues has been
a driving force behind the promulgation of numerous laws and regulations which
seek to control or prevent environmental degradation and mandate restorative
measures. According to the United States Environmental Protection Agency
("EPA"), contamination of groundwater and surface water resulting from
industrial, agricultural and residential development is one of the most serious
environmental problems facing the United States. Because of the interrelated
nature of groundwater, surface water and rainwater in the water cycle,
contamination of one source of water affects the quality of other sources.
Surface water can be affected by direct contamination or runoff from cities or
agricultural areas. In addition, soil contamination from hazardous materials
often leads to water contamination through surface runoff and infiltration.
Similarly, air pollution and the resulting acid rain and other forms of
deposition can contribute to the contamination of water resources over a wide
geographic area. This contamination can threaten the quality of the water
supplies that serve as drinking water sources and detrimentally affect aquatic
life and the quality of lakes, rivers, estuaries, harbors and oceans.
The economic and environmental consequences from continuously evolving
regulations present new opportunities for the Company to assist public and
private sector clients in achieving compliance. Past enforcement efforts under
the Clean Water Act ("CWA") have focused on regulating sources of pollution
which originate from a discrete point, such as industrial facilities and
municipal treatment plants. Much of the Company's water-related environmental
business has been derived from this market. However, the EPA estimates that
nonpoint sources, such as stormwater runoff from urban streets, runoff from
farmland and construction sites, atmospheric deposition, drainage and combined
sewer overflow, currently account for more than 50% of the pollution entering
the nation's waters. As a result, the EPA is currently developing programs and
allocating funding to address the complex problem of nonpoint source pollution
within the context of holistic watershed management. Under National Pollutant
Discharge Elimination System ("NPDES") regulations promulgated in November 1990,
for example, the EPA will require municipalities and industries to apply for
nonpoint discharge permits. The Company's ongoing technical support of the
EPA's water programs has led to early involvement in the development and
implementation of this emerging nonpoint source program. However, no assurance
can be given that the Company will continue to participate in this program.
In addition to the CWA, other laws, such as the Resource Conservation and
Recovery Act of 1976 ("RCRA"), the Comprehensive Environmental Response,
Compensation and Liability Act ("Superfund") and the Safe Drinking Water Act
("SDWA"), require companies and government agencies to make considerable
environmental expenditures. Major environmental expenditures are also planned
by the United States government, including expenditures by the United States
Department of Defense ("DOD") and the United States Department of Energy ("DOE")
to clean up defense and nuclear weapons production and test facilities that have
become contaminated over the past four decades.
COMPANY SERVICES
The Company's services generally fall within six business areas: surface
water, groundwater, waste management, nuclear environmental, resource management
and facilities management. The Company provides its clients with a wide range of
services including research and development, environmental assessment and
engineering, design and construction management, and facility operation and
maintenance. These services are offered individually or together as part of the
Company's full service approach to environmental problems. The Company is
currently performing services under more than 800 active contracts, which range
from small site investigations to large, comprehensive assessment and
remediation projects.
2
SURFACE WATER
Public concern with the quality of surface water resources, defined as
rivers, lakes and streams as well as coastal and marine waters, and the ensuing
legislative and regulatory response, have led to a demand for the Company's
services. Over the past 30 years, the Company and the Predecessor have developed
a specialized set of technical skills which position the Company to compete
effectively for surface water and watershed management projects. The Company
provides water resource services to public clients such as the EPA, DOD and DOE
and to a broad base of private clients including those in the chemical,
pharmaceutical, utility, aerospace and petroleum industries. The Company also
provides surface water services to state and local agencies, particularly in the
areas of watershed management, flood control and drainage designs. The Company's
services in the management of surface water quantity and quality include
research and development for new generations of computer models that can predict
and compare the response of water quality parameters under various watershed
management practices; design of monitoring programs; consulting services,
particularly in regulatory compliance, permitting and nonpoint source
management; and engineering design of integrated best management practices
(e.g., stormwater detention ponds and artificial wetlands), stream, lake and
wetland restoration and enhancement measures, and flood conveyance and control
structures.
Traditional "command and control" solutions used since the 1970s by the
federal government to bring industrial and municipal wastewater treatment plant
discharges into compliance have been successful in reducing impacts to U.S.
surface waters. However, a significant percentage of waters remain polluted due
primarily to diffuse "nonpoint source" pollution generated by man's activities
on the rural and urban landscape. Under a reauthorized Clean Water Act expected
within the next one to two years, EPA has set as a high priority working with
states and local governments to implement more effective nonpoint source and
watershed management programs to address this problem.
The Company has also worked closely with the U.S. Army Corps of Engineers
(ACE) to develop and implement nationwide non-traditional approaches to flood
control policy, planning, and design. As a consultant to ACE, the Company has
implemented flood control practices using natural, non-structural features. In
addition to ensuring human health, safety, and welfare protection, this new
approach results in a decreased federal investment, higher benefit-to-cost
ratios, the creation of recreational opportunities, and the enhancement and
effective long-term management of endangered urban watersheds.
The Company has worked closely with the EPA since the passage of the CWA in
1977 in researching and evaluating surface water environmental systems. Under
contracts with the EPA, the Company has assisted in the development of national
guidelines on surface water monitoring strategies, nonpoint source pollution
control practices, pollution trading and other economic incentive-based control
strategies, and public education methods for use by states and local agencies in
their ongoing surface water and watershed management programs. Through its work
for the EPA, the Company has developed expertise in complex modeling, Geographic
Information Systems (GIS), remote sensing, surface water monitoring, data
analyses, publication of national guidance documents and environmental impact
assessments for surface water projects. The development of this knowledge base
has strategically positioned Tetra Tech as an authority on regulations affecting
discharges to surface water and best management practices.
Examples of past and current projects in the surface water field include
the following:
. Stormwater Runoff. The Company recommended methods to manage
stormwater runoff and other point and nonpoint sources of pollution
for a variety of clients including Guilford County, North Carolina;
Baltimore and Prince Georges Counties, Maryland; Suffolk County, New
York; Prince William County, Virginia; and the City of Tucson,
Arizona. For Prince Georges County, Tetra Tech developed several new
investigative technologies to assess and manage stormwater pollution
under the NPDES program. Predictive models and statistical algorithms
integrated with GIS help prioritize water quality efforts. Models are
also being developed to assess water quality benefits derived from
wetland systems and other best management practices. The Company is
assisting the California Department of Transportation to establish a
statewide stormwater quality monitoring program to meet state and
federal regulations.
