What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-02-04 compared with 2021-07-30 · 174 added, 271 removed, 417 unchanged (52% of the section changed)

3 unchanged sentences

(unaudited - in thousands, except par value)

ASSETS June 27,

2021 September 27,

ASSETS January 2,

2022 October 3,

Current assets:

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Preferred stock - authorized, 2,000 shares of $ 0.01 par value;

no shares issued and outstanding at June 27, 2021 and September 27, 2020

no shares issued and outstanding at January 2, 2022 and October 3, 2021

Common stock - authorized, 150,000 shares of $ 0.01 par value;

issued and outstanding, 54,071 and 53,797 shares at June 27, 2021 and September 27, 2020, respectively

issued and outstanding, 53,999 and 53,981 shares at January 2, 2022 and October 3, 2021, respectively

Accumulated other comprehensive loss ( 123,048 ) ( 125,028 )

8 unchanged sentences

(unaudited – in thousands, except per share data)

Three Months Ended Nine Months Ended

2021 June 28,

2020 June 27,

2021 June 28,

Three Months Ended

2022 December 27,

Revenue $ 858,510 $ 765,104

3 unchanged sentences

Selling, general and administrative expenses ( 52,546 ) ( 50,058 )

Contingent consideration – fair value adjustments ( 30 ) ( 50 ) 163 1,521

Income from operations 87,220 66,252

Interest expense ( 2,737 ) ( 3,564 ) ( 8,585 ) ( 10,412 )

Interest expense, net ( 2,904 ) ( 3,026 )

Income before income tax expense 84,316 63,226

13 unchanged sentences

(unaudited – in thousands)

Three Months Ended Nine Months Ended

2021 June 28,

2020 June 27,

2021 June 28,

Three Months Ended

2022 December 27,

Net income $ 68,499 $ 52,448

2 unchanged sentences

( 686 ) 32,393

Gain (loss) on cash flow hedge valuations, net of tax 1,498 ( 30 ) 4,864 ( 5,726 )

Other comprehensive income (loss), net of tax 12,657 21,655 59,391 ( 17,154 )

Gain on cash flow hedge valuations, net of tax 2,666 1,476

Other comprehensive income, net of tax 1,980 33,869

Comprehensive income, net of tax $ 70,479 $ 86,317

5 unchanged sentences

(unaudited – in thousands)

Nine Months Ended

2021 June 28,

Three Months Ended

2022 December 27,

Cash flows from operating activities:

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Deferred income taxes ( 878 ) 954

Provision for losses on accounts receivables ( 4,355 ) 539

Fair value adjustments to contingent consideration ( 163 ) ( 1,521 )

Gain on sale of property and equipment ( 110 ) ( 9,693 )

(Gain) loss on sale of property and equipment 239 ( 7 )

Changes in operating assets and liabilities, net of effects of business acquisitions:

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Capital expenditures ( 1,518 ) ( 1,795 )

Proceeds from sale of property and equipment 333 17,162

Proceeds from sales of assets 3,514 9

Net cash used in investing activities ( 6,862 ) ( 1,786 )

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Net cash used in financing activities ( 36,414 ) ( 32,827 )

Effect of exchange rate changes on cash, cash equivalents and restricted cash 10,772 ( 334 )

Net increase in cash, cash equivalents and restricted cash 76,751 20,929

Cash, cash equivalents and restricted cash at beginning of period 157,515 120,901

Cash, cash equivalents and restricted cash at end of period $ 234,266 $ 141,830

Effect of exchange rate changes on cash and cash equivalents ( 169 ) 7,356

Net increase in cash and cash equivalents 38,974 5,923

Cash and cash equivalents at beginning of period 166,568 157,515

Cash and cash equivalents at end of period $ 205,542 $ 163,438

Supplemental information:

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$ 11,535 $ 5,696

Reconciliation of cash, cash equivalents and restricted cash:

Cash and cash equivalents $ 234,266 $ 141,658

Restricted cash — 172

Total cash, cash equivalents and restricted cash $ 234,266 $ 141,830

See Notes to Consolidated Financial Statements.

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Consolidated Statements of Stockholders' Equity

Three Months Ended June 28, 2020 and June 27, 2021

(unaudited – in thousands)

Common Stock Additional

Capital Accumulated

Comprehensive

Loss Retained

Earnings Total

Equity Non-Controlling

Interests Total

Shares Amount

BALANCE AT MARCH 29, 2020 54,142 $ 541 $ 10,473 $ ( 199,391 ) $ 1,138,485 $ 950,108 $ 130 $ 950,238

Net income 45,497 45,497 6 45,503

Other comprehensive income (loss) 21,659 21,659 ( 4 ) 21,655

Cash dividends of $ 0.17 per common share

( 9,175 ) ( 9,175 ) ( 9,175 )

Stock-based compensation 4,057 4,057 4,057

Restricted & performance shares released ( 5 ) — ( 45 ) ( 45 ) ( 45 )

Stock options exercised 14 — 336 336 336

Stock repurchases ( 263 ) ( 2 ) ( 14,821 ) $ ( 4,720 ) ( 19,543 ) ( 19,543 )

BALANCE AT JUNE 28, 2020 53,888 $ 539 $ — $ ( 177,732 ) $ 1,170,087 $ 992,894 $ 132 $ 993,026

BALANCE AT MARCH 28, 2021 54,158 $ 542 $ — $ ( 115,056 ) $ 1,261,661 $ 1,147,147 $ 81 $ 1,147,228

Net income 51,903 51,903 21 51,924

Other comprehensive income 12,655 12,655 2 12,657

Distributions paid to noncontrolling interests — ( 9 ) ( 9 )

Cash dividends of $ 0.20 per common share

( 10,831 ) ( 10,831 ) ( 10,831 )

Stock-based compensation 5,695 5,695 5,695

Restricted & performance shares released 2 — ( 101 ) ( 101 ) ( 101 )

Stock options exercised 29 1 931 932 932

Stock repurchases ( 118 ) ( 2 ) ( 6,525 ) ( 8,473 ) ( 15,000 ) ( 15,000 )

BALANCE AT JUNE 27, 2021 54,071 $ 541 $ — $ ( 102,401 ) $ 1,294,260 $ 1,192,400 $ 95 $ 1,192,495

Tetra Tech, Inc.

