What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-04-30 compared with 2021-01-29 · 145 added, 96 removed, 301 unchanged (44% of the section changed)

32 unchanged sentences

The following table presents the percentage of our revenue by client sector:

Three Months Ended

2020 December 29,

Three Months Ended Six Months Ended

2021 March 29,

2020 March 28,

2021 March 29,

Client Sector

1 unchanged sentence

federal government (1)

35.5 33.1 35.1 31.9

commercial 19.0 21.9 19.8 22.3

International (2)

28.3 30.9 28.3 30.9

Total 100.0 % 100.0 % 100.0 % 100.0 %

23 unchanged sentences

The following table presents the percentage of our revenue by reportable segment:

Three Months Ended

2020 December 29,

Three Months Ended Six Months Ended

2021 March 29,

2020 March 28,

2021 March 29,

Reportable Segment

6 unchanged sentences

The following table presents the percentage of our revenue by contract type:

Three Months Ended

2020 December 29,

Three Months Ended Six Months Ended

2021 March 29,

2020 March 28,

2021 March 29,

Contract Type

46 unchanged sentences

The actions we have taken to navigate through this worldwide pandemic, the strength of our balance sheet, and our technical leadership position us well to address the global challenges of providing clean water, environmental restoration, and the impacts of climate change.

In first quarter of fiscal 2021, our revenue decreased 4.1% compared to the prior-year period.

Our revenue includes contributions from acquisitions that did not contribute to our revenue in the first quarter of fiscal 2020.

In the first half of fiscal 2021, revenue declined 0.8% compared to the prior-year period.

Our revenue includes contributions from acquisitions that did not contribute to our revenue in the first half of fiscal 2020.

Our year-over-year revenue comparisons were also impacted by the decision to dispose of our Canadian turn-key pipeline activities in the fourth quarter of fiscal 2019 and the subsequent wind-down of those activities in fiscal 2020, which included the disposal of related equipment.

State and Local Government.

state and local government revenue increased 0.9% in the first quarter of fiscal 2021 compared to the same period last year.

This comparison was impacted by a reduction in subcontractor activity.

state and local revenue, net of subcontractor costs, increased 11.0% in the first quarter of fiscal 2021 compared to the first quarter of fiscal 2020.

This increase reflects continued broad-based growth in our U.S.

state and local government revenue increased 12.0% in the first half of fiscal 2021 compared to the same period last year.

The increase reflects continued broad-based growth in our U.S.

state and local government project-related infrastructure business, particularly with increased revenue from municipal water infrastructure work in the metropolitan areas of California, Texas, and Florida.

Our episodic disaster response activities also increased compared to the first half of last year.

Most of our work for U.S.

state and local governments relates to critical water and environmental programs, which we expect to increase further next year.

However, further budgetary constraints to our clients could negatively impact our business.

Conversely, increased disaster response activity could cause our fiscal 2021 revenue to exceed our current expectations.

state and local governments relates to critical water and environmental programs, which we expect to continue to grow at a rate similar to the first half of this fiscal year.

The risk of further budgetary constraints to our clients is mitigated with the passage of the American Rescue Plan Act of 2021, signed into law on March 11, 2021, which provides financial support for state and local governments.

Federal Government.

federal government revenue increased 8.4% in the first quarter of fiscal 2021 compared to the prior-year period.

This increase includes the contributions from acquisitions completed in fiscal 2020.

federal government revenue increased 9.2% in the first half of fiscal 2021 compared to the prior-year period .

This increase includes the contributions from acquisitions, w hich did not have comparable revenue in the first half of fiscal 2020.

These contributions were partially offset by reduced international development activities as COVID-19 travel restrictions have caused some project delays.

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federal spending amounts and priorities could change significantly from our current expectations, which could have a significant positive or negative impact on our fiscal 2021 revenue.

commercial revenue decreased 13.1% in the first quarter of fiscal 2021 compared to the same period last year.

This decline was primarily due to reduced industrial activity as a result of the COVID-19 pandemic.

We currently expect the adverse impact of the COVID-19 pandemic to our U.S.

commercial revenue to continue to be more significant than to our U.S.

government programs and projects throughout most of this fiscal year.

commercial revenue decreased 11.9% in the first half of fiscal 2021 compared to the same period last year.