3
. Water Supply Protection. Tetra Tech is assisting several local
agencies in watershed restoration and pollution source assessments in
areas where surface water supplies are susceptible to land activities
(e.g., urbanization, agriculture). These include, for example, the
assessment of pathogen sources and fate in the Occoquan Watershed,
Virginia, and the development of stream channel restoration methods in
several watersheds within New York City's water supply system.
. Watershed Assessment Tool Development. Under contracts with the EPA
and Prince Georges County, Maryland, Tetra Tech has developed a number
of watershed assessment tools that provide integration of watershed
and receiving water models, databases, monitoring and design data, and
watershed attribute information within a GIS platform (PC-Windows and
UNIX workstations). These tools range from "BASINS," which was
developed for EPA to be used by states to perform local and regional
scale watershed assessments, to "SAM," which was developed for Prince
Georges County for detailed assessment and optimization of best
management practices.
. Coastal Nonpoint Pollution. As the prime contractor to the EPA's
Assessment and Watershed Protection Division, Tetra Tech is assisting
in the development of implementation strategies and technical guidance
for nonpoint source pollution control within the coastal zone under
the Coastal Nonpoint Pollution Control Program. The Company is also
assisting the EPA in developing guidance for the assessment of
stormwater discharges and combined sewer overflows as required under
NPDES regulations. The Company is also assisting the government of
the Philippines in addressing problems related to the management of
the country's vital coastal resources. Under this contract, the
Company provides scientific and engineering services and policy
support for the development and implementation of effective community-
based coastal resources and watershed management.
. Municipal Flood Control Design. The Company has provided design
services for numerous flood control projects in western states. The
Company provided design and construction engineering services for the
Talbert Channel ocean outlet, a major component of the U.S. Army Corps
of Engineers' Santa Ana River flood control project. This project is
the largest of its kind west of the Mississippi River. For the city
of Federal Way, Washington, the Company performed the feasibility
assessment, predesign and final design for a regional stormwater
detention basin to address existing and predicted future flooding on a
rapidly urbanizing portion of Hylebos Creek. The results of the
analysis identified flood frequency levels, identified unstable
downstream channel reaches, and predicted typical water quality
expected for the site. The subsequent design required balancing
various environmental (wetlands, fisheries, water quality) and
physical (property availability, geologic) constraints.
. Flood Control Planning. The Company is currently providing flood
control related planning services to the U.S. Army Corps of Engineers'
Los Angeles District. Individual projects include flood
investigations of 72 sites in Arizona; an analysis of flooding effects
to 300 in-stream structures in California, Arizona, Nevada, and Utah;
a reconnaissance study for habitat restoration along the Gila River in
Arizona; and development of multiple-use flood mitigation alternatives
for 35 miles of the Salt River through the metropolitan Phoenix area.
. Power Plant Discharges. Under a contract with the Electric Power
Research Institute, the Company developed RIVRISK, a multi-purpose
mathematical model used to assess potential human health risks from
power plant discharges into rivers. The model is designed to help
utilities evaluate options, design new or restored wetlands, and
obtain permits for activities involving existing and constructed
wetlands such as power corridors, road construction and habitat
improvement.
. Water Quality Survey of Lower Columbia River. Tetra Tech conducted
a three-year investigation of the overall status and health of the
Columbia River from the mouth of the river to the first dam at
Bonneville, Oregon. The project included identification of point and
nonpoint sources of contamination; development of modeling approaches
for estimating contaminant transport and fate;
4
human health risk assessment of consumption of fish; identification of
beneficial river uses and their susceptibility to changes in water
quality; water, sediment and biological field investigations; and
preparation of a comprehensive initial assessment of water quality in
the lower Columbia River.
GROUNDWATER SERVICES
According to the EPA, groundwater contamination is one of the most severe
environmental problems currently confronting the United States. Groundwater is
located in the saturated zone beneath the land surface, is the source of
drinking water for approximately 50% of the population and accounts for
approximately 25% of all water consumed for residential, industrial and
agricultural purposes. Tetra Tech's activities in the groundwater field are
diverse and typically include such projects as the investigation and
identification of sources of chemical contamination in groundwater; the
examination of the extent of contamination; the analysis of the speed and
direction of contamination migration; and the design and evaluation of remedial
alternatives. In addition, the Company conducts monitoring studies to assess
the effectiveness of groundwater treatment and extraction wells. Tetra Tech's
professionals have the ability to analyze complex groundwater data using
sophisticated computer models.
Examples of past and current projects in the groundwater field include the
following:
. Groundwater Studies and Regulatory Negotiation at a Superfund Site.
At the Pagel's Pit CERCLA site in Illinois, the Company has
demonstrated the effectiveness of a sparge curtain remedy that will
save the client an estimated $8 million compared to the remedy
originally specified. To support this documentation, Tetra Tech
conducted a study of groundwater impacts and remedial alternatives,
prepared an Explanation of Significant Difference and presented the
recommended remedy to the regulatory agency, which has conceptually
approved the preliminary design. The sparge curtain will include
approximately 31 wells to remove TCE contamination in groundwater at
the facility.
. Groundwater Cleanup at Former Municipal Solid Waste Landfill in New
Hampshire. The Company has provided technical analysis to the
landfill Trust in support of regulatory negotiations regarding remedy
selection and development of a Scope of Work for Remedial Design and
Remedial Action (RD/RA). The management of migration remedy includes
groundwater extraction from the bedrock. In addition, Tetra Tech has
assisted with the identification and evaluation of adjacent
contributors to contamination at the site. The Company is also
evaluating the use of an innovative chemical reactive wall to be
installed downgradient of the landfill.
. Aerospace Site. Tetra Tech performed a remedial investigation of
possible subsurface contamination at five manufacturing plants of a
large aerospace company. Over 400 soil borings, 15,000 feet of
drilling and over 3,500 samples were collected and analyzed in 5
months. An innovative database was developed for analysis and
presentation of data to the client and governmental regulators. Tetra
Tech also designed and installed a Phase I remedial well field to
extract 6,000 gallons-per-minute ("gpm") of contaminated groundwater.
Subsequent phases will culminate in a 12,000 gpm treatment plant.
. Utilities Cleanup. The Company is supporting activities ranging
from initial site investigations through cleanup and demolition at
approximately 50 former manufactured gas plant sites across the United
States, including work in Oregon, Washington, California, Iowa,
Wisconsin, New York, New Jersey, West Virginia, and Washington, DC.