Consolidated Statements of Stockholders' Equity

Nine months ended June 28, 2020 and June 27, 2021

Three Months Ended December 27, 2020 and January 02, 2022

(unaudited – in thousands)

9 unchanged sentences

Net income 52,436 52,436 12 52,448

Other comprehensive loss ( 17,148 ) ( 17,148 ) ( 6 ) ( 17,154 )

Distributions paid to noncontrolling interests — ( 69 ) ( 69 )

Other comprehensive income 33,867 33,867 2 33,869

Cash dividends of $ 0.17 per common share

5 unchanged sentences

Stock repurchases ( 135 ) ( 1 ) ( 5,757 ) $ ( 9,242 ) ( 15,000 ) ( 15,000 )

BALANCE AT JUNE 28, 2020 53,888 $ 539 $ — $ ( 177,732 ) $ 1,170,087 $ 992,894 $ 132 $ 993,026

BALANCE AT SEPTEMBER 27, 2020 53,797 $ 538 $ — $ ( 161,786 ) $ 1,198,567 $ 1,037,319 $ 54 $ 1,037,373

BALANCE AT DECEMBER 27, 2020 54,193 $ 542 $ — $ ( 127,919 ) $ 1,232,563 $ 1,105,186 $ 68 $ 1,105,254

BALANCE AT OCTOBER 3, 2021 53,981 $ 540 $ — $ ( 125,028 ) $ 1,358,726 $ 1,234,238 53 $ 1,234,291

Net income 68,489 68,489 10 68,499

Other comprehensive income 1,980 1,980 1,980

Distributions paid to noncontrolling interests — ( 9 ) ( 9 )

Cash dividends of $ 0.20 per common share

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Stock repurchases ( 290 ) ( 3 ) — ( 49,997 ) ( 50,000 ) ( 50,000 )

BALANCE AT JUNE 27, 2021 54,071 $ 541 $ — $ ( 102,401 ) $ 1,294,260 $ 1,192,400 $ 95 $ 1,192,495

BALANCE AT JANUARY 2, 2022 53,999 $ 540 $ — $ ( 123,048 ) $ 1,360,390 $ 1,237,882 $ 63 $ 1,237,945

See Notes to Consolidated Financial Statements.

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They do not include all of the information and footnotes required by U.S.

GAAP for complete financial statements and, therefore, should be read in conjunction with the audited consolidated financial statements and the notes contained in our Annual Report on Form 10-K for the fiscal year ended September 27, 2020.

These financial statements reflect all normal recurring adjustments that are considered necessary for a fair statement of our financial position, results of operations and cash flows for the interim periods presented.

The results of operations and cash flows for any interim period are not necessarily indicative of results for the full year or for future years .

Beginning in fiscal 2022, we aligned our operations to better serve our clients and markets, and created a new High Performance Buildings ("HPB") division in our Commercial/International Services Group ("CIG") reportable segment.

As a result, we transferred some related operations in our Government Services Group (" GSG") reportable segment to our CIG reportable segment.

Prior year amounts for reportable segments have been reclassified to conform to the current year presentation.

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board ("FASB") issued updated guidance, Accounting Standards Update ("ASU") 2016-13, related to the measurement of credit losses for certain financial assets.

This guidance replaces the current incurred loss methodology with an expected credit loss methodology.

It requires us to recognize an allowance equal to our current estimate of all contractual cash flows that we do not expect to collect.

We adopted this guidance in the first quarter of fiscal 2021, and the adoption did not have a material impact on our consolidated financial statements.

Our estimate considered relevant information about past events, current conditions, and reasonable and supportable forecasts impacting the collectability of the reported amounts.

In August 2018, the FASB issued updated guidance modifying certain fair value measurement disclosures.

The guidance contains additional disclosures to enable users of the financial statements to better understand the entity’s assumptions used to develop significant unobservable inputs for Level 3 fair value measurements, but also eliminates the requirement for entities to disclose the amount of and reasons for transfers between Level 1 and Level 2 investments within the fair value hierarchy.

We adopted this guidance in the first quarter of fiscal 2021, and the adoption did not have a material impact on our consolidated financial statements.

In December 2019, the FASB issued guidance simplifying the accounting for income taxes by removing certain exceptions to general principles in Topic 740 and amending certain existing guidance for clarity.

This guidance is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2020 (first quarter of fiscal 2022 for us).

Early adoption is permitted.

We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

In December 2019, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2019-12, which simplifies the accounting for income taxes by removing certain exceptions to general principles in Topic 740 and amending certain existing guidance for clarity .

We adopted this guidance in the first quarter of fiscal 2022, and the adoption did not have an impact on our consolidated financial statements.

In May 2020, the Securities and Exchange Commission issued guidance amending certain financial disclosures about acquired and disposed businesses.

The amendments are designed to assist registrants in making more meaningful determinations of whether a subsidiary or an acquired or disposed business is significant, and to improve the related disclosure requirements.

The guidance is effective for fiscal years beginning after December 31, 2020 (first quarter of fiscal 2022 for us).

We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

We adopted this guidance in the first quarter of fiscal 2022, and the adoption did not have an impact on our consolidated financial statements.

In October 2021, the FASB issued ASU 2021-08, which requires the recognition and measurement of contract assets and contract liabilities acquired in a business combination in accordance with Accounting Standards Codification Topic 606, "Revenue from Contracts with Customers" ("ASC 606").

Considerations to determine the amount of contract assets and contract liabilities to record at the acquisition date include the terms of the acquired contract, such as timing of payment, identification of each performance obligation in the contract and allocation of the contract transaction price to each identified performance obligation on a relative standalone selling price basis as of contract inception.

ASU 2021-08 is effective for us beginning in the first quarter of fiscal 2023.

ASU 2021-08 should be applied prospectively for acquisitions occurring on or after the effective date of the amendments.

Early adoption of the proposed amendments would be permitted, including adoption in an interim period.

We are currently assessing the impact this standard will have on our consolidated financial statements.

In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832), which requires disclosures for transactions with a government authority that are accounted for by applying a grant or contribution model by analogy, including (1) the types of transactions, (2) the accounting for those transactions, and (3) the effect of those transactions on an entity's financial statements.

ASU 2021-10 is effective for us beginning in the first quarter of fiscal 2023, with early adoption permitted.

This guidance should be applied prospectively to all transactions that are reflected in the financial statements at the date of initial application and to new transactions that are entered into after that date, or retrospectively.

We do not expect the adoption of this guidance to have an impact on our consolidated financial statements.

Revenue and Contract Balances

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The following tables present revenue disaggregated by client sector and contract type:

Three Months Ended Nine Months Ended

2021 June 28,

2020 June 27,

2021 June 28,

Three Months Ended

2022 December 27,

(in thousands)

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Other than the U.S.

federal government, no single client accounted for more than 10% of our revenue for the three and nine months ended June 27, 2021 and June 28, 2020.

federal government, no single client accounted for more than 10% of our revenue for the three months ended January 2, 2022 and December 27, 2020.

Contract Assets and Contract Liabilities

10 unchanged sentences

Net contract assets/liabilities consisted of the following:

2021 September 27, 2020

2022 October 3, 2021

(in thousands)

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Net contract liabilities $ ( 121,080 ) $ ( 86,619 )

(1) Includes $ 8.5 million and $ 12.3 million of contract retentions as of June 27, 2021 and September 27, 2020, respectively.

