What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2024-11-19 compared with 2023-11-22 · 355 added, 289 removed, 1084 unchanged (37% of the section changed)

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Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets at October 1 , 202 3 and October 2 , 202 2

Consolidated Statements of Income for the fiscal years ended October 1 , 202 3 , October 2 , 202 2 and October 3 , 20 21

Consolidated Statements of Comprehensive Income for the fiscal years ended October 1 , 202 3 , October 2 , 202 2 and October 3 , 202 1

Consolidated Statements of Cash Flows for the fiscal years ended October 1 , 202 3 , October 2 , 202 2 and October 3 , 202 1

Consolidated Statements of Equity for the fiscal years ended October 1 , 202 3 , October 2 , 202 2 and October 3 , 202 1

Consolidated Balance Sheets at September 29 , 202 4 and October 1 , 202 3

Consolidated Statements of Income for the fiscal years ended September 29 , 202 4 , October 1 , 202 3 and October 2 , 202 2

Consolidated Statements of Comprehensive Income for the fiscal years ended September 29 , 202 4 , October 1 , 202 3 and October 2 , 202 2

Consolidated Statements of Cash Flows for the fiscal years ended September 29 , 202 4 , October 1 , 202 3 and October 2 , 202 2

Consolidated Statements of Equity for the fiscal years ended September 29 , 202 4 , October 1 , 202 3 and October 2 , 20 2 2

Notes to Consolidated Financial Statements

Schedule II – Valuation and Qualifying Accounts and Reserves for the fiscal years ended October 1 , 202 3 , October 2 , 202 2 and October 3 , 202 1

Schedule II – Valuation and Qualifying Accounts and Reserves for the fiscal years ended September 29 , 202 4 , October 1 , 202 3 and October 2 , 202 2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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We have audited the accompanying consolidated balance sheets of Tetra Tech, Inc.

and its subsidiaries (the “Company”) as of October 1, 2023 and October 2, 2022, and the related consolidated statements of income, of comprehensive income, of equity and of cash flows for each of the three years in the period ended October 1, 2023, including the related notes and financial statement schedule listed in the accompanying index (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of October 1, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of October 1, 2023 and October 2, 2022, and the results of its operations and its cash flows for each of the three years in the period ended October 1, 2023 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of October 1, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

and its subsidiaries (the “Company”) as of September 29, 2024 and October 1, 2023, and the related consolidated statements of income, of comprehensive income, of equity and of cash flows for each of the three years in the period ended September 29, 2024, including the related notes and financial statement schedule listed in the accompanying index (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of September 29, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of September 29, 2024 and October 1, 2023, and the results of its operations and its cash flows for each of the three years in the period ended September 29, 2024 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 29, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

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We believe that our audits provide a reasonable basis for our opinions.

As described in Management's Report on Internal Control over Financial Reporting, management has excluded LS Technologies ("LST") from its assessment of internal control over financial reporting as of September 29, 2024 because it was acquired by the Company in a purchase business combination during 2024.

We have also excluded LST from our audit of internal control over financial reporting.

LST is a wholly-owned subsidiary whose total assets and total revenues excluded from management's assessment and our audit of internal control over financial reporting represent 1.4% and 1.7%, respectively, of the related consolidated financial statement amounts as of and for the year ended September 29, 2024.

Definition and Limitations of Internal Control over Financial Reporting

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Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Revenue Recognition - Determination of Total Estimated Contract Cost for Fixed-price Contracts

As described in Note 3 to the consolidated financial statements, $1.64 billion of the Company’s total revenues for the year ended October 1, 2023 was generated from fixed-price contracts.

As disclosed by management, under fixed-price contracts, the Company's clients pay an agreed fixed-amount negotiated in advance for a specified scope of work.

Revenue is recognized over time as the related performance obligation is satisfied by transferring control of a promised good or service to the Company's customers.

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue Recognition - Certain fixed-price, time-and-materials and cost-plus contracts

As described in Note 3 to the consolidated financial statements, the Company recognized revenue of $5,199 million for the year ended September 29, 2024, of which a majority relates to revenue recognized for certain fixed-price, time-and-materials and cost-plus contracts.

The Company recognizes revenue over time as the related performance obligation is satisfied by transferring control of a promised good or service to the Company's customers.

Progress toward complete satisfaction of the performance obligation is primarily measured using a cost-to-cost measure of progress method.

The cost input is based primarily on contract cost incurred to date compared to total estimated contract cost.

This measure includes forecasts based on the best information available and reflects management's judgment to faithfully depict the value of the services transferred to the customer.

Due to uncertainties inherent in the estimation process, it is possible that estimates of costs to complete a performance obligation will be revised in the near-term.

This measure includes forecasts based on the best information available and reflects management's judgment to depict the value of the services transferred to the customer.

For those performance obligations for which revenue is recognized using a cost-to-cost measure of progress method, changes in total estimated costs, and related progress towards complete satisfaction of the performance obligation, are recognized on a cumulative catch-up basis in the period in which the revisions to the estimates are made.

As a result, the Company recognized net favorable revenue and operating income adjustments of $11.0 million for the year ended October 1, 2023.

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

The anticipated losses and estimated cost to complete the related contracts was $8.5 million and approximately $68 million, respectively, as of October 1, 2023.

The principal considerations for our determination that performing procedures relating to revenue recognition - determination of total estimated contract cost for fixed-price contracts is a critical audit matter are (i) the significant judgment by management in developing the estimate of total contract cost for fixed-price contracts;

and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and in evaluating audit evidence related to management’s estimate of total contract costs for fixed-price contracts with cumulative catch-up adjustments, anticipated losses or claims.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the revenue recognition process, including controls over the total estimated contract cost for fixed-price contracts.

These procedures also included, among others, (i) evaluating and testing management’s process for developing the estimate of total contract cost for a sample of contracts with cumulative catch-up adjustments, anticipated losses or claims, which included evaluating the contract terms and other documents that support those estimates, and testing of underlying contract costs;

(ii) assessing management's ability to reasonably estimate total contract costs by performing a comparison of the total estimated contract cost as compared with prior period estimates, including evaluating the timely identification of circumstances that may warrant a modification to the total estimated contract cost;

and (iii) evaluating, for certain contracts, management’s methodologies and assessing the consistency of management’s approach over the life of the contract.

Acquisition of RPS Group plc – Valuation of Certain Client Relations and Trade Name

As described in Note 5 to the consolidated financial statements, the Company completed its acquisition of RPS Group plc (“RPS”) on January 23, 2023 for a total purchase price of approximately $784 million.

Of the total acquired intangible assets of $174.1 million, certain client relations and a trade name represent the majority.

Fair value was estimated by management using a multi-period excess earnings method for client relations and a relief from royalty method for trade names.

Management’s significant assumptions used in estimating fair value of client relations include (i) the estimated life the asset will contribute to cash flows, such as remaining contractual terms, (ii) revenue growth rates and EBITDA margins, (iii) attrition rate of customers, and (iv) the estimated discount rates that reflect the level of risk associated with receiving future cash flows.

The significant assumptions used in estimating fair value of trade name include the royalty rates and discount rates.

The principal considerations for our determination that performing procedures relating to the valuation of certain client relations and trade name in the acquisition of RPS Group plc is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of certain client relations and trade name acquired, (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to estimated life, revenue growth rates, customer attrition rates, EBITDA margins and discount rates for certain client relations and a royalty rate and discount rate for a trade name, and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

For certain on-call engineering or consulting and similar contracts, the Company recognizes revenue in the amount which they have the right to invoice the customer if that amount corresponds directly with the value of the performance completed to date.

Due to uncertainties inherent in the estimation process, it is possible that estimates of costs to complete a performance obligation will be revised in the near-term.

The principal consideration for our determination that performing procedures relating to revenue recognition for certain fixed-price, time-and-materials and cost-plus contracts is a critical audit matter is a high degree of audit effort in performing procedures related to the Company's revenue recognition.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the acquisition accounting, including controls over management’s valuation of certain client relations and trade name acquired.

These procedures also included, among others, (i) reading the purchase agreement;

(ii) testing management’s process for developing the fair value estimate of certain client relations and trade name acquired;

(iii) evaluating the appropriateness of the multi-period excess earnings and relief from royalty methods used by management;

(iv) testing the completeness and accuracy of the underlying data used in the multi-period excess earnings and relief from royalty methods;

and (v) evaluating the reasonableness of the significant assumptions used by management related to the estimated life, revenue growth rates, customer attrition rates, EBITDA margins and discount rates for certain client relations and the royalty rate and discount rate for a trade name.

Evaluating management’s assumptions related to the estimated life, revenue growth rates, customer attrition rates and EBITDA margins for client relations involved considering (i) the current and past performance of RPS;

(ii) the consistency with external market and industry data;

and (iii) whether the assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the multi-period excess earnings and relief from royalty methods and (ii) the reasonableness of the discount rate assumption for certain client relations and trade name, as well as, the royalty rate for a trade name.

These procedures included testing the effectiveness of controls relating to the revenue recognition process.

These procedures also included, among others, (i) evaluating management’s significant accounting policies related to revenue recognition;

(ii) for certain fixed-price contracts, testing management's process for developing the estimate of total contract cost for a sample of contracts with cumulative catch-up adjustments and anticipated losses or claims, and evaluating the contract terms and other documents that support the changes in total estimated contract costs;

(iii) assessing, for a sample of fixed-price contracts, estimated total contract costs by performing a comparison of the total estimated contract cost as compared with prior period estimates and evaluating the timely identification of circumstances that may warrant a modification to the total estimated contract cost;

(iv) evaluating, for certain contracts, management’s methodologies and assessing the consistency of management’s methodology over the life of the contract;

(v) re-calculating revenue recognized based on the contract value, year-to-date costs, and total estimated costs to complete;

(vi) testing the existence and accuracy of total contract revenue recorded, on a sample basis, by obtaining and inspecting source documents such as contracts and purchase orders;

(vii) for certain on-call engineering or consulting contracts where revenue is recognized using the practical expedient right to invoice, testing the accuracy of revenue recognized, on a sample basis by obtaining and inspecting source documents, such as contracts and purchase orders;

and (viii) for certain contracts, testing the completeness and accuracy of costs incurred to date, on a sample basis, by obtaining and inspecting source documents, such as invoices and timecards.