Of primary concern at most of these sites are dense non-aqueous phase
liquids (DNAPL). The Company is the author of the standard reference
text, DNAPL Site Characterization, and has taught seminars for the EPA
in all ten regions focusing on DNAPL investigation, cleanup and
control strategies.
5
WASTE MANAGEMENT
The Company has utilized its experience and technical expertise in water-
related environmental services to expand into complementary environmental
services. For example, Tetra Tech established a hazardous waste capability
in the early 1980s which focused on water and soil contamination problems. Tetra
Tech currently provides a wide range of engineering and consulting services for
hazardous waste projects, from initial site assessment through design and
implementation of remedial solutions. In addition, the Company performs risk
assessments to determine the probability of adverse health effects that may
result from exposure to toxic substances in environmental media. The Company
also provides waste minimization and pollution prevention services, and
evaluates the effectiveness of innovative technologies.
Examples of past and current projects in hazardous waste management
include:
. Technical Analyses and Regulatory Support at Superfund Site in Rhode
Island. The Company is assisting in the implementation of remedial
design/remedial action activities at a site at which liquid bulk
wastes and more than 10,000 drums containing hazardous waste were
disposed in several trenches. Tetra Tech has assisted the PRP Group
in negotiating a revised scope of work that includes sequential pilot
testing of remedy components. This allows the effectiveness of the
proposed remedy to be evaluated prior to full scale implementation.
. Navy Installation Restoration Program. The Company is providing
program management and technical support for the Navy CLEAN program
under a ten-year contract. Activities include installation
restoration, base realignment and closure, and underground storage
tank programs. The Company has conducted numerous treatability
studies of both conventional and innovative treatment technologies to
assist in selecting cleanup strategies for naval installations. The
Company supports the Navy Environmental Leadership Program by
identifying and demonstrating innovative methods for the Navy to
achieve compliance with applicable laws and regulations, accelerate
cleanup, implement pollution prevention techniques, and conserve
natural resources.
. Innovative Technology Evaluation. The Company is the prime
contractor for the nationwide Superfund Innovative Technology
Evaluation (SITE) program, to demonstrate and evaluate the performance
and cost of various processes for treating contaminated soil and
groundwater. Under SITE and similar federal government efforts for
the Department of Defense (DOD) and Department of Energy (DOE), as
well as state and private industry partners, Tetra Tech has tested,
evaluated, and disseminated information on hundreds of new and
emerging treatment technologies and have supported government and
industry efforts to foster the continued development of these and
other new technologies.
. RCRA Support at Industrial Plant. The Company is performing a RCRA
Facility Investigation and streamlined Corrective Measures Study in a
fractured aquifer in Stonewall, Virginia. A phased and risk-based
screening approach was used at the site to delineate 22 source areas,
resulting in the consolidation of 22 areas into five areas of concern.
The Company negotiated a streamlined approach that focuses on passive
remediation and limited source reduction, thus limiting costs at the
site.
. Municipal Solid Waste Landfills. The Company is participating in
remedial action at a landfill in Howard County, Maryland, including
contractor oversight, waste characterization, air monitoring, and
reporting functions at a hazardous waste removal action for more than
500 buried drums. Work included setting up site zones, health and
safety procedures, and standard procedures for drum removal, as well
as comprehensive community relations activities. As part of the same
contract, the Company performed remedial investigation/feasibility
studies ("RI/FS") activities at three municipal solid waste landfills.
. Site Investigation and Remediation Services. The Company is providing
investigation and remediation services to the California Department of
Transportation in connection with hazardous
6
waste sites encountered during freeway construction; and site
investigation, risk assessment and remedial design services for State
superfund sites for the California Department of Toxic Substances
Control.
. Support for Ordnance Remediation. The Company supported a first-of-
its-kind, large-scale demonstration of over 50 state-of-the-art
technologies that detect, identify, and remediate buried unexploded
ordnance (UXO) for the U.S. Army Environmental Center's UXO Advanced
Technology Demonstration Program.
. RI/FS Activities. The Company is engaged in RI/FS activities at 12
sites for a Fortune 50 company.
. Army Depot Cleanup. The Company is providing site investigation and
remedial design services for the Army Corps of Engineers at various
Army Depots in western states.
. Port of Long Beach. Tetra Tech is conducting site investigation and
remediation of petroleum-contaminated soils for the Port of Long
Beach, California.
NUCLEAR ENVIRONMENTAL PROGRAMS
The DOE's nuclear weapons plants and research laboratories have a wide
variety of environmental needs, including groundwater and surface water
contamination, as well as hazardous waste management and environmental
compliance. Tetra Tech's services to the DOE are focused in areas compatible
with the Company's core businesses and include NEPA analysis and documentation,
environmental audits and risk assessments, regulatory compliance support,
groundwater characterization, RI/FS and project management and oversight. The
end of the Cold War and subsequent arms reduction agreements have reduced the
Nation's requirements for nuclear weapons. These changes have resulted in
increased opportunities for Tetra Tech's nuclear environmental services. The
Company's environmental analyses will assist DOE with the storage or disposition
of surplus materials from dismantled nuclear components from weapons no longer
required for the U.S. weapons stockpile.
Examples of DOE projects performed by the Company include the following:
. Environmental Impact Analysis. Programmatic Environmental Impact
Statement ("PEIS") for Reconfiguration of the Nuclear Weapons Complex
involving environmental analysis of planned modernization activities
at 13 sites nationwide. Tetra Tech has received contract
modifications expanding the PEIS contract to over seven times its
original value.
. Nuclear Test Site. The Company is a subcontractor under a multi-
year DOE contract for an RI/FS of radioactive contamination resulting
from activities, including nuclear test explosions, at the DOE's
Nevada Test Site. This contract includes investigation of the
magnitude and extent of groundwater contamination, preparation of
environmental impact statements and corrective action under RCRA.
. Savannah River Site. The Company is a prime contractor to the DOE
Savannah River Site operator in South Carolina. Ongoing programs are
being conducted by Tetra Tech to aid in the assessment of closure and
remedial action options for various waste units at this site. The
Company is also providing multi-disciplinary support for low-level
radioactive and mixed waste management activities including the
assessment of waste characterization, sampling and analysis,
treatment, and disposal alternatives.
. Pantex Plant. The Company is preparing the site-wide Environmental
Impact Statement for the Pantex Plant, Amarillo, Texas.