The decline was primarily due to reduced industrial activity as a result of the COVID-19 pandemic.

We currently expect our U.S.

commercial revenue to grow in the second half of the fiscal year with higher revenue from renewable energy and environmental programs, and more favorable year-over-year comparisons than first half of the fiscal year;

however, if adverse conditions due to the COVID-19 pandemic are prolonged, it could have a negative impact on our revenue for the second half of the fiscal year.

International.

Our international revenue decreased 12.4% in the first quarter of fiscal 2021 compared to the prior-year period.

Excluding the impact of the aforementioned prior-year disposal of our Canadian turn-key pipeline activities, our international revenue decreased 10.2% in the first quarter of fiscal 2021 compared to the same period last year.

Our international revenue decreased 9.2% in the first half of fiscal 2021 compared to the prior-year period.

Excluding the impact of the aforementioned prior-year disposal of our Canadian turn-key pipeline activities, our international revenue decreased 7.5% in the first half of fiscal 2021 compared to the same period last year.

The revenue decline primarily reflects the adverse impact of the COVID-19 pandemic, partially offset by increased renewable energy activity in Canada.

In light of the COVID-19 pandemic, we currently expect our overall international government work to be stable for fiscal 2021;

We currently expect our overall international government work to grow in the second half of this fiscal year with improving economic conditions and more favorable year-over-year comparisons;

however, our international commercial activities could have a significant adverse impact if the current economic conditions due to COVID-19 are prolonged.

1 unchanged sentence

Consolidated Results of Operations

Three Months Ended

2020 December 29,

Three Months Ended Six Months Ended

2021 March 29,

2020 Change March 28, 2021 March 29, 2020 Change

($ in thousands)

6 unchanged sentences

Selling, general and administrative expenses (51,907) (51,041) (866) (1.7) (101,928) (97,476) (4,452) (4.6)

Contingent consideration - fair value adjustments 230 1,571 (1,341) (85.4) 193 1,571 (1,378) (87.7)

Income from operations 60,807 47,530 13,277 27.9 127,059 110,832 16,227 14.6

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Accordingly, we segregate subcontractor costs from revenue to promote a better understanding of our business by evaluating revenue exclusive of costs associated with external service providers.

In the first quarter of fiscal 2021, revenue and revenue, net of subcontractor costs, decreased $32.5 million, or 4.1%, and $8.9 million, or 1.4%, respectively, compared to the same period last year.

Excluding the net contributions from the aforementioned acquisitions/disposal, our revenue decreased 7.5% in the first quarter of fiscal 2021 compared to the prior-year quarter.

In the second quarter of fiscal 2021, revenue and revenue, net of subcontractor costs, increased $20.6 million, or 2.8%, and $15.4 million, or 2.6%, respectively, compared to the year-ago quarter.

Excluding the net contributions from the aforementioned acquisitions/disposal, our revenue was comparable to the second quarter of fiscal 2020.

In the first half of fiscal 2021, revenue and revenue, net of subcontractor costs, decreased $11.9 million, or 0.8%, and increased $6.5 million, or 0.5%, respectively, compared to the prior-year period.

Excluding the net contributions from the aforementioned acquisitions/disposal, our revenue decreased 3.8% in the first half of fiscal 2021 compared to the prior-year period.

The decline was primarily due to the adverse impact of the COVID-19 pandemic, particularly on our U.S.

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The following table reconciles our reported results to non-U.S.

GAAP adjusted results, which exclude the gains on non-core equipment disposals in the first quarter of fiscal 2020 related to the disposal of our Canadian turn-key pipeline activities.

For the first quarter of fiscal 2020, the effective tax rate applied to the adjustment to earnings per share ("EPS") to arrive at adjusted EPS was 28.0%.

We applied the relevant marginal statutory tax rate based on the nature of the adjustment and tax jurisdiction in which it occurred.

GAAP adjusted results, which exclude gains on non-core equipment disposals, earn-out adjustments, COVID-19 impact and RCM results.

The gains on non-core equipment disposals relate to the disposal of our Canadian turn-key pipeline activities that commenced in the fourth quarter of fiscal 2019.

The effective tax rate applied to the adjustments to earnings per share ("EPS") to arrive at adjusted EPS averaged 23.3% in the first half of fiscal 2020.