In the first nine months of fiscal 2021 and 2020, we recognized revenue of approximately $ 108 million and $ 106 million, respectively, from amounts included in the contract liability balances at the end of fiscal 2020 and 2019, respectively.

(1) Inclu des $ 13.5 million and $ 12.2 million of contract retentions as of January 2, 2022 and October 3, 2021, respectively.

In the first quarters of fiscal 2022 and 2021, we recognized revenue of approximately $ 63 million and $ 60 million, respectively, from amounts included in the contract liability balances at the end of fiscal 2021 and 2020, respectively.

We recognize revenue primarily using the cost-to-cost measure of progress to estimate progress towards completion.

Changes in those estimates could result in the recognition of cumulative catch-up adjustments to the contract’s inception-to-date revenue, costs and profit in the period in which such changes are made.

As a result, we recognized net favorable operating income adjustments of $ 1.7 million and $ 2.8 million in the third quarter and first nine months of fiscal 2021, respectively, compared to a net unfavorable adjustment of $ 2.8 million in the first nine months of fiscal 2020 (all in the second quarter).

As a result, we recognized net favorable revenue and operating income adjustments of $ 2.8 million in the first quarter of fiscal 2022.

For the first quarter of fiscal 2021, these net adjustments to our revenue and operating income were immaterial.

C hanges in revenue and cost estimates could also result in a projected loss, determined at the contract level, which would be recorded immediately in earnings.

As of June 27, 2021 and September 27, 2020, our consolidated balance sheets included liabilities for anticipated losses of $ 8.0 million and $ 13.2 million, respectively.

The estimated cost to complete these related contracts as of June 27, 2021 and September 27, 2020 was approximately $ 81 million and $ 118 million, respectively.

As of January 2, 2022 and October 3, 2021, our consolidated balance sheets included liabilities for anticipated losses of $ 14.2 million and $ 12.7 million, respectively.

The estimated cost to complete these related contracts as of January 2, 2022 and October 3, 2021 was approximately $ 116 million and $ 104 million, respectively.

Accounts Receivable, Net

Net accounts receivable consisted of the following:

2021 September 27,

2022 October 3,

(in thousands)

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Unbilled accounts receivable, which represent an unconditional right to payment subject only to the passage of time, include unbilled amounts typically resulting from revenue recognized but not yet billed pursuant to contract terms or billed after the period end date.

Substantially all of our unbilled receivables at June 27, 2021 are expected to be billed and collecte d within 12 months.

Substantially all of our unbilled receivables at January 2, 2022 are expected to be billed and collecte d within 12 months.

The allowance for doubtful accounts represents amounts that are expected to become uncollectible or unrealizable in the future.

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and general economic and industry conditions, including the potential impacts of the coronavirus disease 2019 ("COVID-19") pandemic, that may affect our clients' ability to pay.

The $ 3.8 million decline in our allowance for doubtful accounts in the first nine months of fiscal 2021 primarily reflects the collection of accounts receivable we previously determined were likely uncollectible related to our Canadian turn-key pipeline activities that we decided to dispose of in the fourth quarter of fiscal 2019.

Total accounts receivable at June 27, 2021 and September 27, 2020 included approximately $ 11 million for each period (all in our Remediation Construction Management ("RCM") segment), related to claims, including requests for equitable adjustment, on contracts that provide for price redetermination.

Total accounts receivable at January 2, 2022 and October 3, 2021 included approximately $ 11 million for each period, related to claims, including requests for equitable adjustment, on contracts that provide for price redetermination.

Claims are amounts in excess of agreed contract prices that we seek to collect from our clients or other third parties for delays, errors in specifications and designs, contract terminations, change orders in dispute or unapproved as to both scope and price, or other causes of unanticipated additional costs.

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We regularly evaluate all unsettled claim amounts and record appropriate adjustme nts to revenue when it is probable that the claim will result in a different contract value than the amount previously estimated.

In the first nine months of fiscal 2021 (all in the second quarter), we recognized increases to revenue and related gains of $ 2.8 million in our Commercial/

International Services Group ("CIG").

In the first nine months of fiscal 2020, we recorded net losses in operating income related to claims of $ 4.4 million in our CIG segment.

No single client accounted for more than 10% of our accounts receivable at June 27, 2021 a nd September 27, 2020.

Remaining Unsatisfied Performance Obligations (“RUPOs”)

Our RUPOs represent a measure of the total dollar value of work to be performed on contracts awarded and in progress.

We h ad $ 3.2 billion of RU POs as of June 27, 2021.

RUPOs increase with awards from new contracts or additions on existing contracts and decrease as work is performed and revenue is recognized on existing contracts.

RUPOs may also decrease when projects are canceled or modified in scope.

We include a contract within our RUPOs when the contract is awarded and an agreement on contract terms has been reached.

We expect to satisfy our RUPOs as of June 27, 2021 over the following periods:

In the first quarters of fiscal 2022 and fiscal 2021, we recorded no gains or losses related to claims.

Other than the U.S.

federal government, no single client accounted for more than 10% of our accounts receivable at January 2, 2022 and October 3, 2021.

Remaining Unsatisfied Performance Obligations (“RUPO”)

Our RUPO represents a measure of the total dollar value of work to be performed on contracts awarded and in progress.

We h ad $ 3.4 billion of RUPO as of January 2, 2022.

RUPO increases with awards from new contracts or additions on existing contracts and decreases as work is performed and revenue is recognized on existing contracts.

RUPO may also decrease when projects are canceled or modified in scope.

We include a contract within our RUPO when the contract is awarded and an agreement on contract terms has been reached.

We expect to satisfy our RUPO as of January 2, 2022 over the following periods:

(in thousands)

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Total $ 3,435,383

Although RUPOs reflect business that is considered to be firm, cancellations, deferrals or scope adjustments may occur.

RUPOs are adjusted to reflect any known project cancellations, revisions to project scope and cost, foreign currency exchange fluctuations and project deferrals, as appropriate.

Although RUPO reflects business that is considered to be firm, cancellations, deferrals or scope adjustments may occur.

RUPO is adjusted to reflect any known project cancellations, revisions to project scope and cost, foreign currency exchange fluctuations and project deferrals, as appropriate.

Our operations and maintenance contracts can generally be terminated by the clients without a substantive financial penalty.

Therefore, the remaining performance obligations on such contracts are limited to the notice period required for the termination (usually 30 , 60 , or 90 days).

In the second quarter of fiscal 2021, we acquired Coanda Research and Development Corporation ("CRD"), based in Burnaby, British Columbia.

CRD provides world-class expertise in computational fluid dynamics and utilizes industry-leading capabilities to solve complex engineering science problems for commercial customers, across a broad range of industries and is part of our CIG segment.