. Support to Environmental Management Office. The Company is providing
technical support to the Office of Environmental Management at DOE
Headquarters on a wide range of issues. The
7
focus of this program is on applying successful environmental
practices to improve the efficiency and cost-effectiveness of
environmental restoration and waste management activities throughout
the DOE complex.
RESOURCE MANAGEMENT
The Company's resource management services include the full spectrum of
regulatory requirements under RCRA, the CWA, the Clean Air Act, the National
Environmental Policy Act ("NEPA") and other environmental laws. Although
services are provided to both public and private sector clients, the Company's
current emphasis is on providing resource management services to Army, Navy and
Air Force installations. Activities have been conducted at bases which are
closing as well as those which are remaining open.
Examples of Tetra Tech's resource management projects include the
following:
. Philippines Resource Management. The Company is assisting the
government of the Philippines, through the U.S. Agency for
International Development, with managing the country's natural
resources, including the nation's coastal environments. The Company
provides services supporting Philippine environmental and resource
management policies which focus on market-driven incentives that
encourage industry to comply with standards.
. U.S. Air Force. A nationwide contract with the Air Mobility Command
to perform environmental compliance activities at Air Force bases.
. U.S. Navy. Performance of a wide variety of task orders for
environmental assessment of proposed projects for a Southwest Division
Naval Facilities Engineering Command contract covering Naval and
Marine Corps facilities in California, Arizona and New Mexico.
. Edwards Air Force Base. Environmental documentation for Base
Comprehensive Planning at Edwards Air Force Base, California.
Services performed for this project have included the assessment of
air, wastewater and nonpoint source emissions, as well as technical
support for source reduction and spill prevention contingency
planning.
. U.S. Navy. Environmental documentation for base realignment and
closure activities at U.S. Naval bases in the San Francisco Bay area.
. U.S. Army. A nationwide contract with Army Material Command ("AMC")
to support compliance requirements of AMC installations and facility
tenants.
FACILITIES MANAGEMENT
The Company works in partnership with government and some of the world's
leading corporations to develop long-term solutions to their total facility
management and operation needs. Tetra Tech's approach to Operations &
Maintenance (O&M) services is to provide a fully integrated capability that
targets improving technical effectiveness at the operating unit and process
levels.
The Company's O&M services include the operation and maintenance of
facilities as well as oversight and support for day-to-day compliance
activities. Tetra Tech has operated treatment plants, soil and groundwater
remediation systems, air monitoring stations, hazardous waste
transfer/collection stations, landfills, and industrial systems. The Company's
approach to O&M services focuses on improving operating efficiencies and
maintaining continued effectiveness of operating units. O&M services offered by
the Company range from overall facility operating management to obtaining a
facility's operating permits and licenses and providing the necessary
documentation through automated data management systems. In addition, Tetra Tech
has the capability to manage its customer's complete waste management
requirements; to mitigate environmental impact from past management practices;
and also to ensure that operations meet the stringent operating, reporting and
administrative demands placed on today's facility managers.
8
. Large Air Force Base Facilities. The Company is prime contractor for
O&M services at a large Air Force Base in California. The Company
provides O&M services for a wastewater treatment plant and a hazardous
waste collection plant, as well as air monitoring and other services.
The Company's contract represents the consolidation of numerous
individual contracts into one contract to provide cost savings and
improve efficiency, a model which is expected to be adopted at
additional military bases in the future.
. Aerospace Corporation Landfills. The Company is providing O&M services
of wastewater treatment plants to treat leachate from several
landfills owned by a private corporation.
. Large Air Force Base Site. The Company is providing O&M services of
the Facilities' soil biofarm/bioventing systems.
OTHER ENGINEERING PROJECTS
The Company also provides engineering and construction management services
for projects which are not necessarily environmental in nature, such as
governmental, industrial and commercial buildings, as well as flood control,
recreation and water storage dams and reservoirs. Net revenue from these civil
engineering projects in fiscal 1994, 1995 and 1996 represented 5.7%, 3.7% and
10.3%, respectively, of the Company's net revenue.
CLIENTS
The Company has developed a diverse client base of over 500 current
clients, including Federal, state and local government agencies, utilities,
private companies, professional firms (such as law, consulting and engineering
firms) and real estate development firms. As a result of the diversity of the
Company's services, it may support multiple programs within a specific Federal
agency. Tetra Tech's private sector clients include chemical, mining,
pharmaceutical, aerospace, petroleum and utility companies.
CONTRACTS
The Company enters into various types of contracts with its clients which
include fixed-price, fixed-rate time and materials, cost-reimbursement plus
fixed fee and cost-reimbursement plus fixed and award fee contracts. In fiscal
1996, 17.1%, 32.5% and 50.4% of the Company's net revenue was derived from
fixed-price, fixed-rate time and materials, and cost-reimbursement plus fixed
fee and award fee contracts, respectively. Under a fixed-price contract, the
customer agrees to pay a specified price for the Company's performance of the
entire contract. Fixed-price contracts carry certain inherent risks, including
risks of losses from underestimating costs, problems with new technologies and
economic and other changes that may occur over the contract period.
Consequently, the profitability of fixed-price contracts may vary substantially.
The amount of the fee received for a cost-reimbursement plus fixed and award fee
contract partially depends upon the government's discretionary periodic
assessment of the Company's performance on that contract. The Company's fee
from a cost-reimbursement plus fixed and award fee contract may vary based upon
the Company's performance.
Agencies of the Federal government are among the Company's most significant
clients. During fiscal 1996, the EPA, DOD and DOE accounted for 11.6%, 33.7%
and 11.5%, respectively, of the Company's net revenue. Some contracts made with
the Federal government are subject to annual approval of funding. Limitations
imposed on spending by Federal government agencies may limit the continued
funding of the Company's existing contracts with the Federal government and may
limit the Company's ability to obtain additional contracts. These limitations,
if significant, could have a material adverse effect on the Company. To date,
spending limitations have not had a significant effect on the Company. All
contracts made with the Federal government may be terminated by the government
at any time, with or without cause. 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 the Company in certain cases from
bidding for or performing contracts resulting from or relating to certain work
the Company has performed for the government. In addition, services performed
for a private client may create conflicts of interest which preclude or limit
the Company's ability to obtain work for another private entity. The Company
attempts to identify actual or potential
9
conflicts of interest and to minimize the possibility that such conflicts would
affect its work under current contracts or its ability to compete for future
contracts. The Company has, on occasion, declined to bid on a project because of
an existing potential conflict of interest. However, the Company has not
experienced disqualification during a bidding or award negotiation process by
any government or private client as a result of a conflict of interest. None of
the Company's government contracts are subject to renegotiation of profits
without a change in the contractual scope of work.