We applied the relevant marginal statutory tax rate based on the nature of the adjustments and tax jurisdiction in which they occur.

There were no adjustments in the first half of fiscal 2021.

Both EPS and adjusted EPS were calculated using diluted weighted-average common shares outstanding for the respective periods as reflected in our consolidated statements of income.

Three Months Ended

2020 December 29,

During the second quarter of fiscal 2020, we took actions in response to the COVID-19 pandemic to ensure the health and safety of our employees, clients, and communities.

These actions included activating our Business Continuity Plan globally, which enabled 95% of our workforce to work remotely and all 450 of our global offices to remain operational supporting our programs and projects.

This required incremental costs for employee relocation, expansion of our virtual private network capabilities, enhanced security, and sanitizing of our offices.

In addition, we incurred severance costs to right-size select operations where projects were cancelled specifically due to COVID-19 concerns and the resulting macroeconomic conditions.

These incremental costs totaled $8.2 million in the second quarter of fiscal 2020.

Although the charges were recognized in the second quarter, substantially all of these costs were paid in cash in the third quarter of fiscal 2020.

Three Months Ended Six Months Ended

2021 March 29,

2020 Change March 28,

2021 March 29,

($ in thousands)

Income from operations $ 60,807 $ 47,530 $ 13,277 27.9% $ 127,059 $ 110,832 $ 16,227 14.6%

RCM — (1) 1 NM

Non-core equipment disposal — (800) 800 NM

RCM (1) 1 (2) NM (1) — (1) NM

Non-core equipment disposal — (2,184) 2,184 NM — (2,984) 2,984 NM

Earn-out adjustments — (971) 971 NM — (971) 971 NM

COVID-19 — 8,233 (8,233) NM — 8,233 (8,233) NM

Adjusted income from operations (1)

1 unchanged sentence

EPS $ 0.83 $ 0.66 $ 0.17 25.8% $ 1.79 $ 1.51 $ 0.28 18.5%

Non-core equipment disposal — (0.01) 0.01 NM

RCM — — — NM — — — NM

Non-core equipment disposal — (0.03) 0.03 NM — (0.04) 0.04 NM

Earn-out adjustments — (0.01) 0.01 NM — (0.01) 0.01 NM

COVID-19 — 0.11 (0.11) NM — 0.11 (0.11) NM

Adjusted EPS (1)

2 unchanged sentences

(1) Non-GAAP financial measure

Our operating income increased $3.0 million in the first quarter of fiscal 2021 compared to the same period last year.

Our GSG segment's operating income increased $5.7 million in the first quarter of fiscal 2021 compared to the first quarter of fiscal 2020.

These results are described below under "Government Services Group." Our CIG segment's operating income decreased $2.1 million in the first quarter of fiscal 2021 compared to the year-ago quarter.

Our operating income increased $13.3 million and $16.2 million in the second quarter and first half of fiscal 2021, respectively, compared to fiscal 2020 periods.

Our GSG segment's operating income increased $10.8 million and $16.4 million in the second quarter and first half of fiscal 2021, respectively, compared to the prior-year periods.

These results are described below under "Government Services Group." Our CIG segment's operating income increased $4.6 million and $2.6 million in the second quarter and first half of fiscal 2021, respectively, compared to the year-ago periods.

These results are described below under "Commercial/International Services Group."

Our net interest expense was $3.0 million in the first quarter of fiscal 2021 compared to $3.3 million in the prior-year period.

The decrease primarily reflects lower interest rates (primarily LIBOR).

The effective tax rates for the first quarters of fiscal 2021 and 2020 were 17.0% and 21.1%, respectively.

Income tax expense was reduced by $6.1 million and $3.6 million of excess tax benefits on share-based payments in the first quarters of fiscal 2021 and 2020, respectively.

Excluding the impact of the excess tax benefits on share-based payments, our effective tax rates for the first quarters of fiscal 2021 and 2020 were 26.8% and 27.1%, respectively.

Our EPS was $0.96 in the first quarter of fiscal 2021 compared to $0.85 in the year-ago quarter.

On the same basis as our adjusted operating income, EPS was $0.96 in the first quarter of fiscal 2021 compared to $0.84 in the first quarter of fiscal 2020.