/s/ PricewaterhouseCoopers LLP

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(in thousands, except par value)

ASSETS October 1,

Fiscal Year Ended

ASSETS September 29,

2024 October 1,

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Short-term lease liabilities, operating leases 63,419 65,005

Current portion of long-term debt — 12,504

Current contingent earn-out liabilities 26,934 51,108

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Commitments and contingencies (Note 18)

Preferred stock – Authorized, 2,000 shares of $ 0.01 par value;

no shares issued and outstanding at October 1, 2023 and October 2, 2022

Common stock – Authorized, 150,000 shares of $ 0.01 par value;

issued and outstanding, 53,248 and 52,981 shares at October 1, 2023 and October 2, 2022, respectively

Preferred stock – Authorize d, 2,000 shares of $ 0.01 par value;

no shares issued and outstanding at September 29, 2024 and October 1, 2023

Common stock – Authoriz ed, 750,000 shares of $ 0.01 par value;

issued and outstanding, 267,717 and 266,238 shares at September 29, 2024 and October 1, 2023 , respectively

Additional paid-in capital 35,900 —

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Fiscal Year Ended

September 29,

2024 October 1,

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Fiscal Year Ended

September 29,

2024 October 1,

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Net income $ 333,443 $ 273,452 $ 263,164

Other comprehensive income, net of tax

Other comprehensive income (loss), net of tax

Foreign currency translation adjustments, net of tax 115,120 12,622 ( 94,933 )

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Fiscal Year Ended

September 29,

2024 October 1,

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Fair value adjustment to foreign currency forward contract — ( 89,402 ) ( 19,904 )

Acquisition and integration expenses 7,138 — —

Other non-cash items 5,369 975 ( 1,245 )

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Contract liabilities 4,704 44,152 55,915

Cash settled contingent earn-out liability ( 7,943 ) — —

Income taxes receivable/payable ( 35,530 ) 40,527 14,627

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Repurchases of common stock — — ( 200,000 )

Taxes paid on vested restricted stock ( 16,833 ) ( 25,223 ) ( 17,630 )

Shares repurchased for tax withholdings on share-based awards ( 12,982 ) ( 16,833 ) ( 25,223 )

Payments of contingent earn-out liabilities ( 46,107 ) ( 21,328 ) ( 20,124 )

Stock options exercised 3,067 626 1,806

Bank overdrafts — — ( 36,627 )

Dividends paid ( 58,828 ) ( 52,113 ) ( 46,099 )

Principal payments on finance leases ( 6,530 ) ( 5,579 ) ( 4,344 )

Net cash provided by (used in) financing activities 382,380 ( 249,608 ) ( 210,099 )

Net cash (used in) provided by financing activities ( 191,380 ) 382,380 ( 249,608 )

Effect of exchange rate changes on cash and cash equivalents 7,573 4,093 ( 12,314 )

Net (decrease) increase in cash and cash equivalents ( 16,263 ) 18,526 9,053

Net increase (decrease) in cash and cash equivalents 63,858 ( 16,263 ) 18,526

Cash and cash equivalents at beginning of year 168,831 185,094 166,568

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Interest $ 36,855 $ 47,367 $ 13,378

Income taxes, net of refunds received of $ 2.2 million, $ 4.8 million and $ 2.1 million

Income taxes, net of refunds received o f $ 4.2 million, $ 2.2 million and $ 4.8 million

$ 180,707 $ 93,176 $ 70,799

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Consolidated Statements of Equity

Fiscal Years Ended October 3, 2021, October 2, 2022, and October 1, 2023

Fiscal Years Ended October 2, 2022, October 1, 2023, and September 29, 2024

(in thousands)

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Capital Accumulated

Comprehensive

Income (Loss) Retained

Comprehensive (Loss) Income Retained

Earnings Total

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Shares Amount

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

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

Issuance of shares under five -for-one stock split

215,926 2,160 — — ( 2,160 ) — — —

Comprehensive income, net of tax:

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Stock repurchases ( 6,708 ) ( 65 ) ( 14,884 ) — $ ( 185,051 ) ( 200,000 ) — ( 200,000 )

Reclassification of APIC — — ( 40 ) — 40 — — —

BALANCE AT OCTOBER 2, 2022 264,903 2,650 — ( 208,144 ) 1,388,581 1,183,087 50 1,183,137

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Foreign currency translation adjustments — — — 12,623 — 12,623 ( 1 ) 12,622

Pension — — — 2,638 — 2,638 — 2,638

Gain on cash flow hedge valuations — — — ( 2,412 ) — ( 2,412 ) — ( 2,412 )

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Shares issued for Employee Stock Purchase Plan 492 5 12,623 — — 12,628 — 12,628

Stock repurchases ( 1,342 ) ( 13 ) ( 14,936 ) ( 185,051 ) ( 200,000 ) ( 200,000 )

BALANCE AT OCTOBER 2, 2022 52,981 530 — ( 208,144 ) 1,390,701 1,183,087 50 1,183,137

Comprehensive income, net of tax:

Net income 273,420 273,420 32 273,452

Reclassification of APIC — — 26,734 — ( 26,734 ) — — —

Common Stock Additional

Capital Accumulated

Comprehensive

Income (Loss) Retained

Comprehensive (Loss) Income Retained

Earnings Total

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Shares Amount

Capped call transactions — — ( 51,750 ) — 12,912 ( 38,838 ) — ( 38,838 )

BALANCE AT OCTOBER 1, 2023 266,238 2,662 — ( 195,295 ) 1,596,066 1,403,433 73 1,403,506

Comprehensive income, net of tax:

Net income — — — — 333,382 333,382 61 333,443

Foreign currency translation adjustments — — — 115,120 — 115,120 — 115,120

Pension — — — 1,300 — 1,300 — 1,300

Gain on cash flow hedge valuations ( 2,412 ) ( 2,412 ) ( 2,412 )

Comprehensive income, net of tax 449,802 61 449,863

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Shares issued for Employee Stock Purchase Plan 522 6 14,669 — — 14,675 — 14,675

Reclassification of APIC 26,724 ( 26,724 ) — —

Capped call transactions ( 51,750 ) 12,912 ( 38,838 ) ( 38,838 )

BALANCE AT OCTOBER 1, 2023 53,248 $ 532 $ — $ ( 195,295 ) $ 1,598,196 $ 1,403,433 $ 73 $ 1,403,506

BALANCE AT SEPTEMBER 29, 2024 267,717 $ 2,677 $ 35,900 $ ( 78,875 ) $ 1,870,620 $ 1,830,322 $ 91 $ 1,830,413

See accompanying Notes to Consolidated Financial Statements.

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Description of Business

We are a leading global provider of high-end consulting and engineering services that focuses on water, environment, sustainable infrastructure, renewable energy and international development.

We are a leading global provider of high-end consulting and engineering services that focuses on water, environment and sustainable infrastructure.

We are a global company that is Leading with Science® to provide innovative solutions for our public and private clients.

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commercial clients and international clients other than development agencies.

Basis of Presentation and Preparation

Principles of Consolidation and Presentation.

The consolidated financial statements include our accounts and those of joint ventures of which we are the primary beneficiary.

Basis of Presentation

Principles of Consolidation.

The accompanying consolidated financial statements include our accounts and those of joint ventures of which we are the primary beneficiary and are prepared in accordance with accounting principles generally accepted in the United States of America ("U.S.

GAAP") and expressed in U.S.

All significant intercompany balances and transactions have been eliminated in consolidation.

We report results of operations based on 52 or 53-week periods ending on the Sunday nearest September 3 0.

Fiscal years 2023, 2022 and 2021 contained 52, 52 and 53 weeks, respectively.

We operate on a 52 or 53-week year, ending on the Sunday nearest September 3 0.

Fiscal years 2024, 2023 and 2022 are 52-week years.

Use of Estimates.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("U.S.

GAAP") requires us to make estimates and assumptions.

These estimates and assumptions affect the amounts reported in our consolidated financial statements and accompanying notes.

The preparation of financial statements in conformity with U.S.

GAAP requires us to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes.

Although such estimates and assumptions are based on management's best knowledge of current events and actions we may take in the future, actual results could differ materially from those estimates.

On an on-going basis, we evaluate our estimates based on historical facts and other assumptions that we believe are reasonable.

On July 29, 2024, our Board of Directors approved a five -for-one stock split of our common stock.

The stock split had a record date of September 5, 2024 and an effective date of September 6, 2024.

The par value per share of our common stock remains unchanged at $ 0.01 per share after the stock split.

All prior-period share or per share amounts presented herein have been retroactively adjusted to reflect the stock split.

Cash and Cash Equivalents.

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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 our fiscal 2023 year-end are expected to be billed and collected within 12 months.

Substantially all of our unbilled receivables at fiscal 2024 year-end are expected to be billed and collected within 12 months.

Unbilled accounts receivable also include amounts related to requests for equitable adjustment to contracts that provide for price redetermination.

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Contract retentions, included in contract assets, represent amounts withheld by clients until certain conditions are met or the project is completed, which may extend beyond one year.

Contract liabilities represent the amount of cash collected from clients and billings to clients on contracts in advance of work performed and revenue recognized.

liabilities represent the amount of cash collected from clients and billings to clients on contracts in advance of work performed and revenue recognized.

The majority of these amounts are expected be earned within 12 months and are classified as current liabilities.

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We believe the methodology that we use to review impairment of goodwill, which includes a significant amount of judgment and estimates, provides us with a reasonable basis to determine whether impairment has occurred.

However, many of the factors employed in determining whether our goodwill is impaired are outside of our control and it is reasonably likely that assumptions and estimates will change in future periods.

However, many of the factors employed in determining whether our goodwill is

impaired are outside of our control and it is reasonably likely that assumptions and estimates will change in future periods.

These changes could result in future impairments.

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Our last annual review was performed at July 1, 2024 (i.e., the first day of our fiscal fourth quarter).

I n addition, we regularly evaluate whether events and circumstances have occurred that may indicate a potential change in recoverability of goodwill.

We perform interim goodwill impairment reviews between our annual reviews if certain events and circumstances have occurred, including a deterioration in general economic conditions, an increased competitive environment, a change in management, key personnel, strategy or customers, negative or declining cash flows or a decline in actual or planned revenue or earnings compared with actual and projected results of relevant prior periods.

In addition, we regularly evaluate whether events and circumstances have occurred that may indicate a potential change in recoverability of goodwill.

We perf orm interim goodwill impairment reviews between our annual reviews if certain events and circumstances have occurred, including a deterioration in general economic conditions, an increased competitive environment, a change in management, key personnel, strategy or customers, negative or declining cash flows or a decline in actual or planned revenue or earnings compared with actual and projected results of relevant prior periods.