In the third quarter of fiscal 2021, we acquired The Kaizen Company (“KZN”) and IBRA-RMAC Automation Solutions (“IRM”).

In the first quarter of fiscal 2022, our acquisition activity was immaterial.

In fiscal 2021, we acquired Coanda Research and Development Corporation ("CRD"), The Kaizen Company (“KZN”), IBRA-RMAC Automation Solutions (“IRM”), and the partnership interests of Hoare Lea, LLP and Subsidiaries ("HLE").

CRD is based in Burnaby, British Columbia and provides world-class expertise in computational fluid dynamics and utilizes industry-leading capabilities to solve complex engineering science problems for commercial customers, across a broad range of industries.

KZN is based in Washington, DC and provides international development advisory and management consulting services offering a suite of innovative tools that support advanced solutions in health, education, governance, peace and stability, and sustainable economic growth.

IRM is based in San Diego, California, and provides digital water transformation consulting services and an innovative suite of tools to address complex water system modernization challenges.

Both KZN and IRM are part of our Government Services Group ("GSG") segment.

The total fair value of the purchase price of these three acquisitions completed during the first nine months of fiscal 2021 was $ 29.1 million.

This amount was comprised of $ 18.9 million in initial cash payments made to the sellers, and $ 10.2 million for the estimated fair value of contingent earn-out obligations, with a maximum of $ 19.0 million, based upon the achievement of specified operating income targets in each of the three to four years following the acquisition.

We acquired Segue Technologies, Inc.

("SEG"), a leading information technology management consulting firm based in Arlington, Virginia and BlueWater Federal Solutions, Inc.

("BWF"), a leading information technology management consulting firm based in Chantilly, Virginia in the second and fourth quarters of fiscal 2020, respectively.

SEG and BWF are both part of our GSG segment.

The total fair value of the purchase price for these two acquisitions w as $ 88.6 million.

T his amount was comprised of $ 71.4 million in initial cash payments made to the sellers, $ 0.7 million of payables related to estimated post-closing adjustments for net assets acquired, and $ 16.5 million for the estimated fair value of contingent earn-out obligations, with a maximum of $ 28.0 million, based upon the achievement of specified operating income targets in each of the three years following the acquisitions.

Goodwill additions resulting from the recent acquisitions of KZN, IRM and CRD are primarily attributable to the significant technical expertise residing in an embedded workforce that is sought out by clients, and the synergies expected to arise after the acquisitions.

The fiscal 2020 goodwill additions represent the value of a workforce with distinct expertise in the high-end information technology field, in the areas of data analytics, modeling and simulation, cloud, and agile software development.

In addition, these acquired capabilities, when combined with our existing global consulting and engineering business, result in opportunities that allow us to provide services under contracts that could not have been pursued individually by either us or the acquired companies.

The results of these acquisitions were included in our consolidated financial statements from their respective closing dates.

HLE is a leader in sustainable engineering design based in Bristol, United Kingdom.

It was established in 1862 and is an award-winning high-end consultancy firm in the United Kingdom, with more than 900 employees, providing innovative solutions to complex engineering and design challenges for sustainable infrastructure and high performance buildings.

CRD and HLE are part of our CIG segment, and KZN and IRM are part of our GSG segment.

The total fair value of the purchase price for these acquisitions was $ 151.7 million.

This amount was comprised of $ 101.4 million in initial cash payments made to the sellers, and $ 50.3 million for the estimated fair value of contingent earn-out obligations, with a maximum of $ 74.0 million, based upon the achievement of specified operating income targets in each of the three to four years following the acquisitions.

Goodwill additions resulting from the above business combinations are primarily attributable to the existing workforce of the acquired companies and the synergies expected to arise after the acquisitions.

The fiscal 2021 goodwill additions represent the significant technical expertise residing in embedded workforces that are sought out by clients and the long-standing reputation of HLE.

In addition, these acquired capabilities, when combined with our exis ting global consulting and engineering business, result in opportunities that allow us to provide services under contracts that could not have been pursued individually by either us or the acquired compan ies.

T he results of these acquisitions were included in our consolidated financial statements from their respective closing dates.

These acquisitions were not considered material, individually or in the aggregate, to our consolidated financial statements.

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The fair values of any earn-out arrangements are included as part of the purchase price of the acquired companies on their respective acquisition dates.

For each transaction, we estimate the fair value of contingent earn-out payments as part of the initial purchase price and record the estimated fair value of contingent consideration as a liability in “Current contingent earn-out liabilities” and “Long-term contingent earn-out liabilities” on the consolidated balance sheets.

and “Long-term contingent earn-out liabilities” on the consolidated balance sheets.

We consider several factors when determining that contingent earn-out liabilities are part of the purchase price, including the following:

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We use a probability-weighted discounted income approach as a valuation technique to convert future estimated cash flows to a single present value amount.

The significant unobservable inputs used in the fair value measurements are operating income projections over the earn-out period (generally two or three years ), and the probability outcome percentages we assign to each scenario.

The significant unobservable inputs used in the fair value measurements are operating income projections over the earn-out period (generally three to five years ), and the probability outcome percentages we assign to each scenario.

Significant increases or decreases to either of these inputs in isolation would result in a significantly higher or lower liability, with a higher liability capped by the contractual maximum of the contingent earn-out obligation.

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Any amount paid in excess of the contingent earn-out liability on the acquisition date is reflected as cash used in operating activities in our consolidated statements of cash flows.

We evaluated our estimated fair value of contingent consideration liabilities for each individual acquisition on a quarterly basis, which included a review of their financial results to-date, the status of ongoing projects in their RUPOs, and the inventory of prospective new contract awards.

We also considered the potential impact of the global economic disruption due to the COVID-19 pandemic on our operating income projections over the various earn-out periods.

The updated fair value could differ materially from the initial estimates.

We review and re-assess the estimated fair value of contingent consideration on a quarterly basis, and the updated fair value could differ materially from the initial estimates.

Changes in the estimated fair value of our contingent earn-out liabilities related to the time component of the present value calculation are reported in interest expense.

During the first nine months of fiscal 2021 and 2020, we recorded adjustments to our contingent earn-out liabilities and reported a net gain in operating income of $ 0.2 million and $ 1.5 million, respectively (substantially all in the second quarters of fiscal 2021 and 2020).

At June 27, 2021, there was a total potential maximu m of $ 68.2 million of outstanding contingent consideration related to acquisitions.

Adjustments to the estimated fair value related to changes in all other unobservable inputs are reported in operating income.

In the first quarter of fiscal 2022, we evaluated our estimates for contingent consideration liabilities for the remaining earn-out periods for each individual acquisition, which included a review of their financial results to-date, the status of ongoing projects in their RUPO, and the inventory of prospective new contract awards.