Our net interest expense decreased $0.7 million and $1.0 million in the second quarter and first half of fiscal 2021, respectively, compared to the prior-year periods.

The decreases primarily reflect reduced borrowings.

Our income tax expense increased $4.8 million and $3.0 million in the second quarter and first half of fiscal 2021, respectively, compared to the same periods last year due to increased pre-tax income.

Our effective tax rates for the first half of fiscal 2021 and 2020 were 19.2% and 19.5%, respectively.

Income tax expense was reduced by $8.0 million and $6.7 million of excess tax benefits on share-based payments in the first half of fiscal 2021 and 2020, respectively.

Excluding the impact of the excess tax benefits on share-based payments, our effective tax rates in the first half of fiscal 2021 and 2020 were 25.8% and 25.9%, respectively.

Our EPS was $0.83 and $1.79 in the second quarter and first half of fiscal 2021, compared to $0.66 and $1.51 in the prior-year periods, respectively.

On the same basis as our adjusted operating income, EPS was $0.83 and $1.79 in the second quarter and first half of fiscal 2021, compared to $0.73 and $1.57 in fiscal 2020 periods, respectively.

Segment Results of Operations

Government Services Group

Three Months Ended

2020 December 29,

Three Months Ended Six Months Ended

2021 March 29,

2020 Change March 28, 2021 March 29, 2020 Change

($ in thousands)

3 unchanged sentences

Income from operations $ 46,109 $ 35,347 $ 10,762 30.4% $ 93,809 $ 77,395 $ 16,414 21.2%

Revenue and revenue, net of subcontractor costs, increased $11.2 million, or 2.5%, and $15.2 million, or 4.6%, respectively, in the first quarter of fiscal 2021 compared to the year-ago quarter.

Revenue and revenue, net of subcontractor costs, increased $36.9 million, or 8.5%, and $26.0 million, or 8.1%, respectively, in the second quarter of fiscal 2021 compared to the year-ago quarter.

For the first half of fiscal 2021, revenue and revenue, net of subcontractor costs, increased $48.1 million, or 5.4%, and $41.3 million, or 6.3%, respectively, compared to the prior-year period.

These increases reflect higher U.S.

local government activity for water and environmental programs and contributions from the aforementioned acquisitions.

These increases were partially offset by lower internatio nal development revenue due to project delays caused by COVID-19.

Operating income increased $5.7 million in the first quarter of fiscal 2021 compared to the year-ago quarter, reflecting the higher revenue and an improved operating margin.

Our operating margin, based on revenue, net of subcontractor costs, improved to 13.8% in the first quarter of fiscal 2021 compared to 12.8% in the same period last year primarily due to improved labor utilization.

state and local government activity for water and environmental programs and disaster response activities.

Additionally, the increases also reflect contributions from the aforementioned acquisitions.

These increases were partially offset by lower international development revenue due to project delays caused by COVID-19.

Operating income increased $10.8 million and $16.4 million in the second quarter and first half of fiscal 2021, respectively, compared to the prior-year periods, reflecting the higher revenue.

In addition, we incurred $1.6 million of incremental costs for actions to respond to the COVID-19 pandemic in the second quarter of fiscal 2020.

Our operating margin, based on revenue, net of subcontractor costs, improved to 13.6% in the first half of fiscal 2021 compared to 11.9% in the same period last year.

Excluding the COVID-19 charges, our operating margin was 12.1% in the first half of fiscal 2020.

The improved operating margin was primarily due to improved labor utilization.

Commercial/International Services Group

Three Months Ended

2020 December 29,

Three Months Ended Six Months Ended

2021 March 29,

2020 Change March 28, 2021 March 29, 2020 Change

($ in thousands)

3 unchanged sentences

Income from operations $ 26,311 $ 21,676 $ 4,635 21.4% $ 55,869 $ 53,309 $ 2,560 4.8 %

Revenue and revenue, net of subcontractor costs, decreased $40.1 million, or 11.4%, and $24.0 million, or 8.5%, respectively, in the first quarter of fiscal 2021 compared to the year-ago quarter.

Excluding the impact of the disposal of our Canadian turn-key pipeline activities, revenue and revenue, net of subcontractor costs, decreased 9.9% and 6.5%, respectively, in the first quarter of fiscal 2021 compared to the prior-year quarter.