We assess goodwill for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment, referred to as a component.

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According to the authoritative guidance on accounting for uncertainty in income taxes, we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position.

The tax benefits recognized in the financial statements from

such a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement.

The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement.

This guidance also addresses de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and disclosure requirements for uncertain tax positions.

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We determine the fu nctional currency of our foreign operating units based upon the primary currency in which they operate.

These operating units maintain their accounting records in their local currency, primarily Canadian and Australian dollars, the Euros and British pounds.

These operating units maintain their accounting records in their local currency, primarily Canadian and Australian dollars, Euros and British pounds.

Where the functional currency is not the U.S.

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Gains or losses from foreign currency transactions are included in income from operations.

Reclassifications.

Certain reclassifications were made to the prior fiscal years to conform to the current-year presentation.

Recently Issued Accounting Pro nouncements

In November 2021, the Financial Accounting Standards Board issued ASU 2021-10, Government Assistance (Topic 832), which requires annual 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 was effective for us beginning in the first quarter of fiscal 2023.

In fiscal 2020, the Canadian federal government implemented the Canadian Emergency Wage Subsidy ("CEWS") program in response to the negative impact of the coronavirus disease 2019 pandemic on businesses operating in Canada.

Some of our Canadian legal entities qualified for and applied for these CEWS cash benefits to partially offset the impacts of revenue reductions and on-going staffing costs.

The $ 21.0 million total received was initially recorded in " Other current liabilities " until all potential amendments to the qualification criteria, including some that were proposed with retroactive application, were finalized in fiscal 2022.

As there are no further contingencies, the amounts received will be distributed to all Canadian employees.

We expect to distribute approximately $ 10 million in the next twelve months.

Accordingly, this amount is included in "Accrued compensation" on our consolidated balance sheet as of October 1, 2023.

The remaining $ 11.0 million, which we expect to distribute beyond one year, is reported in " Other long-term liabilities ".

We do not expect there will be any related impact on our operating income, and we have no outstanding applications for further government assistance.

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which requires that an entity report segment information in accordance with Topic 280, Segment Reporting.

The amendments in the ASU are intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses.

The amendments in this ASU are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024 (fiscal 2025 for us).

Early adoption is permitted.

We are currently evaluating the impact of this guidance on our consolidated financial statements;

however, we do not plan to adopt Topic 280 before fiscal 2025.

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, which requires that an entity, on an annual basis, disclose additional income tax information, primarily related to the rate reconciliation and income taxes paid.

The amendments in the ASU are intended to enhance the transparency and decision usefulness of income tax disclosures.

The amendments in this ASU are effective for annual periods beginning after December 15, 2024 (fiscal 2026 for us).

Early adoption is permitted.

We are currently evaluating the impact of this guidance on our consolidated financial statements;

however, we do not plan to adopt Topic 740 before fiscal 2026.

Revenue and Contract Balances

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Fiscal Year Ended

September 29,

2024 October 1,

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(2) Includes revenue generated from non-U.S.

clients, primarily in Canada, Australia, Europe and the United Kingdom.

clients, primarily i n United Kingdom, Australia and Canada.

Other than the U.S.

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Net contract assets/liabilities consisted of the following (in thousands):

Fiscal Year Ended

September 29,

2024 October 1, 2023

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(1) Includ es $ 7.9 million and $ 6.8 million of contract retentions at fiscal 2024 and 2023 year-ends, respectively.

In fiscal 2023, we recognized revenue of approximately $ 164 million from amounts included in the contract liability balance at the end of fiscal 2022, compared to approximately $ 125 million in fiscal 2022 .

We recognize revenue primarily using the cost-to-cost measure of progress method 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, in fiscal 2023, we recognized net favorable revenue and operating income adjustments of $ 11.0 million.

T he corresponding net revenue and operating income adjustments were immaterial for fiscal 2022.

Changes in revenue and cost estimates could also result in a projected loss, determined at the contract level, which would be recorded i mmediately in earn ings.

As of October 1, 2023 and October 2, 2022, our consolidated balance sheets included liabilities for anticipated losses of $ 8.5 million and $ 10.0 million, respectively.

Both our contract assets and contract liabilities increased in fiscal 2024 compared to fiscal 2023 year-end, due to the timing of our milestone billing on fixed-price contracts which were different from the timing of revenue recognition on those

In fiscal 2024 and 2023, we recognized revenue of approximately $ 247 million and $ 164 million, respectively, from amounts included in the contract liability balances at the end of fiscal 2023 and 2022 , respectively.

Revenue is recognized by measuring progress over time under Accounting Standards Codification Topic 606, "Revenue from Contracts with Customers".

We estimate and measure progress on our contracts over time whereby we compare our total costs incurred on each contract as a percentage of the total expected contract costs.

Changes in t hose 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, in fiscal 2024 and 2023, we recognized net favorable revenue and operating income adjustments of $ 29.8 million and $ 11.0 million, respective ly.

The corresponding net revenue and operating income adjustments were immaterial for fiscal 2022.

Changes 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 September 29, 2024 and October 1, 2023, our consolidated balance sheets included liabilities for anticipated losses of $ 15.1 million and $ 8.5 million, respectively.

The estimated cost to complete these related contracts at the end of fiscal 2024 and 2023 was approximately $ 101 million and $ 68 million, respectively.

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Net accounts receivable consisted of the following (in thousands):

Fiscal Year Ended

September 29,

2024 October 1,

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Substantially all of our unbilled receivables at fiscal 2023 year-end are expected to be billed and collecte d within 12 months.

Substantially all of our unbilled receivables at fisc al 2024 year-end 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.

We determine an estimated allowance for uncollectible accounts based on management's consideration of trends in the actual and forecasted credit quality of our clients, including delinquency and payment history;

type of client, such as a government agency or a commercial sector client;

and general economic and industry condition s , which may affect our clients' ability to pay .

type of client, such as government agency or a commercial sector client;

and general economic and industry conditions, which may affect our clients' ability to pay.

Other than the U.S.

federal government, no single client accounted for more than 10% of our accounts receivable at fiscal 2024 and 2023 year-ends.

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 $ 4.8 billion of RUP Os as of October 1, 2023.

RUPOs increase with awards from new contracts or additions to 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 fiscal 2023 year-end over the following periods (in thousands):

Remaining Unsatisfied Performance Obligation (“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 $ 5.3 billion of RUPO as of September 29, 2024.

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

Our 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 fiscal 2024 year- end over the following periods (in thousands):

Within 12 months $ 3,723,668

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Total $ 5,331,389

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.

Our 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;

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Stock Repurchase and Dividends

On October 5, 2021, our Board of Directors authorized a new stock repurchase program under which we could repurchase up to $ 400 million of our common stock .

In fiscal 2023, we did not repurchase any shares of our common stock.

repurchased and settled 1,341,679 shares with an average price of $ 149.07 per share for a total cost of $ 200.0 million in fiscal 2022, and 479,369 shares with an average price of $ 125.16 per share for a total cost of $ 60.0 million in fiscal 2021, in the open market.

As of October 1, 2023, we had a remaining balance of $ 347.8 million under our repurchase program.

On October 5, 2021, our Board of Directors authorized a stock repurchase program under which we could repurchase up to $ 400 million of our common stoc k .

In fiscal 2024 and 2023, we did not repurchase any shares of our common stock.

We repurchased and settled 6,708,395 shares with an average price of $ 29.81 per share for a total cost of $ 200.0 million in fiscal 2022 in the open market.

At fiscal 2024 year-end, we had a remaining balance of $ 347.8 million under our stock repurchase program.

The following table presents dividends declared and paid in fiscal 2024, 2023 and 2022:

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January 29, 2024 0.052 February 14, 2024 February 27, 2024 13,908

April 29, 2024 0.058 May 20, 2024 May 31, 2024 15,522

July 29, 2024 0.058 August 15, 2024 August 30, 2024 15,525

Total dividends paid as of September 29, 2024 $ 58,828

November 7, 2022 $ 0.046 November 21, 2022 December 9, 2022 $ 12,186

January 30, 2023 0.046 February 13, 2023 February 24, 2023 12,242

May 8, 2023 0.052 May 24, 2023 June 6, 2023 13,840

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Total dividends paid as of October 2, 2022 $ 46,099

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

July 26, 2021 $ 0.20 August 20, 2021 September 3, 2021 10,800

Total dividends paid as of October 3, 2021 $ 40,041

Subsequent Events.

On November 11, 2024, our Board of Directors declared a quarterly cash dividend of $ 0.058 per share payable on December 13, 2024 to stockholders of record as of the close of business on November 27, 2024.

In fiscal 2024, we acquired LS Technologies ("LST"), an innovative U.S.

federal enterprise technology services and management consulting firm based in Fairfax, Virginia.

LST provides high-end consulting and engineering services including advanced data analytics, cybersecurity and digital transformation solutions to U.S.

government clients.

Additionally, we acquired Convergence Controls & Engineering ("CCE"), an industry leader in process automation and systems integration solutions.

CCE’s expertise includes customized digital controls and software solutions, advanced data analytics, cloud data integration and cybersecurity applications.

Both LST and CCE are included in our GSG segment.

The aggregate fair value of the purchase price of these two acquisitions was $ 120 million.

This amount consisted of $ 93 million in initial cash payments, $ 4 million of cash holdback related to a tax reserve, and $ 23 million for the estimated fair value of contingent earn-out obligations, with a maximum of $ 60 million, based upon the achievement of specified operating income targets in each of the

three years following the acquisition dates.

The $ 120 million purchase price was allocated $ 12 million to net tangible assets, $ 23 million to identifiable intangible assets, and $ 85 million to goodwill.

The purchase price allocation is preliminary and subject to adjustment as the estimates, assumptions, valuations and other analyses have not yet been finalized in order to make a definitive allocation.

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

As a result, no pro forma information has been provided.

On September 23, 2022, we made an all-cash offer to acquire all of the outstanding shares of RPS Group plc ("RPS"), a publicly traded company on the London Stock Exchange for 222 pence per share, through a scheme of arrangement, which was unanimously recommended by RPS' Board of Directors.

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On January 19, 2023, the court-sanctioned scheme of arrangement to purchase RPS was approved, and we completed the acquisition on January 23, 2023.

RPS employs approximately 5,000 associates in the United Kingdom, Europe, Asia Pacific and North America, delivering high-end solutions, especially in energy transformation, water and program management for government and commercial clients.