The Company provides its services pursuant to contracts, purchase orders or
retainer letters. Company policy provides that, where possible, all contracts
will be in writing. The Company bills all of its clients periodically based on
costs incurred, on either an hourly-fee basis or on a percentage of completion
basis, as the project progresses. Generally, Tetra Tech's contracts do not
require that it provide performance bonds. Most of the Company's agreements
permit termination by the client upon payment of fees and expenses through the
date of the termination.
MARKETING
The Company's marketing activities are managed by the corporate marketing
department, which establishes the Company's business plan, target markets and
develops overall marketing strategies. The marketing department also identifies
and tracks the development of large Federal programs, positions the Company for
new business areas, selects appropriate partners, if any, for new projects and
assists in the bid process for new projects. In addition, the corporate
marketing department supports marketing activities firm-wide by coordinating
corporate promotional and professional activities, including appearances at
trade shows, direct mailings, telemarketing and public and media relations.
Local marketing activities for the Company are implemented through its over
70 local offices. A local presence enables the Company's professionals to gain
greater knowledge of local environmental issues and a better understanding of
local laws and regulations. Local marketing activities are coordinated by full
time marketing staff located in certain local offices and include meetings with
potential clients and local regulators, presentations to civic and professional
organizations and seminars on current regulatory topics.
COMPETITION
The market for the Company's services is highly competitive. The Company
competes with many other firms, ranging from small local firms to large national
firms having greater financial and marketing resources than the Company.
Competition in the environmental services industry is likely to increase as the
industry matures, as more companies enter the market and expand the range of
services which they offer and as the Company and its competitors move into new
geographic markets. Historically, competition has been based primarily on the
quality and timeliness of service. However, as the industry matures, the
Company believes that price will become an increasingly important competitive
factor.
BACKLOG
At September 29, 1996, Tetra Tech's gross revenue backlog was approximately
$206.3 million, compared to $190.2 million at October 1, 1995. The Company
includes in gross revenue backlog only those contracts for which funding has
been provided and work authorizations have been received. The Company estimates
that approximately $167.8 million of the gross revenue backlog at September 29,
1996 will be recognized during fiscal 1997. No assurance can be given that all
amounts included in backlog ultimately will be realized, even if evidenced by
written contracts. See "Contracts."
ENVIRONMENTAL LEGISLATION
The demand for the Company's environmental services is a result of public
concern over environmental issues and the ensuing legislative response. As a
result, the Company's clients have become subject to an increasing number of
frequently overlapping Federal, state and local laws concerned with the
protection of the environment, as well as regulations promulgated by
administrative agencies pursuant to such laws.
10
The Company has provided services to clients with respect to the following
Federal statutes and regulations:
The Clean Water Act. Under the CWA, as amended, a system of permits and
enforcement procedures for the discharge of pollutants into waters of the United
States from industrial, municipal and other wastewater sources was established.
The EPA sets discharge standards for certain wastewater discharges and provides
grants to assist municipalities in complying with treatment requirements.
The CWA requires pretreatment of industrial wastewater before discharge
into municipal systems and gives the EPA the authority to set pretreatment
limits under certain circumstances. These efforts by the EPA will prompt
facility upgrading and better control of industrial discharges. The surface
water toxics regulations require states to identify waters adversely affected by
toxics and propose control strategies. Promulgated regulations require permits
for stormwater discharges for industrial activities and large (populations
greater than 100,000) municipal stormwater systems.
The Resource Conservation and Recovery Act of 1976. RCRA, as amended by the
Hazardous and Solid Waste Amendments of 1984 ("HSWA"), provides a comprehensive
scheme for the regulation of hazardous waste from the time of generation to its
ultimate disposal (and sometimes thereafter), as well as the regulation of
persons engaged in generation, handling, transportation, treatment, storage and
disposal of hazardous waste. The RCRA scheme includes both a permitting and a
manifest tracking system. With few exceptions, every facility that treats,
stores or disposes of hazardous waste must obtain a RCRA permit from the EPA, or
a state agency which has been authorized by the EPA to administer the RCRA
program, and must comply with certain operating, financial responsibility and
disclosure requirements. Although most states have obtained authority to
administer this program within their respective states, the applicable state
statutes must be at least as stringent as the Federal standards and the Federal
government retains enforcement authority. Regulations have been issued pursuant
to RCRA in the following areas, among others: permitting assistance, remediation
of environmental complications associated with underground storage tanks,
municipal solid waste disposal and land disposal of hazardous waste. HSWA also
imposes land disposal restrictions on certain listed hazardous wastes which do
not meet specified treatment standards, prescribes more stringent standards for
hazardous waste disposal sites, sets standards for underground storage tanks and
provides for corrective action at or near sites of waste management units.
The Comprehensive Environmental Response, Compensation and Liability Act of
1980. This legislation, as amended by the Superfund Amendments and
Reauthorization Act of 1986 ("SARA"), established the Superfund program to
identify and clean up inactive hazardous waste sites and provides for penalties
and punitive damages for noncompliance with EPA orders. Superfund also covers
the emergency cleanup of spills. Superfund may impose strict joint and several
liability on certain hazardous substance generators, transporters and disposal
facility owners and operators for the costs of removal or remedial action, other
necessary response costs and damages for injury, destruction or loss of natural
resources, and the cost of any health effects study. Federal funds may be used
to pay for the cleanup. SARA provided a separate fund, supported by a tax on
gasoline, for the cleanup of leaks from underground storage tanks. In addition,
under SARA, the EPA has the mandate to emphasize permanent remedies and
treatment at Superfund sites, developing a technology oriented market.
The National Environmental Policy Act. NEPA is the basic national charter
for protection of the environment. The purpose of NEPA is to guide public
officials in making decisions that are based on an understanding of the
environmental consequences of those decisions.
NEPA requires that an environmental impact statement ("EIS") be prepared
for "major federal actions significantly affecting the quality of the human
environment." A "major federal action" includes actions with effects that may
be major and which are potentially subject to Federal control and
responsibility. The term includes legislation proposed by an agency; adoption
of agency rules, regulation and policies; adoption of formal plans; and approval
of specific Federal projects. In addition, Federal permits, licenses, loans,
grants, leases and other Federal actions that are necessary for private
developments may require preparation of an EIS, although actual Federal
involvement in the activity may be minimal.