In addition, we considered the potential impact of the global economic disruption due to the COVID-19 pandemic on our operating income projections over the various earn-out peri ods.

For the first quarters of fiscal 2022 and 2021, we had no material adjustments to our contingent earn-out liabilities in operating income.

At January 2, 2022, there was a total potential ma ximum of $ 119.4 million of outstanding contingent consideration related to acquisitions.

Of this amount, $ 65.8 million was estimated as the fair value and accrued on our consolidated balance sheet.

If the global economic disruption related to the COVID-19 pandemic is prolo nged, we could have significant reductions in our contingent earn-out liabilities and related gains in our operating income in future periods.

Subsequent Event.

On July 26, 2021, we acquired Hoare Lea, a leader in sustainable engineering design.

Based in Bristol, United Kingdom, Hoare Lea was established in 1862 and is an award-winning high-end consultancy firm in the United Kingdom, with more than 900 employees, providi ng innovative solutions to complex engineering and design challenges for sustainable infrastructure and high performance buildings.

Hoare Lea will be included in our CIG segment .

Goodwill and Intangible Assets

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(in thousands)

Balance at September 27, 2020 $ 516,315 $ 477,183 $ 993,498

Balance at October 3, 2021 $ 538,433 $ 570,145 $ 1,108,578

Goodwill reallocation ( 51,497 ) 51,497 —

Acquisition activity 14,671 — 14,671

Translation 10,099 29,633 39,732

Balance at June 27, 2021 $ 541,305 $ 510,491 $ 1,051,796

Our goodwill balances reflect foreign currency translation adjustments related to our foreign subsidiaries with functional currencies that are different than our reporting currency.

Translation and adjustments 44 ( 233 ) ( 189 )

Balance at January 2, 2022 $ 501,651 $ 621,409 $ 1,123,060

Our goodwill balances reflect the goodwill reallocation related to the creation of our new HPB division on the first day of fiscal 2022, which included a transfer of some related operations in our GSG reportable segment to our CIG reportable segment.

The foreign currency translation adjustments resulted from our foreign subsidiaries with functional currencies that are different than our reporting currency.

These amounts are presented net of reductions from historical impairment adjustments.

The gross amounts o f goodwill for GSG were $ 559.0 million and $ 534.0 million at June 27, 2021 and September 27, 2020, respectively, excluding accumulated impairment of $ 17.7 million for each period.

The gross amounts of goodwill for CIG were $ 632.0 million and $ 598.7 million at June 27, 2021 and September 27, 2020, respectively, excluding accumulated impairment of $ 121.5 million for each period.

The gross amounts o f goodwill for GSG were $ 519.4 million and $ 556.1 million at January 2, 2022 and October 3, 2021, respectively, excluding accumulated impairment of $ 17.7 million for each period.

The gross amounts of goodwill for CIG were $ 742.9 million and $ 691.6 million at January 2, 2022 and October 3, 2021, respectively, excluding accumulated impairment of $ 121.5 million for each period.

We perform our annual goodwill impairment review at the beginning of our fiscal fourth quarter.

Our most recent annual review at June 28, 2021 (i.e.

the first day of our fourth quarter in fiscal 2020) indicated that we had no impairment of goodwill, and all of our reporting units had estimated fair values that were in excess of their carrying values, including goodwill.

All of our reporting units had estimated fair values that exceeded their carrying values by more than 80 %, with the exception of our former Asia/Pacific ("ASP") reporting unit, which was in our CIG reportable segment.

Our former ASP reporting unit had an estimated fair value that exceeded its carrying value by less than 20 %.

the first day of our fourth quarter in fiscal 2021) indicated that we had no impairment of goodwill, and all of our reporting units had estimated fair values that were in excess of their carrying values, including

As of June 28, 2021, and after the reallocation of goodwill on the first day of fiscal 2022, we had no reporting units that had estimated fair values that exceeded their carrying values by less than 150 %.

We also regularly evaluate whether events and circumstances have occurred that may indicate a potential change in the recoverability of goodwill.

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Although we believe that our estimates of fair value for these reporting units are reasonable, if financial performance for these reporting units falls significantly below our expectations or market prices for similar business decline, the goodwill for these reporting units could become impaired.

On September 2, 2020, Australia announced that it had fallen into economic recession, defined as two consecutive quarters of negative growth, for the first time since 1991 including 7 % negative growth in the quarter ending June 30, 2020.

This prompted a strategic review of our former ASP reporting unit.

As a result of the economic recession in Australia, our revenue growth and profit margin forecasts for our former ASP reporting unit declined from the previous forecast used for our annual goodwill impairment review as of June 29, 2020.

We also performed an interim goodwill impairment review of our former ASP reporting unit in September 2020 and recorded a $ 15.8 million goodwill impairment charge.

As a result of the impairment charge, the estimated fair value of our former ASP reporting unit equaled its carrying value of $ 144.9 million, including $ 95.5 million of goodwill, at September 27, 2020.

On September 28, 2020 (the first day of our fiscal 2021), we merged our former ASP reporting unit into our Client Account Management reporting unit.

The following table presents the gross amount and accumulated amortization of our acquired identifiable intangible assets with finite useful lives included in “Intangible assets, net” on the consolidated balance sheets:

June 27, 2021 September 27, 2020

January 2, 2022 October 3, 2021

Remaining Life

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Amount Accumulated

Amortization Gross

Amortization Net Amount Gross

Amount Accumulated

Amortization Net Amount

($ in thousands)

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Backlog 1.2 32,113 ( 28,573 ) 3,540 34,577 ( 30,670 ) 3,907

Trade names 1.6 7,162 ( 6,124 ) 7,964 ( 6,325 )

Technology and trade names 4.3 14,936 ( 6,864 ) 8,072 14,939 ( 6,327 ) 8,612

Total $ 90,695 $ ( 54,160 ) $ 36,535 $ 118,971 $ ( 80,981 ) $ 37,990

Amortization expense for the three and nine months ended June 27, 2021 was $ 2.2 million and $ 7.8 million , respectively, compared to $ 2.6 million and $ 9.0 million for the prior-year periods.

Amortization expense for the three months ended January 2, 2022 wa s $ 2.7 million, compared to $ 3.4 million for the prior-year periods.

Estimated amortization expense for the remainder of fiscal 2022 and succeeding years is as follows:

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Property and equipment consisted of the following:

2021 September 27,

2022 October 3,

(in thousands)

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Property and equipment, net $ 35,428 $ 37,733

The depreciation expense related to property and equipment was $ 3.1 million and $ 9.0 million for the three and nine months ended June 27, 2021, respectively, compared to $ 3.7 million and $ 10.1 million for the prior-year periods.

The depreciation expense related to property and equipment wa s $ 3.4 million for the three months ended January 2, 2022, compared to $ 2.9 million for the prior-year period.