RPS employed approximately 5,000 associates in the United Kingdom, Europe, Asia Pacific and North America, delivering high-end solutions, especially in energy transformation, water and program management for government and commercial clients.

Substantially all of RPS is included in our CIG segment.

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This forward contract is explained further in Note 15, "Derivative Financial Instruments".

The table below represents the preliminary purchase price allocation for RPS based on estimates, assumptions, valuations and other analyses as of January 23, 2023, that has not been finalized in order to make a definitive allocation.

The purchase consideration, excluding the aforementioned forward contract gain, is allocated to the tangible and intangible assets, and liabilities of RPS based on their estimated fair values, with any excess purchase consideration allocated to goodwill as follows (in thousands) :

The table below represents the purchase price allocation for RPS based on estimates, assumptions, valuations and other analyses as of January 23, 2023.

The all cash purchase consideration, excluding the aforementioned forward contract gain, was allocated to the tangible and intangible assets, and liabilities of RPS based on their estimated fair values, with any excess purchase consideration allocated to goodwill as follows (in thousands) :

Cash and cash equivalents $ 32,093

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Supplemental Pro Forma Information (Unaudited)

Following are the supplemental consolidated financial results of Tetra Tech and RPS on an unaudited pro forma basis, as if the RPS acquisition had been consummated as of the beginning of fiscal 2022 (in thousands) :

Fiscal Year Ended

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Amyx is included in our Government Services Group ("GSG") segment.

The total fair value of the purchase price of Amyx was $ 120.9 million, comprised of a $ 100.0 million payable in a promissory note issued to the sellers (paid subsequent to closing), $ 8.7 million of payables related to estimated post-closing adjustments, and $ 12.2 million for the estimated fair value of contingent earn-out obligations, with a maximum of $ 25.0 million, based upon the achievement of specified operating income targets in each of the three years following the acquisition date.

Amyx was not considered significant to our consolidated financial statements.

The total fair value of the purchase price of Amyx was $ 120.9 million, consisted of a $ 100.0 million payable in a promissory note issued to the sellers (paid subsequent to closing), $ 8.7 million of payables related to estimated post-closing adjustments, and $ 12.2 million for the estimated fair value of contingent earn-out obligations, with a maximum of $ 25.0 million, based upon the achievement of specified operating income targets in each of the three years following the acquisition date.

Amyx was not considered material to our consolidated financial statements.

As a result, no pro forma information has been provided.

In fiscal 2022, we acquired The Integration Group of America ("TIGA"), Piteau Associates (“PAE”) and two other financially immaterial acquisitions.

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This amount is comprised of $ 44.0 million in initial cash payments made to the sellers, $ 2.5 million of receivables (net) related to estimated post-closing adjustments for the net assets acquired, $ 15.5 million payable in a promissory note issued to the sellers along with related transaction expenses of the sellers (which were subsequently paid in July 2022) and $ 31.3 million for the estimated fair value of contingent earn-out obligations, with a maximum of $ 47.0 million, based upon the achievement of specified operating income targets in each of the three to five years following the acquisitions.

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

The majority of the goodwill from the fiscal 2023 acquisitions is not deductible for tax purposes, while the majority of the goodwill from the fiscal 2022 acquisitions is deductible for tax purposes.

The results of fiscal 2022 and 2023 acquisitions were included in our consolidated financial statements beginning on the respective closing dates.

Goodwill additions resulting from the fiscal 2023 business combinations are primarily attributable to the significant technical expertise residing in embedded workforces that are sought out by clients, synergies expected to arise after the acquisitions in the areas of enterprise technology services, data management, energy transformation, water, program management, and data analytics and the long-standing reputations of RPS and Amyx.

These acquisitions further expand and complement our market-leading positions in water, renewable energy and sustainable infrastructure;

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

As a result, no pro forma information has been provided.

The majority of the goodwill from fiscal 2024 and 2022 acquisitions is deductible for tax purposes, while the majority of the goodwill from the fiscal 2023 acquisitions is not deductible for tax purposes.

The results of our acquisitions were included in our consolidated financial statements beginning on the respective closing dates.

In fiscal 2024, our goodwill additions from the LST and CCE acquisitions reflect the extensive technical knowledge of the acquired workforces, the anticipated synergies in data analytics, cybersecurity and digital transformation services, and collective reputations of these acquisitions in providing mission critical solutions to both commercial and government customers.

In fiscal 2023, our goodwill additions are primarily attributable to the significant technical expertise residing in embedded workforces that are sought out by clients, synergies expected to arise after the acquisitions in the areas of enterprise technology services, data management, energy transformation, water, program management, and data analytics and the long-standing reputations of RPS and Amyx.

These acquisitions further expand and complement our market-leading positions in water and environment;

enhanced by a combined suite of differentiated data analytics and digital technologies, and expansion into existing and new geographies.

The fiscal 2022 goodwill additions are primarily attributable to the significant technical expertise residing in embedded workforces that are sought out by clients, long-term management experience, the industry reputations and the synergies expected to arise after the acquisitions in the areas of data management, digitization, modeling, water and natural resources.

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 companies.

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

Intangible assets with finite lives arise from business acquisitions and are amortized based on the period over which the contractual or economic benefit of the intangible assets are expected to be realized or on a straight-line basis over the useful lives of the underlying assets, ranging from one to twelve years .

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.

Intangible assets with finite lives arise from business acquisitions and are amortized based on the period over which the contractual or economic benefit of the intangible assets are expected to be realized on a straight-line basis over the useful lives of the underlying assets, ranging from one to 12 years.

These consist of client relations, backlog and trade names.

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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 “Non-current 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:

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

(1) the valuation of our acquisitions is not supported solely by the initial consideration paid, and the contingent earn-out formula is a critical and material component of the valuation approach to determining the purchase price;

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

In each quarter during fiscal 2023, 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 RUPOs and the inventory of prospective new contract awards.

In each quarter during fiscal 2024, 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 fiscal 2024, we recorded adjustments to our contingent earn-out liabilities and reported a net loss to operating income of $ 2.5 million.

The net loss primarily resulted from increased valuations of the contingent consideration liabilities for our prior acquisitions of Segue Technologies, Inc., Hoare Lea, LLP ("HLE"), TIGA and PAE, reflecting their financial performance that exceeded our previous expectations.

These increases were partially offset by a decreased valuation of the contingent consideration for Amyx, which has the forecasted revenue becoming realized later than originally anticipated.

The net loss primarily resulted from increased valuations of the contingent consideration liabilities for our prior acquisitions of LST and BlueWater Federal Solutions, Inc., reflecting their financial performance that exceeded our previous expectations.

These increases were partially offset primarily by a decreased valuation of the contingent consideration for Amyx, as forecasted revenues and earnings did not become realized as originally anticipated.

In fiscal 2023, we recorded adjustments to our contingent earn-out liabilities and reported a net loss to operating income of $ 12.3 million .

performance that exceeded our previous expectations.

These increases were partially offset by a decreased valuation of the contingent consideration for Amyx.

In fiscal 2022, total adjustments to our contingent earn-out liabilities in operating income were immaterial.

In fiscal 2021, we recorded adjustments to our contingent earn-out liabilities and reported a net gain in operating income of $ 3.3 million.

These adjustments resulted from the updated valuations of the contingent consideration liabilities, which reflect updated projections of acquired companies' financial performance during their respective earn-out periods.

At October 1, 2023, there was a total potential max imum of $ 113.8 million of outstanding contingent consideration related to acquisitions.

Of this amount, $ 73.4 million was estimated as the fair value and accrued on our consolidated balance sheet.

The following table summarizes the changes in the carrying value of estimated contingent earn-out liabilities (in thousands):

The following table summarizes the changes in the fair value of estimated contingent consideration (in thousands):

Fiscal Year Ended

September 29,

2024 October 1,

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Beginning balance $ 73,422 $ 65,566 $ 59,297

Acquisition date fair value of contingent earn-out liabilities 12,248 31,341 50,235

Change in fair value of contingent earn-out liabilities 2,480 2,184 992

Re-measurement of contingent earn-out liabilities 12,255 329 ( 3,273 )

Foreign exchange impact 2,201 ( 7,152 ) ( 596 )

Earn-out payments:

Reported as cash used in operating activities — ( 310 ) ( 427 )

Reported as cash used in financing activities ( 21,328 ) ( 20,123 ) ( 20,251 )

Estimated earn-out liabilities for acquisitions 23,038 12,248 31,341

Payments of contingent consideration ( 54,050 ) ( 21,328 ) ( 20,433 )

Adjustments to fair value reported in earnings 2,541 12,255 329

Interest accretion expense 2,639 2,480 2,184

Effect of foreign currency exchange rate changes 1,156 2,201 ( 7,152 )

Ending balance $ 48,746 $ 73,422 $ 65,566

Maximum potential payout at end of period $ 102,006 $ 113,820 $ 120,882

Goodwill and Intangible Assets

The following table summarizes the changes in the carrying value of goodwill (in thousands):

The following table summarizes the changes in the carrying value of goodwill by reportable segment (in thousands):

GSG CIG Total

Balance at October 2, 2022 $ 519,102 $ 591,310 $ 1,110,412

Goodwill reallocation ( 51,497 ) 51,497 —

Acquisitions 42,365 26,318 68,683

Translation and other ( 10,199 ) ( 56,650 ) ( 66,849 )

Balance at October 2, 2022 519,102 591,310 1,110,412

Acquisitions 138,380 621,496 759,876

Translation and other 2,460 7,496 9,956

Acquisition activity 138,380 621,496 759,876

Translation and other adjustments 2,460 7,496 9,956

Balance at October 1, 2023 659,942 1,220,302 1,880,244

Our goodwill balances reflect the goodwill reallocation related to the creation of our new High Performance Buildings 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 rep orting currency.

The fiscal 2023 goodwill amounts are presented net of reductions from historical impairment adjustments and fiscal 2023 goodwill additions relate to our fiscal 2023 acquisitions.

The purchase price allocations for our fiscal 2023 acquisitions are preliminary and subject to adjustment based upon the final determinations of the net assets acquired and information to perform the final valuations.

Acquisition activity 84,865 — 84,865

Translation and other adjustments 6,010 75,450 81,460

Balance at September 29, 2024 $ 750,817 $ 1,295,752 $ 2,046,569

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

The fiscal 2024 goodwill addition resulted from the purchase price allocations for our recent acquisitions which are preliminary and subject to adjustment based upon the final determinations of the net assets acquired and information to perform the final valuation.

Goodwill adjustments primarily related to the foreign currency translation adjustments which resulted from our foreign subsidiaries with functional currencies that are different than our reporting currency.