Revenue and revenue, net of subcontractor costs, decreased $15.3 million, or 5.0%, and $11.3 million, or 4.3%, respectively, in the second quarter of fiscal 2021 compared to the prior-year quarter.

For the first half of fiscal 2021, revenue and revenue, net of subcontractor costs, decreased $55.4 million, or 8.4%, and $35.3 million, or 6.4%, respectively, compared to the year-ago period.

Excluding the impact of the disposal of our Canadian turn-key pipeline activities, revenue decreased 4.2% and 7.2% in the second quarter and first half of fiscal 2021, respectively, compared to fiscal 2020 periods.

The declines primarily reflect the adverse impact of the COVID-19 pandemic.

Operating income decreased $2.1 million in the first quarter of fiscal 2021 compared to the same period last year, reflecting the lower revenue partially offset by an improved operating margin.

Additionally, operating income in the first quarter of fiscal 2020 included gains of $0.8 million from the disposition of non-core equipment.

Our operating margin, based on revenue, net of subcontractor costs, improved to 11.4% in the first quarter of fiscal 2021 compared to 11.1% (10.8% adjusted for the non-core gain) in the same period last year.

This improvement was primarily due to our increased focus on high-end consulting services.

Operating income increased $4.6 million and $2.6 million in the second quarter and first half of fiscal 2021, respectively, compared to fiscal 2020 periods.

In the second quarter of fiscal 2020, we incurred $6.6 million of incremental costs for actions to respond to the COVID-19 pandemic.

Additionally, operating income in the second quarter and first half of fiscal 2020 included gains of $2.2 million and $3.0 million, respectively, from the disposition of non-core equipment.

Excluding the fiscal 2020 COVID-19 charges and disposition gains, operating income increased $0.2 million and decreased $1.0 million in the second quarter and first half of fiscal 2021, respectively, compared to fiscal 2020 periods.

Our operating margin, based on revenue, net of subcontractor costs, improved to 10.9% in the first half of fiscal 2021 compared to 9.7% in the same period last year.

Excluding the COVID-19 charges and disposition gains, our operating margin was 10.4% in the first half of fiscal 2020.

The improved operating margin was primarily due to our increased focus on high-end consulting services.

Remediation and Construction Management

Three Months Ended Six Months Ended

2021 March 29,

2020 Change March 28, 2021 March 29, 2020 Change

($ in thousands)

Revenue $ 470 $ 5 $ 465 $ 470 $ 150 $ 320

Subcontractor costs 65 (70) 135 65 (178) 243

Revenue, net of subcontractor costs $ 535 $ (65) $ 600 $ 535 $ (28) $ 563

Income (loss) from operations $ 1 $ (1) $ 2 $ 1 $ 1 $ —

RCM's projects were substantially complete at the end of fiscal 2018.

There were no significant activities in RCM for the first quarters of fiscal 2021 and 2020.

There were no significant activities in RCM for the second quarter and first half of fiscal 2021 and 2020.

The following table provides a reconciliation between remaining unsatisfied performance obligations ("RUPOs") and backlog:

8 unchanged sentences

Specifically, our backlog does not consider the impact of termination for convenience clauses within the contracts.

The contract term and thus remaining performance

obligation on certain of our operations and maintenance contracts, are limited to the notice period required for contract termination (usually 30, 60, or 90 days).

The contract term and thus remaining performance obligation on certain of our operations and maintenance contracts, are limited to the notice period required for contract termination (usually 30, 60, or 90 days).

Financial Condition, Liquidity and Capital Resources

Capital Requirements.

As of December 27, 2020, we had $163.4 million of c ash and cash equivalents and access to an additional $686 million of borrowings available under our credit facility.

During the first quarter of fiscal 2021, we generated $33.2 million of cash from operations.

As of March 28, 2021, we h ad $225.3 million of cash and cash equivalents and access to an additional $720 million of borrowings available under our credit facility.

During the first half of fiscal 2021, we generated $157.4 million of cash from operations.

To date, we have not experienced any significant deterioration in our financial condition or liquidity due to the COVID-19 pandemic and our credit facilities remain available.