NEPA requires the EIS to contain a detailed statement on: the environmental
impact of the proposed action; any adverse environmental effects which cannot be
avoided should the proposal be implemented; alternatives
11
to the proposed action; the relationship between local short-term uses of the
environment and the maintenance and enhancement of long-term productivity; and
any irreversible and irretrievable commitments of resources which would be
involved in the proposed action should it be implemented.
In addition to NEPA, several states have adopted legislation requiring
environmental impact analysis to be prepared for actions at the state level.
The Safe Drinking Water Act. Under the SDWA and its subsequent
reauthorizations, the EPA is empowered to set drinking water standards for water
supply systems in the United States. The SDWA requires that the EPA set maximum
groundwater contamination levels for 83 previously unregulated toxic substances
and also requires the EPA to establish a priority list every three years of
contaminants that may cause adverse health effects and may require regulation.
The first priority list was published in January 1988. Water supply systems are
required to begin monitoring within defined time limits following the
publication of the final regulations. The SDWA also requires that the EPA set
criteria specifying when utilities using surface water supplies should filter
their water and issue national primary drinking water regulations requiring all
utilities to disinfect their water. By June 1993, all surface water supply
systems must provide filtration and disinfection. The EPA regulations under the
SDWA are expected to result in significant expenditures by water supply systems
for evaluation and, ultimately, for upgrading of many facilities.
Other Regulations. The Company's services are also utilized by its clients
in complying with the following Federal laws: the Oil Pollution Act of 1990, the
Toxic Substances Control Act, the Clean Air Act, the Emergency Planning and
Community Right-to-Know Act of 1986, and the Marine Protection, Research and
Sanctuaries Act of 1972.
Many states have passed legislation and established policies to cover more
detailed aspects of hazardous waste management. The State of California, for
example, has consistently been a leader in passing and implementing waste
management legislation. These laws, and similar laws in other states, address
such topics as air pollution control, underground storage tanks, water quality,
solid waste, hazardous materials, surface impoundments, site cleanup and waste
discharge. Several states have modeled their environmental laws and regulations
on those of California. The Company believes that its experience in California
makes it prepared to respond to the regulatory environment in such states.
Because much of the Company's business is generated either directly or
indirectly as a result of Federal and state governmental programs and
regulations, changes in governmental policies affecting such programs, or
regulations or administrative actions affecting the funding or sponsorship of
such programs, could have a material adverse effect on the Company's business.
However, the Company believes that it will benefit from current regulatory
initiatives emphasizing risk management, cost/benefit analysis, pollution
prevention and source control, and natural resources conservation and disaster
planning.
POTENTIAL LIABILITY AND INSURANCE
Because of the type of environmental projects in which the Company is or
may be involved, the Company's current and anticipated future services may
involve risks of potential liability under Superfund, common law or contractual
indemnification agreements. It is difficult to assess accurately both the areas
and magnitude of potential risk to the Company.
The Company maintains comprehensive general liability insurance in the
amount of $1,000,000. This amount, together with $9,000,000 umbrella policies,
provide total general liability coverage of $10,000,000. The Company's
professional liability insurance ("E&O") policy, which included pollution
coverage, for 1996 provided $10,000,000 in coverage, with $100,000 self-insured
retention. For 1997, the Company expects to maintain similar coverages as to
1996 for current services including pollution-related services rendered by the
Company. However, because there are various exclusions and retentions under the
Company's insurance policies, there can be no assurance that all liabilities
that may be incurred by the Company are subject to insurance coverage. In
addition, the E&O policy is a "claims made" policy which only covers claims made
during the term of the policy. If a policy terminates and retroactive coverage
is not obtained, a claim subsequently made, even a claim based on events or
12
acts which occurred during the term of the policy, would not be covered by the
policy. In the event the Company expands its services into new markets, no
assurance can be given that the Company will be able to obtain insurance
coverage for such activities or, if insurance is obtained, that the dollar
amount of any liabilities incurred in connection with the performance of such
services will not exceed policy limits. The premiums paid by the Company for its
professional liability policies during 1996 were approximately $726,000 for E&O.
The amounts to be paid for 1997 will be determined by March 14, 1997. The
Company expects no significant increase in rates.
EMPLOYEES
At September 29, 1996, the Company had 1,899 employees, including 1,303
professionals. The Company's professional staff includes archaeologists,
biologists, cartographers, chemists, chemical engineers, civil engineers,
electrical engineers, environmental engineers, environmental scientists,
geologists, hydrogeologists, mechanical engineers, oceanographers and
toxicologists. The Company's ability to retain and expand its staff of
qualified professionals will be an important factor in determining the Company's
future growth and success. None of the Company's employees is represented by a
labor organization, and management considers its relations with its employees to
be good.
RISK FACTORS
Statements regarding the Company's performance prospects could contain
forward-looking information that involves risk and uncertainties such as the
level of demand for the Company's services, funding delays for projects, lack of
regulatory clarity affecting the marketplace and industry-wide competitive
factors. The following risk factors should be reviewed in addition to the other
information contained in this Annual Report on Form 10-K.
POTENTIAL LIABILITY AND INSURANCE. Because of the type of environmental
projects in which the Company is or may be involved, the Company's current and
anticipated future services may involve risks of potential liability under
superfund, common law or contractual indemnification agreements. It is
difficult to assess accurately both the areas and magnitude of potential risk to
the Company.
The Company maintains comprehensive general liability insurance in the
amount of $1,000,000. This amount, together with $9,000,000 coverage under
umbrella policies, provide total general liability coverage of $10,000,000. The
Company's professional liability insurance ("E&O") policy, which includes
pollution coverage, for 1996 provides $10,000,000 in coverage, with a $100,000
self-insured retention. For 1997, the Company expects to maintain similar
coverages for current services including pollution-related services rendered by
the Company. However, because there are various exclusions and retentions under
the Company's insurance policies, there can be no assurance that all liabilities
that may be incurred by the Company are subject to insurance coverage. In
addition, the E&O policy is a "claims made" policy which only covers claims made
during the term of the policy. If a policy terminates and retroactive coverage
is not obtained, a claim subsequently made, even a claim based on events or acts
which occurred during the term of the policy, would not be covered by the
policy. In the event the Company expands its services into new markets, no
assurance can be given that the Company will be able to obtain insurance
coverage for such activities or, if insurance is obtained, that the dollar
amount of any liabilities incurred in connection with the performance of such
services will not exceed policy limits. The premiums paid by the Company for
its professional liability policies during 1996 were approximately $726,000 for
E&O. The amounts to be paid for 1997 will be determined by March 14, 1997.