Stock Repurchase and Dividends

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 nine months of fiscal 2021, we repurchased and settled 368,177 shares with an average price of $ 122.22 per share for a total cost of $ 45.0 million in the open market.

At June 27, 2021, we had a remaining balance of $ 162.8 million under our stock repurchase program.

The following table presents dividends declared and paid in the first nine months of fiscal 2021 and 2020:

On October 5, 2021, the Board of Directors authorized a new stock repurchase program under which we could repurchase up to $ 400 million of our common stock in addition to the $ 147.8 million remaining under the previous stock repurchase program at October 3, 2021 .

In the first quarter of fiscal 2022, we repurchased and settled 290,196 shares with an average price of $ 172.30 per share for a total cost of $ 50.0 million in the open market.

At January 2, 2022, we had a remaining balance of $ 497.8 million under our stock repurchase program.

The following table presents dividends declared and paid in the first quarters of fiscal 2022 and 2021:

Declare Date Dividend Paid Per Share Record Date Payment Date Dividend Paid

(in thousands)

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

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

April 26, 2021 $ 0.20 May 12, 2021 May 28, 2021 10,831

Total dividend paid as of June 27, 2021 $ 29,241

November 15, 2021 $ 0.20 December 2, 2021 December 20, 2021 $ 10,793

January 27, 2020 $ 0.15 February 12, 2020 February 28, 2020 8,225

April 27, 2020 $ 0.17 May 13, 2020 May 29, 2020 9,175

Total dividend paid as of June 28, 2020 $ 25,590

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

Subsequent Event.

On July 26, 2021, the Board of Directors declared a quarterly cash dividend of $ 0.20 pe r share payable on September 3, 2021 to stockholders of record as of the close of business on August 20, 2021.

In February 2016, the FASB issued ASU 2016-02 “Leases (Topic 842)”, which is a new standard related to leases to increase transparency and comparability among organizations by requiring the recognition of right-of-use (“ROU”) assets obtained in exchange for lease liabilities on the balance sheet.

Most prominent among the changes in the standard is the recognition of ROU assets and lease liabilities by lessees for those leases classified as operating leases.

Under the standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases.

We elected to adopt the standard, and available practical expedients, effective September 30, 2019 (the first day of our fiscal 2020).

These practical expedients allowed us to keep the lease classification assessed under the previous lease accounting standard (ASC 840) without reassessment under the new standard, and allowed all separate lease components, including non-lease components, to be accounted for as a single lease component for all existing leases prior to adoption of the new standard.

We adopted this new standard under the modified retrospective transition approach without adjusting comparative periods in the financial statements, as allowed under Leases (Topic 842), and implemented internal controls and key system functionality to enable the preparation of financial information on adoption.

The standard had a material impact on our consolidated balance sheets but did not have an impact on the consolidated income statements.

The most significant impact was the recognition of ROU assets and lease liabilities for operating leases, while accounting for finance leases remained substantially unchanged.

Our finance leases are primarily for certain information technology equipment and the related ROU and lease liabilities were immaterial, and included in "Other current liabilities" and "Other long-term liabilities" accordingly on our consolidated balance sheets at June 27, 2021 and September 27, 2020.

On January 31, 2022, the Board of Directors declared a quarterly cash dividend of $ 0.20 pe r share payable on February 25, 2022 to stockholders of record as of the close of business on February 11, 2022.

Our operating leases are primarily for corporate and project office spaces.

To a much lesser extent, we have operating leases for vehicles and equipment.

Our operating leases have remaining lease terms of one month to twelve years , some of which may include options to extend the leases for up to five years .

We determine if an arrangement is a lease at inception.

Operating leases are included in operating lease ROU assets and current and long-term operating lease liabilities in the consolidated balance sheets.

Operating leases are included in operating lease right-of-use ("ROU") assets and current and long-term operating lease liabilities in the consolidated balance sheets.

Our finance leases are primarily for certain information technology equipment.

The related ROU assets and lease liabilities were immaterial, and are included in "Property and equipment, net", "Other current liabilities" and "Other long-term liabilities", accordingly, in the consolidated balance sheets at January 2, 2022 and October 3, 2021.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

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As most of our leases do not provide an implicit rate, incremental borrowing rates are used based on the information available at commencement date in determining the present value of lease payments.

The operating lease ROU asset also includes any lease payments made and excludes lease incentives.

The operating lease ROU asset at the commencement date also includes any lease payments made to the lessor at or before the commencement date and initial direct costs less lease incentives received.

Lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

Lease expense for operating lease payments is recognized on a straight-line basis over the lease term.

Our operating leases are primarily for corporate and project office spaces.

To a much lesser extent, we have operating leases for vehicles and equipment.

Our operating leases have remaining lease terms of one month to twelve years , some of which may include options to extend the leases for up to five years .

The components of lease costs are as follows:

Three Months Ended Nine Months Ended

2021 June 28,

2020 June 27,

2021 June 28,

Three Months Ended

2022 December 27,

(in thousands)

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Sublease income ( 125 ) ( 29 )

Other — 18 — 54

Total lease cost $ 21,626 $ 22,040

Supplemental cash flow information related to leases is as follows:

Three Months Ended Nine Months Ended

2021 June 28,

2020 June 27,

2021 June 28,

Three Months Ended

2022 December 27,

(in thousands)

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Supplemental balance sheet and other information related to leases are as follows:

June 27, 2021 September 27, 2020

January 2, 2022 October 3, 2021

(in thousands)

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Operating leases 2.1 % 2.2 %

As of June 27, 2021, we do not have any material additional operating leases that have not yet commenced.

A maturity analysis of the future undiscounted cash flows associated with our operating lease liabilities is as follows:

2021 September 27,

As of January 2, 2022, we do not have any material additional operating leases that have not yet commenced.

A maturity analysis of the future undiscounted cash flows associated with our operating lease liabilities at January 2, 2022 is as follows:

(in thousands)

2022 $ 53,596

2022 70,378 64,972

2023 49,755 44,733

2024 36,221 30,991

2025 26,810 21,466

Beyond 45,581

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We recogniz e the fair value of our stock-based awards as compensation expense on a straight-line basis over the requisite service period in which the award vests.

Stock-based compensation expense for the three and nine months ended June 27, 2021 was $ 5.7 million and $ 16.3 million, respectively, compared to $ 4.1 million and $ 13.5 million for the same periods last year.

Most of these amounts were included in selling, general and administrative expenses on our consolidated statements of income.

In the first nine months of fiscal 2021, we awarded 57,542 performance share units (“PSUs”) (all in the first quarter) to our non-employee directors and executive officers at a fair value of $ 153.03 per share on the award date.

Stock-based compensation expense for the three months ended January 2, 2022 was $ 5.8 million , compared to $ 4.9 million for the same period last year.