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

Our last review at July 1, 2024 (i.e., the first day of our fourth quarter in fiscal 2024) 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.

As of July 3, 2023, and after the reallocation of goodwill on the first day of fiscal 2023, we had no reporting units that had estimated fair values that exceeded their carrying values by less than 45 %.

As of July 1, 2024, we had no reporting units that had estimated fair values that exceeded their carrying values by less than 72 %.

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

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Fiscal Year Ended

October 1, 2023 October 2, 2022

September 29, 2024 October 1, 2023

(in years) Gross

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Amortization expense for the identifiable intangible assets for fiscal 2024, 2023 and 2022 was $ 50.0 million, $ 41.2 million and $ 13.2 million, respectively.

Foreign currency translation adjustments reduced net identifiable intangible assets by $ 0.2 million and $ 5.3 million in fiscal 2023 and 2022, respectively.

Estimated amortization expense for the succeeding five fiscal years and beyond is as foll ows (in thousands):

Foreign currency translation adjustments increased net identifiable intangible assets by $ 13.4 million in fiscal 2024.

The foreign currency translation adjustments were immaterial in fiscal 2023.

Estimated amortization expense for the succeeding five fiscal years and beyond is as follows (in thousands ):

2025 $ 36,198

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Fiscal Year Ended

September 29,

2024 October 1,

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The depreciation expense related to property and e quipment was $ 23.7 million, $ 20.0 million and $ 13.9 million for fiscal 2024, 2023 and 2022, respectively.

The increases in property and equipment from October 2, 2022 to October 1, 2023 are primarily due to the RPS acquisition.

Income before income taxes, by geographic area, was as follows (in thousands):

Fiscal Year Ended

September 29,

2024 October 1,

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Fiscal Year Ended

September 29,

2024 October 1,

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Fiscal Year Ended

September 29,

2024 October 1,

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Tax differential on foreign earnings 2.0 1.5 1.0

Non-taxable foreign interest income — — ( 1.0 )

Stock compensation ( 0.4 ) ( 0.4 ) ( 2.0 )

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Disallowed officer compensation 0.9 1.2 1.9

Cash repatriation — 0.1 2.1

Unremitted earnings 0.4 0.2 ( 0.2 )

Hedging gain — ( 5.7 ) —

Global intangible low-taxed income 0.5 — —

Deferred tax adjustments 0.8 ( 2.3 ) 0.1

Audit settlements 0.9 — —

Other 1.1 0.6 1.1

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The effective tax rates for fiscal 2024, 2023 and 2022 wer e 28.1 %, 31.8 % and 24.5 %, respectively.

The fiscal 2024 income tax expense included $ 4.2 million of expense for the settlement of various tax positions that were under audit for fiscal years 2011 through 2021.

The fiscal 2023 income tax expense included non-operating income tax expenses totaling $ 20.6 million to (i) increase the tax liability for uncertain tax positions related to certain U.S.

tax credits and an intercompany financing transaction, (ii) to recognize the tax liability for foreign earnings, primarily in the U.K.

and Australia, that are no longer indefinitely reinvested.

The fiscal 2021 effective tax rate reflects a non-recurring net tax benefit of $ 21.6 million, consisting of a valuation allowance in the United Kingdom that was released due to sufficient positive evidence being obtained in fiscal 2021.

The valuation allowance was primarily related to net operating loss carry-forwards.

We evaluated the positive evidence against any negative evidence and determined that it was more likely than not that the deferred tax assets would be realized.

The primary factors used to assess the likelihood of realization were the past performance of the related entity and our forecast of future taxable income.

In fiscal 2021, we repatriated approximately $ 80 million from Canada and recognized a related tax expense of $ 5.6 million.

At that time, we also determined that our remaining undistributed earnings in Canada of approximately $ 20.1 million were no longer being indefinitely reinvested and recorded an additional deferred tax liability/expense of $ 3.1 million.

tax credits and an intercompany financing transaction, (ii) recognize the tax liability for foreign earnings, primarily in the United Kingdom and Australia, that are no longer indefinitely reinvested.

Also, income tax expense was reduced by $ 4.5 million, $ 4.6 million and $ 10.3 million of excess tax benefits on share-based payments in fiscal 2024, 2023 and 2022, respectively.

Excluding the impact of increasing the tax liability for uncertain tax positions, the valuation allowance release, the foreign earnings repatriation and the excess tax benefits on share-based payments our effective tax rates in fiscal 2023, 2022 and 2021 were 27.8 % , 27.5 % and 25.7 % respectively.

We are currently under examination by the Internal Revenue Service for fiscal years from 2018 to 2021, and the Canada Revenue Agency for fiscal 2011 through 2016.

We are also subject to various other state audits.

Excluding the impact of the excess tax benefits on share-based payments in all years, the settlement amount in fiscal 2024, and the non-operating tax expenses in fiscal 2023, our effective tax rates for fiscal 2024, 2023 and 2022 were 28.1 %, 27.8 % and 27.5 %, respectively.

Temporary differences comprising the net deferred income tax asset shown on the accompanying consolidated balance sheets were as follows (in thousands):

Fiscal Year Ended

September 29,

2024 October 1,

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Prepaid expense ( 3,065 ) ( 2,702 )

Reserves and contingent liabilities ( 153 ) —

Right-of-use assets, operating leases ( 51,841 ) ( 53,437 )

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Our foreign earnings are not considered indefinitely reinvested and any potential tax liability that would be incurred upon repatriation is recognized currently with the related income.

At October 1, 2023, we had available unused federal net operating loss (“NOL”) carry forwards of $ 37.5 million that has no expiration date;

state net operating loss carry forwards of $ 26.0 million that expire at various dates from 2024 to 2037;

At September 29, 2024, we had available state net operating loss carry forwards of $ 26.6 million that expire at various dates from 2025 to 2043;

and available foreign NOL carry forwards of $ 123.9 million, of which $ 15.0 million expire at various dates from 2025 to 2044, and $ 108.9 million have no expiration date.

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Although realization is not assured, based on our assessment, we have concluded that it is more likely than not that the assets will be realized except for the deferred tax assets related to certain loss carry-forwards for which a valuation allowance of $ 16.8 million has been provided.

At October 1, 2023, we had $ 53.6 million of unrecognized tax benefits, all of which, if recognized, would affect our effective tax rate.

At September 29, 2024, we had $ 41.4 million of unrecognized tax benefits, all of which, if recognized, would affect our effective tax rate.

It is reasonably possible that the amount of the unrecognized tax benefits with respect to certain of our unrecognized tax positions may not significantly decrease in the next 12 months.

These changes would be the result of ongoing examinations.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands) :

Fiscal Year Ended

September 29,

2024 October 1,

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We recognize potential interest and penalties related to unrecognized tax benefits in income tax expense.

During fiscal 2023 , 2022 and 2021 , we accrued additional interest and penalties of $ 4.6 million , $ 0.5 million and $ 0.8 million, respectively, and recorded reductions in accrued interest and penalties of $ 2.0 million , $ 0.4 million and $ 0 , respe ctively, as a result of audit settlements and other prior-year adjustments.

The amount of interest and penalties accrued at October 1, 2023, October 2, 2022 and October 3, 2021 was $ 8.0 million , $ 5.3 million and $ 5.2 million, respectively.

During fiscal 2024 , 2023 and 2022 , we accrued additional interest and penalties of $ 3.8 million, $ 4.6 million and $ 0.5 million, respectively, and recorded reductions in accrued interest and penalties of $ 3.2 million , $ 2.0 million and $ 0.4 million, respe ctively, as a result of audit settlements and other prior-year adjustments.

The amount of interest and penalties accrued at September 29, 2024, October 1, 2023 and October 2, 2022 was $ 8.6 million, $ 8.0 million and $ 5.3 million, respectively.

Long-Term Debt

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Fiscal Year Ended

September 29,

2024 October 1,

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Debt issuance costs and discount ( 12,366 ) ( 15,471 )

Current portion of long-term debt — ( 12,504 )

Long-term debt $ 812,634 $ 879,529

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Thereafter, the Convertible Notes will be convertible at the option of the holders at any time until the close of business on the second scheduled trading day immediately preceding the maturity date.

The initial conversion rate applicable to the Convertible Notes is 5.0855 shares of our common stock per $1,000 principal amount of the Convertible Notes, which is equivalent to an initial price of approximately $ 196.64 per share of our common stock, subject to adjustment if certain events occur.

The initial conversion rate applicable to the Convertible Notes was 5.0855 shares (pre-stock split) of our common stock per $1,000 principal amount of the Convertible Notes, which is equivalent to an initial price of approximately $ 196.64 per share (pre-stock split) of our common stock.

The conversion rate is subject to adjustment for certain events, including stock splits and issuance of certain stock dividends on our common stock.

As adjusted to give effect to the stock split, the applicable conversion rate was 25.4345 shares of common stock per $1,000 principal amount of the Convertible Notes (equivalent to an adjusted conversion price of approximately $ 39.32 per share of common stock) at September 29, 2024.

Upon conversion, we will pay cash up to the aggregate principal amount of the Convertible Notes to be converted and pay or deliver , as the case may be, cash, shares of our common stock or a combination of cash and shares of our common stock, at our election, in respect of the remainder, if any, of our conversion obligation in excess of the aggregate principal amount of the Convertible Notes being converted.

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Our net proceeds from the offering were approximately $ 560.5 million after deducting the initial purchasers’ discounts and commissions and offering expenses.

We used approximately $ 51.8 million of the net proceeds to pay the cost of the capped

call transactions described below.

We used approximately $ 51.8 million of the net proceeds to pay the cost of the capped call transactions described below.

We used the remaining net proceeds to repay all $ 185.0 million principal amount outstanding under our revolving credit facility, the remaining $ 234.4 million principal amount outstanding under our senior secured term loan due 2027 and approximately $ 89.4 million principal amount outstanding under our senior secured term loan due 2026.

The Convertible Notes were recorded as a single unit within "Long-term debt" in our fiscal 2023 year-end consolidated balance sheet as the conversion option within the Convertible Notes was not a derivative that would require bifurcation and the Convertible Notes did not involve a substantial premium.

Transaction costs to issue the Convertible Notes were recorded as direct deductions from the related debt liabilities and amortized to interest expense using the effective interest method over the terms of the Convertible Notes.

Debt issuance costs for the Convertible Notes have been amortized to interest expense over the terms of the Convertible Notes at an effective annual interest rate of 2.79 %.