The Company does not maintain funded reserves to provide for payment of
partially or completely uninsured claims and, accordingly, a partially or
completely uninsured claim, if successful and of significant magnitude, could
have a material adverse effect on the Company.
SIGNIFICANT COMPETITION. The market for the Company's services is highly
competitive. The Company competes with many other firms, ranging from small
local firms to large national firms having greater financial and marketing
resources than the Company. Competition in the environmental services industry
is likely to increase as the industry matures, as more companies enter the
market and expand the range of services which they offer and as the Company and
its competitors move into new geographic markets. Historically, competition has
been based
13
primarily on the quality and timeliness of service. However, as the
industry continues to mature, the Company believes that price will become an
increasingly important competitive factor.
CONTRACTS. The Company's contracts with the Federal and State governments
and some of its other client contacts are subject to termination at the
discretion of the client. Some contracts made with the Federal government are
subject to annual approval of funding and audits of the Company's rates.
Limitations imposed on spending by Federal government agencies may limit the
continued funding of the Company's existing contracts with the Federal
government and may limit the Company's ability to obtain additional contracts.
These limitations, if significant, could have a material adverse effect on the
Company. All of the Company's contracts with the federal government are
subject to audit by the government. The Company's government contracts are
subject to renegotiation of profits in the event of a change in the contractual
scope of work to be performed.
CONFLICTS OF INTEREST. Many of the Company's clients are concerned about
potential or actual conflicts of interest in retaining environmental consultants
and engineers. For example, 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 the Company in certain cases from bidding for or
performing contracts resulting from or relating to certain work the Company has
performed for the government. In addition, services performed for a private
client may create a conflict of interest which precludes or limits the Company's
ability to obtain work from another private entity. The Company has, on
occasion, declined to bid on a project because of an actual or potential
conflict of interest. However, the Company has not experienced disqualification
during a bidding or award negotiation process by any government or private
client as a result of a conflict of interest.
POTENTIAL VOLATILITY OF STOCK PRICE. The market price of the Company's
Common Stock may be significantly affected by factors such as quarter-to-quarter
variations in the Company's results of operations, changes in environmental
legislation and changes in investors' perception of the business risks and
conditions in the environmental services business. In addition, market
fluctuations, as well as general economic or political conditions, may adversely
affect the market price of the Company's Common Stock, regardless of the
Company's actual performance.
QUALIFIED PROFESSIONALS. The Company's ability to attract and retain
qualified scientists and engineers is an important factor in determining the
Company's future growth and success. The market for environmental professionals
is competitive and there can be no assurance that the Company will continue to
be successful in its efforts to attract and retain such professionals.
ITEM 2. PROPERTIES.
The Company's corporate headquarters facilities are located in Pasadena,
California. These facilities contain approximately 25,000 square feet of office
space. A portion of these facilities are subject to a lease which expires in
February 1998 and gives the Company an option to extend the term for one
additional five-year period. Another portion of these facilities is subject to
a lease which expires in January 2001. The Company leases office space in
approximately 70 locations in the United States. The Company also rents some
additional office space on a month-to-month basis.
The Company believes that its existing facilities are adequate to meet
current requirements and that suitable additional or substitute space will be
available as needed to accommodate any expansion of operations and for
additional offices.
ITEM 3. LEGAL PROCEEDINGS.
The Company is subject to certain claims and lawsuits typically filed
against the engineering and consulting professions, primarily alleging
professional errors or omissions. The Company carries professional liability
insurance, subject to certain deductibles and policy limits against such claims.
Management is of the opinion that
14
the resolution of these claims will not have a material effect on the Company's
financial position or results of operations. See "Item 1. Business - Potential
Liability and Insurance."
ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
PART II
The information required by Items 5 through 8 of this report is set forth
on pages 17 through 32 of the Company's Annual Report to Stockholders for the
fiscal year ended September 29, 1996. Such information is incorporated in this
report and made a part hereof by reference. Item 9 is not applicable.
PART III
The information required by Items 10 through 13 of this report is set forth
in the sections entitled "Security Ownership of Principal Stockholders,
Directors and Executive Officers," "Election of Directors," and "Executive
Officers, Compensation and Other Information" in the Company's Proxy Statement
for its 1997 Annual Meeting of Stockholders. Such information is incorporated in
this report and made a part hereof by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) 1. and 2. FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES.
The Financial Statements filed as part of this report are
listed in the accompanying index at page 16.
3. EXHIBITS.
3.1 Restated Certificate of Incorporation of the Company, as
amended to date (incorporated herein by reference to
Exhibit 3.1 to the Company's Annual Report on Form 10-K
for the fiscal year ended October 1, 1995).
3.2 Bylaws of the Company, as amended to date (incorporated
herein by reference to Exhibit 3.2 to the Company's
Registration Statement on Form S-1, No. 33-43723).
10.1 Credit Agreement dated as of Sept. 15, 1995 between the
Company, and Bank of America Illinois, as amended by the
First Amendment to Credit Agreement dated as of Nov. 27,
1995 (incorporated herein by reference to Exhibit 10.1 to
the Company's Annual Report on Form 10-K for the fiscal
year ended October 1, 1995).
10.2 Security Agreement dated as of September 15, 1995 among
the Company, GeoTrans, Inc., Simons Li & Associates, Inc.,
Hydro-Search, Inc., PRC Environmental Management, Inc. and
Bank of America Illinois (incorporated herein by
reference to Exhibit 10.2 to the Company's Annual Report
on Form 10-K for the fiscal year ended October 1, 1995).
10.3 Pledge Agreement dated as of September 15, 1995 between
the Company and Bank of America Illinois (incorporated
herein by reference to Exhibit 10.3 to the Company's
Annual Report on Form 10-K for the fiscal year ended
October 1, 1995).
15
10.4 Guaranty dated as of September 15, 1995, executed by the
Company in favor of Bank of America Illinois
(incorporated herein by reference to Exhibit 10.4 to the
Company's Annual Report on Form 10-K for the fiscal year
ended October 1, 1995).
*10.5 Architect-Engineer Contract No. N62474-88-R-5086 dated as
of June 6, 1989 between PRC Environmental Management, Inc.
(a subsidiary of the Company) and the Western Division,
Naval Facilities Engineering Command.