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On January 27, 2020, the Board of Directors authorized a new $200 million stock repurchase program, which was included in our remaining balance of $207.8 million as of fiscal 2020 year-end.

In the first quarter of fiscal 2021, we repurchased and settled 135,413 shares with an average price of $110.77 per share for a total cost of $15 million in the open market.

At December 27, 2020, we had a remaining balance of $192.8 million under our stock repurchase program.

In the first half of fiscal 2021, we repurchased and settled 249,714 shares with an average price of $120.14 per share for a total cost of $30 million in the open market.

At March 28, 2021, we had a remaining balance of $177.8 million under our stock repurchase program.

On November 9, 2020, the Board of Directors declared a quarterly cash dividend of $0.17 per share payable on December 11, 2020 to stockholders of record as of the close of business on November 30, 2020.

On January 25, 2021, the Board of Directors declared a quarterly cash dividend of $0.17 per share payable on February 26, 2021 to stockholders of record as of the close of business on February 10, 2021.

Subsequent Event.

On January 25, 2021, the Board of Directors declared a quarterly cash dividend of $0.17 pe r share payable on February 26, 2021 to stockholders of record as of the close of business on February 10, 2021.

On April 26, 2021, the Board of Directors declared a quarterly cash dividend of $0.20 pe r share payable on May 28, 2021 to stockholders of record as of the close of business on May 12, 2021.

Cash Equivalents and Restricted Cash.

As of December 27, 2020, cash equivalents and restricted cash w ere $163.4 million, an increase of $5.9 million compared to the fiscal 2020 year-end.

The increase was due to net cash provided by operating activities, net proceeds from borrowings, stock options exercised and the effect of exchange rate chang es on cash, partially offset by stock repurchases, taxes paid on vested restricted stock, dividends and contingent earn-out payments.

As of March 28, 2021, cash equivalents and restricted cash w ere $225.3 million, an increase of $67.8 million compared to the fiscal 2020 year-end.

The increase was due to net cash provided by operating activities, stock options exercised and the effect of exchange rate changes on cash, partially offset by net repayments of long-term debt, stock repurchases, taxes paid on vested restricted stock, dividends and contingent earn-out payments.

Operating Activities .

For the first quarter of fiscal 2021, net cash provided by operating activities was $33.2 million, an increase of $51.2 million compared to the prior-year qua rter.

The increase was primarily due to strong collections on our accounts receivable.

For the first half of fiscal 2021, ne t cash provided by operating activities was $157.4 million, an increase of $74.2 million compared to the prior-year period.

The increase primarily resulted from the timing on payments to our vendors and employees.

Investing Activities .

For the first quarter of fiscal 2021, net c ash used in investing activities was $1.8 million, a decrease of $1.1 million compared to the year-ago quarter, due to reduced capital expenditures compared to the same quarter last year.

For the first half of fiscal 2021, net c ash used in investing activities was $7.3 million, a decrease of $20.0 million compared to the year-ago period, due to SEG acquisition in the second quarter of fiscal 2020.

Financing Activities .

For the first quarter of fiscal 2021, net cash used in financing activities was $32.8 million, compared to net cash provided by financing activities of $8.8 million in the prior-year qua rte r.

The change was primarily due to a reduced net borrowing.

For the first half of fiscal 2021, net cash used in financing activities was $91.1 million, an increase of $51.9 million compared to the same period last year.

The change was due to a net repayment on long-term debt of $25.7 million in the first half of fiscal 2021 compared to a net borrowing of $71.4 million in the prior-year period.

This change was partially offset by decreased stock repurchases compared to the year-ago period.

Debt Financing.

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The Amended Credit Agreement expires on July 30, 2023, or earlier at our discretion upon payment in full of loans and other obligations.

As of December 27, 2020, we had $288.5 million in outstanding borrowings under the Amended Credit Agreement, which was comprised of $225.0 million under the Term Loan Facility and $63.5 million outstanding under the Amended Revolving Credit Facility at a year-to-date weighted-average interest rate of 1.34% per annum.

As of March 28, 2021, we had $250.8 million in outstanding borrowings under the Amended Credit Agreement, which was comprised of $221.9 million under the Term Loan Facility and $28.9 million outstanding under the Amended Revolving Credit Facility at a year-to-date weighted-average interest rate of 1.30% per annum.