Most of these amounts were included in selling,

general and administrative expenses on our consolidated statements of income.

In the first quarter of fiscal 2022, we awarded 41,199 performance share units (“PSUs”) to our non-employee directors and executive officers at an estimate fair value of $ 227.94 per share on the award date.

All PSUs are performance-based and vest, if at all, after the conclusion of the three-year performance period.

The number of PSUs that ultimately vest is based 50 % on the growth in our diluted earnings per share and 50 % on our relative total shareholder return over the vesting period.

Additionally, we awarded 117,084 restricted stock units (“RSUs”) to our non-employee directors, executive officers and employees at a fair value of $ 121.97 per share on the award date.

Additionally, we awarded 70,976 restricted stock units (“RSUs”) to our non-employee directors, executive officers and employees at a fair value of $ 188.32 per s hare on the award date.

All exec utive officer and employee RSUs have time-based vesting over a four-year period, and the non-employee director RSUs vest after one year .

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The following table presents the number of weighted-average shares used to compute basic and diluted EPS:

Three Months Ended Nine Months Ended

2021 June 28,

2020 June 27,

2021 June 28,

Three Months Ended

2022 December 27,

(in thousands, except per share data)

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Diluted $ 1.25 $ 0.96

The effective tax rates for the first nine months of fiscal 2021 and 2020 were 20.4 % and 21.2 %, respectively.

Income tax expense was reduced by $ 8.7 million and $ 7.0 million of excess tax benefits on share-based payments in the first nine months 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 nine months fiscal 2021 and 2020 were 25.0 % and 25.4 %, r espectively.

As of June 27, 2021 and September 27, 2020, the liability for income taxes associated with uncertain tax positions was $ 12.8 million and $ 9.7 million, respectively.

Th ese uncertain tax positions substantially relate to ongoing examinations, which are not likely to be resolved within the next 12 months.

The effective tax rates for the first three months of fiscal 2022 and 2021 were 18.8 % and 17.0 %, respectively.

Income tax expense was reduced b y $ 4.5 million and $ 6.1 million of excess tax benefits on share-based payments in the first three months of fiscal 2022 and 2021, respectively.

Excluding the impact of the excess tax benefits on share-based payments, our effective tax rates in the first three months fiscal 2022 and 2021 were 24.1 % an d 26.8 %, r espectively.

As of January 2, 2022 and October 3, 2021, the liability for income taxes associated with uncertain tax positions was $ 13.4 million a nd $ 14.1 million, respectively.

Th ese uncertain tax positions substantially relate to ongoing examinations.

It is reasonably possible that these examinations will be resolved within the next 12 months.

These liabilities represent our current estimates of the additional tax liabilities that we may be assessed when the related audits are concluded.

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Additionally , we continue to report the results of the wind-down of our non-core construction activities in the RCM reportable segment.

Substantially, there has been no remaining backlog for RCM since fiscal 2018 as the projects were complete.

GSG provides consulting and engineering services primarily to U.S.

There has been no remaining backlog for RCM since fiscal 2018 as the projects were complete.

GSG provides high-end consulting and engineering services primarily to U.S.

government clients (federal, state and local) and development agencies worldwide.

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GSG also leads our support for development agencies worldwide, especially in the United States, United Kingdom, and Australia.

CIG primarily provides consulting and engineering services to U.S.

CIG primarily provides high-end consulting and engineering services to U.S.

commercial clients, and international clients that include both commercial and government sectors.

CIG supports commercial clients across the Fortun e 500, renewable energy, industrial, manufacturing, and aerospace markets.

CIG supports commercial clients across the Fortun e 500, renewable energy, industrial, high performance buildings, and aerospace markets.

CIG also provides sustainable infrastructure and related environmental, engineering and project management services to commercial and local government clients across Canada, in Asia Pacific (primarily Australia and New Zealand), the United Kingdom, as well as Brazil and Chile.

Management evaluates the performance of these reportable segments based upon their respective segment operating income before the effect of amortization expense related to acquisitions, and other unallocated corporate expenses.

for inter-segment revenues and transfers as if they were to third parties;

Beginning in fiscal 2022, we aligned our operations to better serve our clients and markets, and created a new HPB division in our CIG reportable segment.

As a result, we transferred some related operations in our GSG reportable segment to our CIG reportable segment.

Accordingly, related balances in our segment reporting for the first quarter of fiscal 2021 have been reclassified to conform to the current year presentation.

Management evaluates th e performance of these reportable segments based upon their respective segment operating income before the effect of amortization expense related to acquisitions, and other unallocated corporate expenses.

We account for inter-segment revenues and transfers as if they were to third parties;

that is, by applying a negotiated fee onto the costs of the services performed.

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The following tables summarize financial information regarding our reportable segments:

Three Months Ended Nine Months Ended

2021 June 28,

2020 June 27,

2021 June 28,

Three Months Ended

2022 December 27,

(in thousands)

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CIG 416,286 356,526

RCM 143 48 613 198

Elimination of inter-segment revenue ( 13,875 ) ( 16,085 )

Total $ 801,633 $ 709,771 $ 2,321,500 $ 2,241,527

Total revenue $ 858,510 $ 765,104

Income from operations

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CIG 45,308 34,563

RCM — ( 1 ) 1 —

Corporate (1)

( 9,267 ) ( 11,006 )

Total $ 69,807 $ 63,525 $ 196,865 $ 174,356

Total income from operations $ 87,220 $ 66,252

(1) Includes amortization of intangibles, other costs and other income not allocable to our reportable segments.

2021 September 27,

2022 October 3,

(in thousands)

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1,350,157 1,320,753

Total $ 2,510,921 $ 2,378,558

Total assets $ 2,640,456 $ 2,576,562

(1) Corporate assets consist of intercompany eliminations and assets not allocated to our reportable segments including goo dwill, intangible assets, deferred income taxes and certain other assets .

Fair Value Measurements

The fair value of long-term debt was determined using the present value of future cash flows based on the borrowing rates currently available for debt with similar terms and maturities (Level 2 measurement, as described in “Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K for the fiscal year ended September 27, 2020).

The carrying value of our long-term debt approximated fair value at June 27, 2021 and September 27, 2020.

At June 27, 2021, we had borrowings o f $ 246.5 million ou tstanding under our Amended Credit Agreement, which were used to fund business acquisitions, working capital needs, stock repurchases, dividends, capital expenditures and contingent earn-outs.

The carrying value of our long-term debt approximated fair value at January 2, 2022 and October 3, 2021.

At January 2, 2022, we had borrowings o f $ 259.4 million ou tstanding under our Amended Credit Agreement, which were used to fund business acquisitions, working capital needs, stock repurchases, dividends, capital expenditures and contingent earn-outs.

Derivative Financial Instruments

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We recognize derivative instruments as either assets or liabilities on the accompanying consolidated balance sheets at fair value.