10.6 1989 Stock Option Plan dated as of February 1, 1989
(incorporated herein by reference to Exhibit 10.13 to the
Company's Registration Statement on Form S-1, No. 33-
43723).
10.7 Form of Incentive Stock Option Agreement executed by the
Company and certain individuals in connection with the
Company's 1989 Stock Option Plan (incorporated
herein by reference to Exhibit 10.14 to the Company's
Registration Statement on Form S-1, No. 33-43723).
10.8 Executive Medical Reimbursement Plan provided to Messrs.
Hwang, Rodrigue and Gherini (incorporated herein by
reference to Exhibit 10.16 to the Company's Registration
Statement on Form S-1, No. 33-43723).
10.9 1992 Incentive Stock Plan (incorporated herein by
reference to Exhibit 10.18 to the Company's Annual Report
on Form 10-K for the fiscal year ended October 3, 1993).
10.10 Form of Incentive Stock Option Agreement used by the
Company in connection with the Company's 1992 Incentive
Stock Plan (incorporated herein by reference to Exhibit
10.19 to the Company's Annual Report on Form 10-K for the
fiscal year ended October 3, 1993).
10.11 1992 Stock Option Plan for Nonemployee Directors
(incorporated herein by reference to Exhibit 10.20 to the
Company's Annual Report on Form 10-K for the fiscal year
ended October 3, 1993).
10.12 Form of Nonqualified Stock Option Agreement used by the
Company in connection with the Company's 1992 Stock Option
Plan for Nonemployee Directors (incorporated herein by
reference to Exhibit 10.21 to the Company's Annual Report
on Form 10-K for the fiscal year ended October 3, 1993).
10.13 1994 Employee Stock Purchase Plan (incorporated herein by
reference to Exhibit 10.22 to the Company's Annual Report
on Form 10-K for the fiscal year ended October 2, 1994).
10.14 Form of Stock Purchase Agreement used by the Company in
connection with the Company's 1994 Employee Stock Purchase
Plan (incorporated herein by reference to Exhibit 10.23 to
the Company's Annual Report on Form 10-K for the fiscal
year ended October 2, 1994).
11. Computation of Net Income Per Common Share.
13. Annual Report to Stockholders for the fiscal year ended
September 29, 1996, portions of which are incorporated by
reference in this report as set forth in Part II hereof.
With the exception of these portions, such Annual Report
is not to be deemed filed as part of this report.
16
21. Subsidiaries of the Company.
23. Independent Auditors' Consent.
27. Financial Data Schedule.
_______________
* Certain portions of this Exhibit were omitted from the copies filed as part
of this Annual Report on Form 10-K. Complete copies of this Exhibit have
been filed separately, together with an application to obtain confidential
treatment with respect thereto.
(b) No Report on Form 8-K was filed during the quarter ended September 29,
1996.
17
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 to be signed on
its behalf by the undersigned, thereunto duly authorized.
TETRA TECH, INC.
Date: December 20, 1996 By: /s/ Li-San Hwang
_________________________________________
Li-San Hwang, Chairman of the Board of
Directors, President and Chief Executive
Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report 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/ Li-San Hwang Chairman of the Board of Directors, December 20, 1996
- ------------------------ President and Chief Executive Officer
Li-San Hwang (Principal Executive Officer)
/s/ James M. Jaska Vice President, Chief Financial December 20, 1996
- ------------------------ Officer and Treasurer (Principal
James M. Jaska Financial and Accounting Officer)
/s/ J. Christopher Lewis Director December 20, 1996
- ------------------------
J. Christopher Lewis
/s/ Patrick C. Haden Director December 20, 1996
- ------------------------
Patrick C. Haden
/s/ James J. Shelton Director December 20, 1996
- ------------------------
James J. Shelton
18
INDEX TO FINANCIAL STATEMENTS
The consolidated financial statements, together with the Notes thereto and
report thereon of Deloitte & Touche LLP dated November 12, 1996, appearing on
pages 21 through 32 of the accompanying 1996 Annual Report to Stockholders, are
incorporated by reference in this Form 10-K Annual Report. With the exception
of the aforementioned information and Part II information set forth on pages 17
through 32, the 1996 Annual Report to Stockholders is not to be deemed filed as
part of this report.
FINANCIAL STATEMENTS SCHEDULES
Page No.
--------
Report of Independent Accountants on Financial Statement
Schedules........................................................... 20
Financial Statement Schedules
Schedule II -- Valuation and Qualifying Accounts and
Reserves.................................................... 21
19
INDEPENDENT AUDITORS' REPORT
Tetra Tech, Inc.:
We have audited the consolidated financial statements of Tetra Tech, Inc. and
its subsidiaries as of September 29, 1996 and October 1, 1995, and for each of
the three years in the period ended September 29, 1996, and have issued our
report thereon dated November 12, 1996; such financial statements and report are
included in your 1996 Annual Report to Stockholders and are incorporated herein
by reference. Our audits also included the financial statement schedule of
Tetra Tech, Inc. and its subsidiaries, listed in Item 14. This financial
statement schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits. In our opinion,
such financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, prevents fairly in all material respects
the information set forth therein.
Los Angeles, California
November 12, 1996
20
TETRA TECH, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE FISCAL YEARS ENDED
OCTOBER 2, 1994, OCTOBER 1, 1995 AND SEPTEMBER 29, 1996
Balance at Charges to
Beginning of Costs and Balance at
Period Expenses Deductions End of Period
------------ ---------- ---------- -------------
Fiscal year ended October 2, 1994
Allowance for loss on accounts
receivable......................... $ 993,000 $ 720,000(b) $ (72,000)(a) $ 1,641,000
Fiscal year ended October 1, 1995
Allowance for loss on accounts
receivable......................... $ 1,641,000 $9,579,000(c) $ (67,000)(a) $11,153,000
Fiscal year ended September 29, 1996
Allowance for loss on accounts
receivable......................... $11,153,000 $1,606,000(d) $(1,658,000)(a) $11,101,000
- ------------------------
(a) Represents write-offs of uncollectible accounts, net of recoveries on
accounts previously written off.
(b) Includes $293,000 for Simons, Li & Associates, Inc. and Simon Hydro-Search,
Inc. as of acquisition date.
(c) Includes $9,635,000 for PRC Environmental Management, Inc. as of
acquisition date.
(d) Includes $1,365,000 for PRC Environmental Management, Inc. and KCM, Inc. as
of acquisition date.
21