In addition, we had $0.7 million in standby letters of credit under the Amended Credit Agreement.

Our average effective weighted-average interest rate on borrowings outstanding during the three months ended December 27, 2020 under the Amended Credit Agreement, including the effects of interest rate swap agreements described in Note 14, “Derivative Financial Instruments” of the “Notes to Consolidated Financial Statements”, was 3.28%.

At December 27, 2020, we had $386.3 million of available credit under the Amended Revolving Credit Facility, all of which could be borrowed without a violation of our debt covenants.

Our average effective weighted-average interest rate on borrowings outstanding during the three months ended March 28, 2021 under the Amended Credit Agreement, including the effects of interest rate swap agreements described in Note 14, “Derivative Financial Instruments” of the “Notes to Consolidated Financial Statements”, was 3.27%.

At March 28, 2021, we had $419.6 million of available credit under the Amended Revolving Credit Facility, all of which could be borrowed without a violation of our debt covenants.

The Amended Credit Agreement contains certain affirmative and restrictive covenants, and customary events of default.

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Our obligations under the Amended Credit Agreement are guarant eed by certain of our domestic subsidiaries and are secured by first priority liens on (i) the equity interests of certain of our subsidiaries, including those subsidiaries that are guarantors or borrowers under the Amended Credit Agreement, and (ii) the accounts receivable, general intangibles and intercompany loans, and those of our subsidiaries that are guarantors or borrowers.

At December 27, 2020, we were in compliance with these covenants with a consolidated leverage ratio of 1.18x and a consolidated interest coverage ratio of 20.51x.

At March 28, 2021, we were in compliance with these covenants with a consolidated leverage ratio of 1.03x and a consolidated interest coverage ratio of 23.06x.

In addition to the Amended Credit Agreement, we maintain other credit facilities, which may be used for bank overdrafts, short-term cash advances and bank guarantees.

At December 27, 2020, there were no borrowings outstanding under these facilities and the aggregate amount of standby letters of credit outstanding was $69.3 million.

As of December 27, 2020, we had bank overdrafts of $13.5 million related to our U.S.

At March 28, 2021, there was $1.6 million outstanding under these facilities and the aggregate amount of standby letters of credit outstanding was $63.3 million.

As of March 28, 2021, we had bank overdrafts of $15.4 million related to our U.S.

disbursement bank accounts.

This balance is reported in the "Current portion of long-term debt and other short-term borrowings" on our consolidated balance sheet as of December 27, 2020.

This balance is reported in the "Current portion of long-term debt and other short-term borrowings" on our consolidated balance sheet as of March 28, 2021.

The change in bank overdraft balance is classified as cash flows from financing activities on our consolidated statements of cash flows as we believe these overdrafts to be a form of short-term financing from the bank due to our ability to fund the overdraft with the overdraft protection on the bank accounts or our other credit facilities if needed.

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November 9, 2020 $ 0.17 November 30, 2020 $ 9,198 December 11, 2020

January 25, 2021 $ 0.17 February 10, 2021 N/A February 26, 2021

January 25, 2021 $ 0.17 February 10, 2021 $ 9,212 February 26, 2021

April 26, 2021 $ 0.20 May 12, 2021 N/A May 28, 2021

We evaluate the realizability of our deferred tax assets by assessing the valuation allowance and adjust the allowance, if necessary.

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Based on future operating results in certain jurisdictions, it is possible that the current valuation allowance positions of those jurisdictions could be adjusted in the next 12 months, particularly in the United Kingdom where we have a valuation allowance of approximately $12.5 million primarily related to the realizability of net operating loss carry-forwards.

As of December 27, 2020 and September 27, 2020, the liability for income taxes associated with uncertain tax positions was $10.7 million and $9.7 million, respectively.

As of March 28, 2021 and September 27, 2020, the liability for income taxes associated with uncertain tax positions was $10.0 million and $9.7 million, respectively.

It is reasonably possible that the amount of the unrecognized benefit with respect to certain of our unrecognized tax positions may significantly decrease within the next 12 months.

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If we default on the Amended Credit Agreement or additional credit facilities, our inability to issue or renew standby letters of credit and bank guarantees would impair our ability to maintain normal operations.