The Convertible Notes were recorded as a single unit within "Long-term debt" in our consolidated balance sheet as the conversion option within the Convertible Notes was not a derivative that would require bifurcation and the Convertible Notes did not involve a substantial premium.

Transaction costs to issue the Convertible Notes were recorded as direct deductions from the related debt liabilities and are amortized to interest expense using the effective interest method over the terms of the Convertible Notes resulting in an effective annual interest rate of 2.79 %.

The net carrying amount of the Convertible Notes was as follows (in thousands) :

Fiscal Year Ended

September 29,

2024 October 1,

Principal $ 575,000 $ 575,000

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The following table sets forth the interest expense recognized related to the Convertible Notes (in thousands) :

Fiscal Year Ended

September 29,

2024 October 1,

Interest expense $ 12,866 $ 1,438

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Concurrent with the offering of the Convertible Notes, in August 2023, we entered into capped call transactions (the "Capped Call Transactions").

The Capped Call Transactions are expected generally to reduce the potential dilution our common stock upon conversion of the Convertible Notes and/or offset any cash payments we elect to make in excess of the principal amount of converted Convertible Notes, as the case may be.

The Capped Call Transactions are expected generally to reduce the potential dilution of our common stock upon conversion of the Convertible Notes and/or offset any cash payments we elect to make in excess of the principal amount of converted Convertible Notes, as the case may be.

If, however, the market price per share of our common stock, as measured under the terms of the Capped Call Transactions, exceeds the cap price of the Capped Call Transactions, there would nevertheless be dilution and/or there would not be an offset of such cash payments, in each case, to the extent that such market price exceeds the cap price of the Capped Call Transactions.

The cap price of the Capped Call Transactions is initially $ 259.56 per share, which represents a premium of 65 % over the last reported sale price of our common stock of $ 157.31 per share on the NASDAQ Global Select Market on August 17, 2023, and is subject to certain adjustments under the terms of the Capped Call Transactions.

The cap price of the Capped Call Transactions was initially $ 259.56 per share (pre-stock split), which represents a premium of 65 % over the last reported sale price of our common stock of $ 157.31 per share (pre-stock split) on the NASDAQ Global Select Market on August 17, 2023.

The cap price is subject to adjustment for certain events, including stock splits and issuance of certain stock dividends on our common stock.

As adjusted to give effect to the stock split, the adjusted cap price was approximately $ 51.90 per share at September 29, 2024.

We recorded the Capped Call Transactions as separate transactions from the issuance of the Convertible Notes.

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On October 26, 2022, we entered into a Third Amended and Restated Credit Agreement that provides for an additional $ 500 million senior secured term loan facility (the "New Term Loan Facility") increasing our total borrowing capacity to $ 1.55 billion.

The New Term Loan Facility will mature in January 2026.

On January 23, 2023, we drew the entire amount of the New Term Loan Facility to partially finance the RPS acquisition.

The New Term Loan Facility is not subject to any amortization payments of principal and matures on the third anniversary of the RPS acquisition closing date in January 2026.

The New Term Loan Facility is not subject to any amortization payments of principal and matures in January 2026.

On February 18, 2022, we entered into Amendment No.

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and (iii) utilize the proceeds for working capital, capital expenditures and other general corporate purposes.

The Amended Credit Agreement provides for a reduction in the interest grid for meeting certain sustainability targets related to the (i) reduction of greenhouse gas emissions through the Company’s projects and operational sustainability initiatives and (ii) improvement of peoples’ lives as a result of the

Company’s projects that provide environmental, social and governance benefits.

The Amended Credit Agreement provides for a reduction in the interest grid for meeting certain sustainability targets related to the (i) reduction of greenhouse gas emissions through the

Company’s projects and operational sustainability initiatives and (ii) improvement of peoples’ lives as a result of the Company’s projects that provide environmental, social and governance benefits.

The Amended Revolving Credit Facility includes a $ 100 million sublimit for the issuance of standby letters of credit, a $ 20 million sublimit for swingline loans and a $ 300 million sublimit for multicurrency borrowings and letters of credit.

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The Amended Term Loan Facility is subject to the same interest rate provisions.

The Amended Credit Agreement expires in February 2027, or earlier at our discretion upon payment in full of loans and other obligations.

At fiscal 2023 year-end, we had $ 320 million in outstanding borrowings under the Amended Credit Agreement, which was all under the New Term Loan Facility, and no borrowings under the Amended Revolving Credit Facility.

The weighted-average interest rate of the outstanding borrowings during fiscal 2023 was 5.71 %.

The Amended Credit Agreement expires on February 18, 2027, or earlier at our discretion upon payment in full of loans and other obligations.

In fiscal 2023, we repaid the Amended Term Loan Facility in full with the Convertible Notes proceeds.

At fiscal 2024 year-end, we had $ 250 million in outstanding borrowings under the Amended Credit Agreement, which was consisted of $ 250 million under the New Term Loan Facility and no borrowings under the Amended Revolving Credit Facility.

The weighted-average interest rate of the outstanding borrowings under the Amended Credit Agreement during fiscal 2024 was 6.70 %.

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

Our year-to-date weighted-average interest rate on borrowings outstanding during fiscal 2022 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" included in Item 8, was 5.37 %.

At October 1, 2023, we had $ 499.3 million of available credit under the Amended Revolving Credit Facility, all of which could be borrowed without a violation of our debt covenants.

At September 29, 2024, we had $ 499.3 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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At fiscal 2024 year-end, there were no outstanding borrowings under these facilities and the aggregate amount of standby letters of credit outstanding was $ 43.3 million.

As of October 1, 2023 we had no bank overdrafts related to our disbursement bank accounts.

As of September 29, 2024 we had no bank overdrafts related to our disbursement bank accounts.

The following table presents scheduled maturities of our long-term debt (in thousands) :

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Operating leases are included in "Right-of-use assets, operating leases", "Short-term lease liabilities, operating leases" and "Long-term lease liabilities, operating leases" in the consolidated balance sheets.

Our finance leases are primarily for certain IT equipment.

Our finance leases are immaterial.

Our finance leases are primarily for certain IT equipment and are immaterial.

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

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

Lease te rms 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.

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Based on this evaluation, we determined that some long-lived assets were no longer recoverable and were in fact impaired.

Fair value was based on expected future cash flows using Level 3 inputs under Accounting Standards Codification Topic 820, Fair Value Measurement ("ASC 820").

Fair value was based on expected future cash flows using Level 3 inputs under Accounting Standards Codification Topic 820, Fair Value Measurement.

The cash flows are those expected to be generated by the market participants, discounted at a real estate-based rate of interest.

As a result of our evaluation, we recorded a $ 16.4 million non-cash charge related to the ROU operating lease asset impairment which was reported in our fiscal 2023 statement of income, and a corresponding decrease to our ROU assets operating leases on our consolidated balance sheet as of fiscal 2023 year-end.

The components of lease costs are as follows (in thousands) :

Fiscal Year Ended

September 29,

2024 October 1,

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Fiscal Year Ended

September 29,

2024 October 1,

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Fiscal Year Ended

September 29,

2024 October 1,

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As of fiscal 2024 year-en d, we had $ 15.3 million of operating leases that have not yet commenced.

A maturity analysis of the future undiscounted cash flows associated with our operating lease liabili ties as of fiscal 2023 year-end is as follows (in thousands):

A maturity analysis of the future undiscounted cash flows associated with our lease liabili ties at fiscal 2024 year-end is as follows (in thousands):

2025 $ 68,743

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Total present value of lease liabilities $ 203,514

Employee Benefits

Some of our Canadian legal entities qualified for and applied for these CEWS cash benefits to partially offset the impacts of revenue reductions and on-going staffing costs.

The $ 21 million total received was initially recorded in " Other long-term liabilities " until all potential amendments to the qualification criteria, including some that were proposed with retroactive application, were finalized in fiscal 2022.

In fiscal 2024 (all in the first quarter of fiscal 2024), we distributed approximately $ 10 million to our Canadian employees.

The remaining $ 11 million, which we expect to distribute in the first quarter of fiscal 2025, is reported in " Accrued compensation ".

We do not expect there will be any related impact on our operating income, and we have no outstanding applications for further government assistance.

Stockholders' Equity and Stock Compensation Plans

At fiscal 2023 year-end, we had the following stock-based compensation plans:

On September 9, 2024, we completed a five -for-one stock split of our common stock.

All share, equity award and per share amounts and related stockholders' equity balances presented herein have been retroactively adjusted, where applicable, to reflect the stock split.

At fiscal 2024 year-end, we had t he following stock-based compensation plans:

• 2015 Equity Incentive Plan ("2015 EIP").

Key employees and non-employee directors may be granted equity awards, including stock options, performance share units ("PSUs") and RSUs.

Key employees and non-employee directors may be granted equity awards, including stock options, performance share units ("PSUs") and restricted stock units ("RSUs").

Shares issued with respect to awards granted under the 2015 EIP other than stock options or stock appreciation rights, which are referred to as "full value awards", are counted against the 2015 EIP's aggregate share limit as three shares for every share or unit actually issued .

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Fiscal Year Ended

September 29,

2024 October 1,

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Exercised ( 410 ) 7.47

Forfeited — —

Outstanding on October 1, 2023 148 $ 39.45 3.20 $ 16,708

Vested or expected to vest on October 1, 2023 148 $ 39.45 3.20 $ 16,708

Exercisable on October 1, 2023 148 $ 39.45 3.20 $ 16,708

The aggregate intrinsic value in the table above represents the total intrinsic value (the difference between our closing stock price on the last trading day of fiscal 2023 and the exercise price, times the number of shares) t hat would have been rec eived by the in-the-money option holders if they had exercised their options on October 1, 2023.

Outstanding on September 29, 2024 332 $ 8.41 2.44 $ 12,598

Vested or expected to vest on September 29, 2024 332 $ 8.41 2.44 $ 12,598

Exercisable on September 29, 2024 332 $ 8.41 2.44 $ 12,598

The aggregate intrinsic value in the table above represents the total intrinsic value (the difference between our closing stock price on the last trading day of fi scal 2024 and the exercise price, times the number of shares) that would have been received by the in-the-money option holders if they had exercised their options on September 29, 2024.

This amount will change based on the fair market value of our stock.

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All of the 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 growth in our EPS and 50 % on our relative total shareholder return over the vesting period.

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

For these performance-based awards, our expected performance is reviewed to estimate the percentage of shares that will vest.

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(in thousands) Weighted-

Nonvested balance at September 27, 2020 444 $ 63.93 355 $ 64.83

Nonvested balance at October 3, 2021 1,903 $ 16.66 1,588 $ 16.59

Granted 389 36.92 209 49.43

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Adjustment (1)

— — 441 16.13

Forfeited ( 63 ) 21.80 — —

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Adjustment (1)

— — 344 19.97

Forfeited ( 78 ) 28.00 ( 45 ) 38.74

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Adjustment (1)

— — 193 30.61

Forfeited ( 75 ) 31.45 ( 29 ) 40.36

Nonvested balance at October 1, 2023 269 $ 130.58 250 $ 128.21

(1) Fiscal 2021 includes a payout adjustment of 99,214 PSUs due to the actual performance level achieved for PSUs granted in fiscal 2018 that vested during fiscal 2021.

Nonvested balance at September 29, 2024 1,487 $ 29.35 1,261 $ 27.78

(1) Fiscal 2022 includes a payout adju stment of 440,990 PSUs due to the actual performance level achieved for PSUs granted in fiscal 2019 that vested during fiscal 2022.

Fiscal 2023 includes a payout adjustment of 343,960 PSUs due to the actual performance level achieved for PSUs granted in fiscal 2020 that vested during fiscal 2023.

Fiscal 2024 includes a payout adjustment of 193,340 PSUs due to the actual performance level achieved for PSUs granted in fiscal 2021 that vested during fiscal 2024.

In fiscal 2023, 2022 and 2021, we awar ded 105,082 , 77,844 and 117,934 shares of RSUs, respectively, to our key employees and non-employee directors.

In fiscal 2024, 2023 and 2022, we awarded 723,420 , 525,410 and 389,220 shares of RSUs, respectively, to our key employees and non-employee directors.

The weighted-average grant-date fair value of RSUs granted during fiscal 2024, 2023 and 2022 was $ 33.14 , $ 31.27 and $ 36.92 , respectively.

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Fiscal Year Ended

September 29,

2024 October 1,

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Fiscal Year Ended

September 29,

2024 October 1,

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For fiscal 2024, 2023 and 2022, we based our expected stock price volatility on historical volatility behavior and current implied volatility behavior.

The risk-free rate of return was based on constant maturity rates provided by the U.S.

The risk-fr ee rate of return was based on constant maturity rates provided by the U.S.

The expected life was based on the ESPP terms and conditions.

Stock-based compensation expense for fiscal 2023, 2022 and 2021 includ ed $ 2.4 million, $ 2.3 million and $ 2.0 million, respectively, related to the ESPP.

Stock-based compensation expense for fiscal 2024, 2023 and 2022 included $ 2.0 million, $ 2.4 million and $ 2.3 million, respectively, related to the ESPP.

The unrecognized stock-based compensation costs for awards granted under the ESPP at fiscal 2024 and 2023 year-ends were $ 0.5 million and $ 0.6 million, respectively.

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We have defined contribution plans in various countries where we have employees.

This p rimarily includes 401(k) plans in the United States.

Th is primarily includes 401(k) plans in the United States.

For fiscal 2024, 2023 and 2022, employer contributions to the U.S.

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Employee deferrals are deposited into a rabbi trust, and the funds are generally invested in individual variable life insurance contracts that we own and are specifically designed to informally fund savings plans of this nature.

At fiscal 2023 and 2022 year-ends, the consolidated balance sheets reflect assets of $ 43.5 million and $ 36.7 million, respectively, related to the deferred compensation plan in "Other long-term assets," and liabilities of $ 43.4 million and $ 36.3 million, respectively, related to the deferred compensation plan in "Other long-term liabilities." The net gains and losses related to the deferred compensation plan are reported as part of “Selling, general and administrative expenses” in our c onsolidated statements of income .

At fiscal 2024 and 2023 year-ends, the consolidated balance sheets reflect assets of $ 70.1 million and $ 43.5 million, respectively, related to the deferred compensation plan in "Other long-term assets," and liabilities of $ 74.3 million and $ 43.4 million, respectively, related to the deferred compensation plan in "Other long-term liabilities." The net gains and losses related to the deferred compensation plan are reported as part of “Selling, general and administrative expenses” in our consolidated statements of income.

These related net gains and losses were immaterial for fiscal 2024, 2023 and 2022.

In connection with the acquisition of HLE in fiscal 2021, we assumed a defined benefit pension plan (the “Plan”), which HLE operates for all qualifying employees.

In connection with an acquisition, we assumed a defined benefit pension plan (the “Plan”), which was operated for all qualifying employees.

The assets of the Plan are held in a separate trustee administered fund.

The Plan was closed to new entrants in August 2003, except for current employees who had not attained the age of 24 at that date.

The Plan was closed to future accrual on December 31, 2009.

Under the agreed schedule of contributions, HLE will make no further contributions, and is to pay the expenses of administering the plan.

The change in the defined benefit obligation, the change in fair value of plan assets and the amounts recognized in the Consolidated Statement of Income, the Consolidated Statement of Comprehensive Income and the Consolidated Statements of Shareholders’ Equity for fiscal 2023 and fiscal 2022 were immaterial.

The plan is closed to new participants and to future benefit accrual.

Under the agreed schedule of contributions, we make no further contributions, and continue to pay the expenses of administering the plan.

The Plan's funded status was as follows (in thousands) :

Fiscal Year Ended

September 29,

2024 October 1,

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The net surplus is reflected in other long-term assets on our consolidated balance sheets as of fiscal 2024 and 2023 year-ends.

The plan is closed to new participants and to future benefit accrual.

The benefits paid in fiscal 2024 and 2023 were $ 1.5 million and $ 1.3 million, respectively.

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Fiscal Year Ended

September 29,

2024 October 1,

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We seek a competitive rate of return relative to an appropriate level of risk depending on the funded status and obligations of each plan and typically employ both active and passive investment management strategies.

The risk in our practices includes diversification across asset classes and investment styles and periodic rebalancing toward asset allocation

The risk in our practices includes diversification across asset classes and investment styles and periodic rebalancing toward asset allocation targets.

The target asset allocation selected for each plan reflects a risk/return profile that we believe is appropriate relative to each plan’s liability structure and return goals.

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Fiscal Year Ended

September 29,

2024 October 1,

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Earnings per Share

The following table sets forth the number of weighted-average shares used to compute basic and diluted EPS (in thousands, except per share data):

Basic EPS is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding, less unvested restricted stock for the period.

Diluted EPS is computed by dividing net income by the weighted-average number of common shares outstanding and dilutive potential common shares for the period.

Potential common shares include the weighted-average dilutive effects of stock-based awards and shares underlying our Convertible Notes.

For fiscal 2024, our Convertible Notes, described in Note 9, "Long-Term Debt", had a dilution impact on the dilutive potential common shares, which was calculated using the if-converted method.

The dilution impact was due to the price of our common stock exceeding the conversion price.

The related Capped Call Transactions were excluded from the calculation of dilutive potential common shares as their effect is anti-dilutive.

For fiscal 2024, 2023 and 2022, no options were excluded from the calculation of dilutive potential common shares.

The following table presents the number of weighted-average shares used to compute basic and diluted EPS (in thousands, except per share data):

Fiscal Year Ended

September 29,

2024 October 1,

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Effect of diluted stock options and unvested restricted stock 2,125 2,170 2,715

Shares issuable assuming conversion of convertible notes 553 — —

Weighted-average common stock outstanding – diluted 270,042 268,185 270,815

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Diluted $ 1.23 $ 1.02 $ 0.97

For fiscal 2023, 2022 and 2021, no options were excluded from the calculation of dilutive potential common shares.

The Convertible Notes had no impact on the calculation of dilutive potential common shares in fiscal 2023, as the price of our common stock did not exceed the conversion price.

The Capped Call Transactions are excluded from the calculation of dilutive potential common shares as their effect is anti-dilutive.

Derivative Financial Instruments

We use certain interest rate derivative contracts to hedge interest rate exposures on our variable rate debt.

Also, we may enter into foreign currency derivative contracts with financial institutions to reduce the risk that cash flows and earnings could adversely be affected by foreign currency exchange rate fluctuations.

We periodically use certain interest rate derivative contracts to hedge interest rate exposures on our variable rate debt.

We also enter into foreign currency derivative contracts with financial institutions to reduce the risk that cash flows and earnings could adversely be affected by foreign currency exchange rate fluctuations.

Our hedging program is not designated for trading or speculative purposes.

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The intrinsic value of the forward contract was immaterial at inception as the GBP/USD spot and forward exchange rates were essentially the same.

The fair value of the forward contract at October 2, 2022 was $ 19.9 million, and an unrealized gain of the same amount was recognized in our fourth quarter of fiscal 2022 results.

The fair value of the forward contract at October 2, 2022 was

$ 19.9 million, and an unrealized gain of the same amount was recognized in our fourth quarter of fiscal 2022 results.

On January 23, 2023, the forward contract was settled at the fair value of $ 109.3 million.

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At fiscal 2022 year-end, the fair value of the effective portion of our interest rate swap agreements designated as cash flow hedges before tax effect was an unrealized gain of $ 2.4 million, which was reported in "Other non-current assets" on our consolidated balance sheet.

Additionally, the related loss of $ 2.4 million, a gain of $ 11.8 million and a gain of $ 6.1 million for fiscal year ended 2023, 2022 and 2021, respectively, were recognized and reported on our consolidated statements of comprehensive income.

There were no other derivative instruments that were not designated as hedging instruments for fiscal 2023, 2022 and 2021.

Additionally, the related loss of $ 2.4 million and a gain of $ 11.8 million for fiscal yea r ended 2023 and 2022, respectively, were recognized and reported on our consolidated statements of comprehensive income.

There were no derivative instruments that were not designated as hedging instruments for fiscal 2024, 2023 and 2022.

Reclassifications Out of Accumulated Other Comprehensive Income (Loss)

The accumulated balances and reporting period activities for fiscal 2023, 2022 and 2021 related to reclassifications out of accumulated other comprehensive income are summarized as follows (in thousands):

Adjustments Gain (Loss)

on Derivative

The accumulated balances and reporting period activities for fiscal 2024, 2023 and 2022 related to reclassifications out of accumulated other comprehensive inc ome (loss) are sum marized as follows (in thousands):

Adjustments (Loss) Gain on Derivative

Instruments Net Pension Adjustments Accumulated

Comprehensive

Income (Loss)

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

Other comprehensive income before reclassifications 30,641 12,175 — 42,816

Amounts reclassified from accumulated other comprehensive income

Interest rate contracts, net of tax (1)

— ( 6,058 ) — ( 6,058 )

Net current-period other comprehensive income 30,641 6,117 — 36,758

(Loss) Income

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

Other comprehensive income before reclassifications ( 94,922 ) 15,937 — ( 78,985 )

Other comprehensive (loss) income before reclassifications ( 94,922 ) 15,937 — ( 78,985 )

Amounts reclassified from accumulated other comprehensive income

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Balances at October 2, 2022 $ ( 210,556 ) $ 2,412 $ — $ ( 208,144 )

Other comprehensive income before reclassifications 12,623 ( 5,192 ) 2,638 10,069

Amounts reclassified from accumulated other comprehensive income

Other comprehensive income (loss) before reclassifications 12,623 ( 5,192 ) 2,638 10,069

Amounts reclassified from accumulated other comprehensive income (loss)

Interest rate contracts, net of tax (1)

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Balances at October 1, 2023 $ ( 197,933 ) $ — $ 2,638 $ ( 195,295 )

Other comprehensiv e income be fore reclassifications

115,120 — 1,300 116,420

Net current-period other comprehensive income

115,120 — 1,300 116,420

Balances at September 29, 2024 $ ( 82,813 ) $ — $ 3,938 $ ( 78,875 )

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

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Fair Value Measurements

We classified our assets and liabilities that were carried at fair value in one of the following categories:

Quoted market prices in active markets for identical assets or liabilities.

Observable market-based inputs or unobservable inputs that are corroborated by market data.

Unobservable inputs that are not corroborated by market data.

Derivative Instruments.

Our derivative instruments are categorized within Level 2 of the fair value hierarchy.

For additional information about our derivative financial instruments (see Note 2, "Basis of Presentation and Preparation" and Note 14, "Derivative Financial Instruments").

For additional information about our derivative financial instruments (see Note 2, "Basis of Presentation" and Note 15, "Derivative Financial Instruments").

Contingent Consideration.

We measure our contingent earn-out liabilities at fair value on a recurring basis using significant unobservable inputs classified within Level 3 of the fair value hierarchy.

(see Note 2, "Basis of Presentation and Preparation" and Note 5, "Acquisitions" for further information).

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).

The carrying value of our long-term debt approximated fair value at the end of our fiscal 2023 and 2022.

At fiscal 2023 year-end, we had borrowings of $ 320 million outstanding under our Amended Credit Agreement and $ 575 million outstanding under our Convertible Senior

Notes, which were used to fund our business acquisitions, working capital needs, dividends, capital expenditures and contingent earn-outs (see Note 9, "Long-Term Debt ").

We measure our contingent earn-out liabilities at fair value on a recurring basis using significant unobservable inputs classified within Level 3 of the fair value hierarchy (see Note 2, "Basis of Presentation" and Note 5, "Acquisitions" for further information).

The fair value of long-t erm debt under our Credit Facility 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).

The carrying value of our long-term debt under our Credit Facility approximated fair value at the end of our fiscal 2024 and 2023.

At fiscal 2024 year-end, we had $ 250 million in outstanding borrowings under our Amended Credit Agreement, which consisted of $ 250 million under the New Term Loan Facility and no borrowings under the Amended Revolving Credit Facility.

The estimated fair value of our $ 575 million Convertible Notes, which were used to fund our business acquisitions, working capital needs, dividends, capital expenditures and contingent earn-outs, was determined based on the trading price of the Convertible Notes as of the last trading day of fiscal 2024.

We consider the fair value of the Convertible Notes to be a Level 2 measurement as they are not actively traded in markets.

The carrying amounts and estimated fair values of the Convertible Notes were approximately $ 564 million and $ 743 million, respectively, at September 29, 2024, and $ 561 million and $ 566 million, respectively, at October 1, 2023 (see Note 9 , " Long-Term Debt ").

Defined Benefit Pension Plan.

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While management does not believe that the resolution of these claims will have a material adverse effect, individually or in aggregate, on our financial position, results of operations or cash flows, management acknowledges the uncertainty surrounding the ultimate resolution of these matters.

On July 15, 2019, following an initial January 14, 2019 filing, the Civil Division of the United States Attorney's Office filed an amended complaint in intervention in three qui tam actions filed against our subsidiary, Tetra Tech EC, Inc.

On July 15, 2019, following an initial January 14, 2019 filing, the Civil Division of the United States Attorney's Office ("the USAO") filed an amended complaint in the intervention of three qui tam actions filed against our subsidiary, Tetra Tech EC, Inc.

("TtEC"), in the U.S.

District Court for the Northern District of California.

District Court for the Northern District of California ("the Court").

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.

We are currently unable to determine the probability of the outcome of this matter or the range of reasonably possible loss, if any

On March 5, 2024, the Court granted the USAO's motion to amend the filing to include additional claims against TtEC under the Comprehensive Environmental Response, Compensation, and Liability Act and common law.

Several ancillary claims brought by third-party private plaintiffs arising from the same services provided by TtEC at Hunters Point are also ongoing.

To explore whether a negotiated resolution is possible, TtEC began engaging in discussions with the USAO subsequent to the end of fiscal 2024 regarding a potential resolution of all claims.

There can be no assurance that any framework for resolution will be achieved and, if any settlement is achieved, what the final terms or dollar amount will be.

If a settlement is achieved, TtEC would not admit any wrongdoing and would be settling to avoid the delay, uncertainty and expense of protracted litigation.

It is reasonably possible that a charge to income, which could be material to our financial position, results of operations and cash flows, may be required in future periods as discussions with the USAO continue and additional information becomes available.

Reportable Segments

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

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

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

GSG supports U.S.

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commercial clients, and international clients inclusive of the commercial and government sectors.

CIG supports commercial clients across the Fortune 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.

CIG supports commercial clients worldwide in 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), Europe, the United Kingdom and South America (primarily Brazil).

Management eva luates 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.

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In fiscal 2023, our Corporate segment operating losses included $ 33.2 million of acquisition and integration expenses as described in Note 5, "Acquisitions".

We also recorded a $ 16.4 million ($ 6.8 million in GSG, $ 8.3 million in CIG and $ 1.3 million in Corporate) of a non-cash impairment charge related to our ROU operating lease assets in fiscal 2023 (see Note 10, "Leases" for more information.)

We also recorded a $ 16.4 million ($ 6.8 million in GSG, $ 8.3 million in CIG and $ 1.3 million in Corporate) non-cash impairment charge related to our ROU operating lease assets in fiscal 2023 (see Note 10, "Leases" for more information).

T he following tables present summarized financial information of our reportable segments (in thousands):

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Fiscal Year Ended

September 29,

2024 October 1,

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Total income from operations $ 500,737 $ 358,113 $ 340,446

(1) Includes goodwill and intangible assets impairment charges, amortizat ion of intangibles, other costs and other income not allocable to segments.

(1) Includes amortizat ion of intangibles, acquisition and integration expenses, as well as other costs and other income not allocable to segments.

The intangible asset amortization expense for fiscal 2024, 2023 and 2022 was $ 50.0 million, $ 41.2 million and $ 13.2 million, respectively.

Additionally, Corporate results included (loss) income for fair value adjustments to contingent consideration liabilities of $( 12.3 ) million, $( 0.3 ) million and $ 3.3 million for fiscal 2023, 2022 and 2021, respectively.

Additionally, Corporate results included loss for fair value adjustments to contingent consideration liabilities of $( 2.5 ) million, $( 12.3 ) million and $( 0.3 ) million for fiscal 2024, 2023 and 2022, respectively.

See Note 6 - "Goodwill and Intangible Assets" for more information.

Fiscal Year Ended

September 29,

2024 October 1,

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Fiscal Year Ended

September 29,

2024 October 1,

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Total $ 5,198,679 $ 4,522,550 $ 3,504,048

Fiscal Year Ended

Long-lived assets (2) :

September 29,

2024 October 1,

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Total $ 350,992 $ 320,030

(1) Includes revenue and long-lived assets from our foreign operations, primarily in Canada, Australia and the United Kingdom, and revenue generated from non-U.S.

(1) Includes revenue and long-lived assets from our foreign operations, primarily in the United Kingdom, Australia and Canada, and reve nue generated from non-U.S.

(2) Excludes goodwill, intangible assets and deferred income taxes.

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We often provide services to unconsolidated joint ventures.

Our revenue related to services we provided to unconsolidated joint ventures for fiscal 2023, 2022 and 2021 was $ 83.1 million, $ 96.0 million and $ 95.5 million, respectively.

Our related reimbursable costs for fiscal 2023, 2022 and 2021 were $ 78.5 million, $ 91.7 million and $ 92.4 million, respectively.

The table below presents revenue and reimbursable costs related to services we provided to our unconsolidated joint ventures (in thousands):

Fiscal Year Ended

September 29,

2024 October 1,

2023 October 2, 2022

Revenue $ 67,744 $ 83,148 $ 95,967

Related reimbursable costs 61,637 78,489 91,656

Our consolidated balance sheets also included the following amounts related to these services (in thousands):

October 1, 2023 October 2, 2022

Fiscal Year Ended

September 29, 2024 October 1, 2023

Accounts receivable, net $ 15,612 $ 19,944

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In the opinion of management, the followin g unaudited quarte rly data for the fiscal 2024 and 2023 reflect all adjustments necessary for a fair statement of the results of operations (in thousands, except per share data).

In the fourth quarter of fiscal 2022 and in the first and second quarters of fiscal 2023, we recognized a $ 19.9 million, $ 68.0 million and $ 21.4 million, respectively, of unrea lized gain on a foreign currency forward contract related to the planned acquisition of RPS.

We also recorded a $ 16.4 million of a non-cash impairment charge related to our ROU operating lease assets in the fourth quarter of fiscal 2023 (see Note 10, "Leases" for more information).

In the first and second quarters of fiscal 2023, we recognized $ 68.0 million and $ 21.4 million, respectively, of unrea lized gain on a foreign currency forward contract related to the planned acquisition of RPS.

We also recorded a $ 16.4 million non-cash impairment charge related to our ROU operating lease assets in the fourth quarter of fiscal 2023 (see Note 10, "Leases" for more information).

Additionally, we incurred $ 33.2 million of acquisition and integration expenses in fiscal 2023 (largely comprised of $ 19.9 million in the second quarter and $ 7.3 million in fourth quarter) as described in Note 5, "Acquisitions".

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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-K

Item 8. Financial Statements and Supplementary Data