We record changes in the fair value (i.e., gains or losses) of the derivatives that have been designated as cash flow hedges in our consolidated balance sheets as accumulated other comprehensive income, and in our consolidated statements of income for those derivatives designated as fair value hedges.

income for those derivatives designated as fair value hedges.

The derivative contracts to hedge interest exposure are categorized within Level 2 of the fair value hierarchy.

In fiscal 2018, we entere d into five interest rate swap agreements that we designated as cash flow hedges to fix the interest rate on the borrowings under our term loan facility.

As of June 27, 2021, the notional principal of our outstanding interest swap agreements was $ 218.8 million ($ 43.8 million each.) The interest rate swaps have a fixed interest rate of 2.79 % and expire in July 2023 for all five agreements.

At June 27, 2021 and September 27, 2020, the fair value of the effective portion of our interest rate swap agreements designated as cash flow hedges before tax effect was $( 10.6 ) million and $( 15.5 ) million, which were reported in "Other current liabilities" on our consolidated balance sheets.

Additionally, the related gains of $ 1.5 million and $ 4.9 million for the three and nine months ended June 27, 2021, respectively, compared to related losses of $ 0.0 million and $ 5.7 million for the prior-year periods, were recognized and reported on our consolidated statements of comprehensive income.

As of January 2, 2022, the notional principal of our outstanding interest swap agreements was $ 209.4 million ($ 41.9 million each.) The interest rate swaps have a fixed interest rate of 2.79 % and expire in July 2023 for all five agreements.

At January 2, 2022 and October 3, 2021, the fair value of the effective portion of our interest rate swap agreements designated as cash flow hedges before tax effect was $( 6.7 ) million and $( 9.4 ) million, which were reported in "Other current liabilities" on our consolidated balance sheets.

Additionally, the related gains of $ 2.7 million for the three months ended January 2, 2022, compared to related gains of $ 1.5 million for the prior-year period, were recognized and reported on our consolidated statements of comprehensive income.

We expect to reclassify $ 4.6 million from accumulated other comprehensive loss to interest expense within the next twelve months.

There were no other derivative instruments designated as hedging instruments for the first nine months of fiscal 2021.

There were no other derivative instruments designated as hedging instruments for the first three months of fiscal 2022.

Reclassifications Out of Accumulated Other Comprehensive Income

The accumulated balances and activities for the three and nine months ended June 27, 2021 and June 28, 2020 related to reclassifications out of accumulated other comprehensive income are summarized as follows:

The accumulated balances and activities for the three months ended January 2, 2022 and December 27, 2020 related to reclassifications out of accumulated other comprehensive income are summarized as follows:

Three Months Ended

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(in thousands)

Balance at March 29, 2020 $ ( 182,822 ) $ ( 16,569 ) $ ( 199,391 )

Other comprehensive income before reclassifications 21,689 1,279 22,968

Amounts reclassified from accumulated other comprehensive loss

Interest rate contracts, net of tax (1)

— ( 1,309 ) ( 1,309 )

Net current-period other comprehensive income (loss) 21,689 ( 30 ) 21,659

Balance at June 28, 2020 $ ( 161,133 ) $ ( 16,599 ) $ ( 177,732 )

Balance at March 28, 2021 $ ( 102,911 ) $ ( 12,145 ) $ ( 115,056 )

Balance at September 27, 2020 $ ( 146,275 ) $ ( 15,511 ) $ ( 161,786 )

Other comprehensive income before reclassifications 32,391 2,978 35,369

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Net current-period other comprehensive income 32,391 1,476 33,867

Balance at June 27, 2021 $ ( 91,754 ) $ ( 10,647 ) $ ( 102,401 )

Nine Months Ended

Adjustments Gain (Loss)

on Derivative

Instruments Accumulated Other Comprehensive Income (Loss)

(in thousands)

Balance at September 29, 2019 $ ( 149,711 ) $ ( 10,873 ) $ ( 160,584 )

Other comprehensive loss before reclassifications ( 11,422 ) ( 3,200 ) ( 14,622 )

Amounts reclassified from accumulated other comprehensive loss

Interest rate contracts, net of tax (1)

— ( 2,526 ) ( 2,526 )

Net current-period other comprehensive loss ( 11,422 ) ( 5,726 ) ( 17,148 )

Balance at June 28, 2020 $ ( 161,133 ) $ ( 16,599 ) $ ( 177,732 )

Balance at September 27, 2020 $ ( 146,275 ) $ ( 15,511 ) $ ( 161,786 )

Other comprehensive income before reclassifications 54,521 9,341 63,862

Balance at December 27, 2020 $ ( 113,884 ) $ ( 14,035 ) $ ( 127,919 )

Balance at October 3, 2021 $ ( 115,634 ) $ ( 9,394 ) $ ( 125,028 )

Other comprehensive income (loss) before reclassifications ( 686 ) 4,032 3,346

Amounts reclassified from accumulated other comprehensive loss

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— ( 1,366 ) ( 1,366 )

Net current-period other comprehensive income 54,521 4,864 59,385

Balance at June 27, 2021 $ ( 91,754 ) $ ( 10,647 ) $ ( 102,401 )

Net current-period other comprehensive income (loss) ( 686 ) 2,666 1,980

Balance at January 2, 2022 $ ( 116,320 ) $ ( 6,728 ) $ ( 123,048 )

(1) This accumulated other comprehensive component is reclassified to “Interest expense” in our consolidated statements of income.

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District Court for the Northern District of California.

The complaint alleges False Claims Act violations and breach of contract related to TtEC's contracts to perform environmental remediation services at the former Hunters Point Naval Shipyard in San Francisco, California.

The complaint alleges False Claims Act violations and breach

of contract related to TtEC's contracts to perform environmental remediation services at the former Hunters Point Naval Shipyard in San Francisco, California.

TtEC disputes the claims and will defend this matter vigorously.

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We often provide services to unconsolidated joint ventures.

Revenue generated from the services we provided to unconsolidated joint ventures for the three and nine months of fiscal 2021 was $ 24.2 million and $ 69.8 million, respectively, compared to $ 19.0 million and $ 67.0 million for the same periods last year.

Related reimbursable costs for the three and nine months of fiscal 2021 were $ 23.2 million and $ 67.2 million, respectively, compared to $ 18.4 million and $ 66.0 million for the same periods last year.

Our revenue related to services we provided to unconsolidated joint ventures for the first quarter of fiscal 2022 and 2021 was approximatel y $ 26 million and $ 22 million, respectively.

Related reimbursable costs for the first quarter of fiscal 2022 and 2021 were $ 25 million and $ 21 million, respectively.

Our consolidated balance sheets also included the following amounts related to these services:

2021 September 27, 2020

2022 October 3, 2021

(in thousands)

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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 1. Financial Statements