At December 27, 2020, we had $0.7 million in standby letters of credit outstanding under our Amended Credit Agreement and $69.3 million in standby lett ers of credit outstanding under our additional letter of credit facilities.

At March 28, 2021, we had $0.7 million in standby letters of credit outstanding under our Amended Credit Agreement and $63.3 million in standby lett ers of credit outstanding under our additional letter of credit facilities.

• From time to time, we provide guarantees and indemnifications related to our services.

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For cost-plus contracts, amounts that may become payable pursuant to guarantee provisions are normally recoverable from the client for work performed under the contract.

For lump sum or fixed-price contracts, this amount is the cost to complete the contracted work less amounts remaining to be billed to the client under the contract.

For lump sum or fixed-price

contracts, this amount is the cost to complete the contracted work less amounts remaining to be billed to the client under the contract.

Remaining billable amounts could be greater or less than the cost to complete.

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The Facility matures on July 30, 2023.

At December 27, 2020, we had borrowings outstanding under the Credit Agreement of $288.5 million at a year-to-date weighted-average interest rate of 1.34% per annum.

At March 28, 2021, we had borrowings outstanding under the Credit Agreement of $250.8 million at a year-to-date weighted-average interest rate of 1.30% per annum.

In August 2018, we entered into five interest rate swap agreements with five banks to fix the variable interest rate on $250 million of our Amended Term Loan Facility.

The objective of these interest rate swaps was to eliminate the variability of our cash flows on the amount of interest expense we pay under our Credit Agreement.

As of December 27, 2020, the notional principal of our outstanding interest swap agreements was $225.0 million ($45.0 million each.) Our year-to-date average effective interest rate on borrowings outstanding under the Credit Agreement, including the effec ts of interest rate swap agreements, at December 27, 2020, was 3.28%.

As of March 28, 2021, the notional principal of our outstanding interest swap agreements was $221.9 million ($44.4 million each.) Our year-to-date average effective interest rate on borrowings outstanding under the Credit Agreement, including the effec ts of interest rate swap agreements, at March 28, 2021, was 3.27%.

For more information, see Note 14, “Derivative Financial Instruments” of the “Notes to Consolidated Financial Statements”.

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Therefore, we are subject to currency exposure and volatility because of currency fluctuations.

We attempt to minimize our exposure to these fluctuations by matching revenue and expenses in the same currency for our contracts .

For the first quarters of fiscal 2021 and 2020, we reported $1.3 million and $0.5 million of foreign currency losses, respectively, in “Selling, general and administrative expenses” on our consolidated statements of income.

We attempt to minimize our exposure to these fluctuati ons by matching revenue and expenses in the same currency for our contracts.

For the first half of fiscal 2021 and 2020, we reported $1.3 million of foreign currency loss and $0.2 million of foreign currency gain, respectively, in “Selling, general and administrative expenses” on our consolidated statements of income.

We have foreign currency exchange rate exposure in our results of operations and equity primarily because of the currency translation related to our foreign subsidiaries where the local currency is the functional currency.

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dollar strengthens against foreign currencies, the translation of these foreign currency denominated transactions will result in reduced revenue, operating expenses, assets and liabilities.

Similarly, our revenue, operating expenses, assets and liabilities will increase if the U.S.

Similarly, our revenue, op erating expenses, assets and liabilities will increase if the U.S.

dollar weakens against foreign currencies.

For the first quarters of fiscal 2021 a nd 2020, 28.3% and 31.0% of our consolidated revenue, respectively, was generated by our international business.

T he effect of foreign exchange rate translation on the consolidated balance sheets was an increase in our equity by $32.4 million and $13.9 million for the first quarters of fiscal 2021 and 2020, respectively.

These amounts were recognized as adjustments to equity through other comprehensive income.

For the first half of fiscal 2021 and 2020, 28.3% and 30.9%

of our consolidated revenue, respectively, was generated by our international business.

For the first half of fiscal 2021, the effect of foreign exchange rate translation on the consolidated balance sheets was an increase in our equity by $43.4 million compared to a decrease in equity of $33.1 million in the first half of fiscal 2020.

These amounts were recognized as adjustment s to equity through other comprehensive income.

Quantitative and Qualitative Disclosures about Market Risk

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis