TETRA TECH INC 10-K

Item 8. Financial Statements and Supplementary Data INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE Page Report of Independent Registered Public Accounting Firm 46 Consolidated Balance Sheets at September 28, 2025 and September 29, 2024 48 Consolidated Statements of Income for the fiscal years ended September 28, 2025, September 29, 2024 and October 1, 2023 49 Consolidated Statements of Comprehensive Income for the fiscal years ended September 28, 2025, September 29, 2024 and October 1, 2023 50 Consolidated Statements of Cash Flows for the fiscal years ended September 28, 2025, September 29, 2024 and October 1, 2023 51 Consolidated Statements of Equity for the fiscal years ended September 28, 2025, September 29, 2024 and October 1, 2023 52 Notes to Consolidated Financial Statements 54 Schedule II – Valuation and Qualifying Accounts and Reserves for the fiscal years ended September 28, 2025, September 29, 2024 and October 1, 2023 90 45 Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of Tetra Tech, Inc. Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of Tetra Tech, Inc. and its subsidiaries (the "Company") as of September 28, 2025 and September 29, 2024, 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 28, 2025, 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 28, 2025, 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 28, 2025 and September 29, 2024, and the results of its operations and its cash flows for each of the three years in the period ended September 28, 2025 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 28, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO. Basis for Opinions The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. 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 SAGE Group Holdings ("SAGE") from its assessment of internal control over financial reporting as of September 28, 2025 because it was acquired by the Company in a purchase business combination during 2025. We have also excluded SAGE from our audit of internal control over financial reporting. SAGE 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 1.2% and 0.8%, respectively, of the related consolidated financial statement amounts as of and for the year ended September 28, 2025. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. 46 Critical Audit Matters 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 $5,443 million for the year ended September 28, 2025, 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 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. 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 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 contacts 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 Los Angeles, California November 20, 2025 We have served as the Company’s auditor since 2004 . 47 Tetra Tech, Inc. Consolidated Balance Sheets (in thousands, except par value) Fiscal Year Ended ASSETS September 28, 2025 September 29, 2024 Current assets: Cash and cash equivalents $ 167,459 $ 232,689 Accounts receivable, net 1,158,928 1,051,461 Contract assets 138,232 129,678 Prepaid expenses and other current assets 83,434 91,585 Assets held-for-sale 57,502 — Income taxes receivable 15,334 21,970 Total current assets 1,620,889 1,527,383 Property and equipment, net 66,148 73,065 Right-of-use assets, operating leases 197,618 177,950 Goodwill 2,049,874 2,046,569 Intangible assets, net 121,160 160,585 Deferred tax assets 106,238 105,529 Other non-current assets 120,247 101,595 Total assets $ 4,282,174 $ 4,192,676 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 204,725 $ 197,440 Accrued compensation 346,912 332,096 Contract liabilities 420,254 351,738 Short-term lease liabilities, operating leases 69,099 63,419 Current contingent earn-out liabilities 24,826 26,934 Liabilities held-for-sale 25,115 — Other current liabilities 288,113 247,900 Total current liabilities 1,379,044 1,219,527 Deferred tax liabilities 21,333 30,162 Long-term debt 763,363 812,634 Long-term lease liabilities, operating leases 154,695 140,095 Non-current contingent earn-out liabilities 32,135 21,812 Other non-current liabilities 151,440 138,033 Commitments and contingencies (Note 18) Equity: Preferred stock – Authorized, 2,000 shares of $ 0.01 par value; no shares issued and outstanding at September 28, 2025 and September 29, 2024 — — Common stock – Authorized, 750,000 shares of $ 0.01 par value; issued and outstanding, 261,418 and 267,717 shares at September 28, 2025 and September 29, 2024, respectively 2,614 2,677 Additional paid-in capital — 35,900 Accumulated other comprehensive loss ( 95,777 ) ( 78,875 ) Retained earnings 1,872,948 1,870,620 Tetra Tech stockholders' equity 1,779,785 1,830,322 Noncontrolling interests 379 91 Total stockholders' equity 1,780,164 1,830,413 Total liabilities and stockholders' equity $ 4,282,174 $ 4,192,676 See accompanying Notes to Consolidated Financial Statements. 48 Tetra Tech, Inc. Consolidated Statements of Income (in thousands, except per share data) Fiscal Year Ended September 28, 2025 September 29, 2024 October 1, 2023 Revenue $ 5,442,590 $ 5,198,679 $ 4,522,550 Subcontractor costs ( 825,230 ) ( 876,817 ) ( 771,461 ) Other costs of revenue ( 3,656,016 ) ( 3,455,422 ) ( 3,026,060 ) Gross profit 961,344 866,440 725,029 Selling, general and administrative expenses ( 357,737 ) ( 356,024 ) ( 305,107 ) Legal contingency costs ( 115,000 ) — — Impairment of goodwill ( 92,416 ) — — Acquisition and integration expenses — ( 7,138 ) ( 33,169 ) Right-of-use operating lease asset impairment — — ( 16,385 ) Contingent consideration – fair value adjustments 12,228 ( 2,541 ) ( 12,255 ) Income from operations 408,419 500,737 358,113 Interest income 9,837 7,288 5,898 Interest expense ( 40,639 ) ( 44,559 ) ( 52,435 ) Other non-operating income — — 89,402 Income before income tax expense 377,617 463,466 400,978 Income tax expense ( 129,668 ) ( 130,023 ) ( 127,526 ) Net income 247,949 333,443 273,452 Net income attributable to noncontrolling interests ( 225 ) ( 61 ) ( 32 ) Net income attributable to Tetra Tech $ 247,724 $ 333,382 $ 273,420 Earnings per share attributable to Tetra Tech: Basic $ 0.94 $ 1.25 $ 1.03 Diluted $ 0.93 $ 1.23 $ 1.02 Weighted-average common shares outstanding: Basic 264,713 267,364 266,015 Diluted 267,123 270,042 268,185 See accompanying Notes to Consolidated Financial Statements. 49 Tetra Tech, Inc. Consolidated Statements of Comprehensive Income (in thousands) Fiscal Year Ended September 28, 2025 September 29, 2024 October 1, 2023 Net income $ 247,949 $ 333,443 $ 273,452 Other comprehensive income (loss), net of tax Foreign currency translation adjustments, net of tax ( 17,165 ) 115,120 12,622 Loss on cash flow hedge valuations, net of tax — — ( 2,412 ) Net pension adjustments 263 1,300 2,638 Other comprehensive income (loss), net of tax ( 16,902 ) 116,420 12,848 Comprehensive income, net of tax $ 231,047 $ 449,863 $ 286,300 Less: comprehensive income attributable to noncontrolling interests, net of tax 225 61 31 Comprehensive income attributable to Tetra Tech, net of tax $ 230,822 $ 449,802 $ 286,269 See accompanying Notes to Consolidated Financial Statements. 50 Tetra Tech, Inc. Consolidated Statements of Cash Flows (in thousands) Fiscal Year Ended September 28, 2025 September 29, 2024 October 1, 2023 Cash flows from operating activities: Net income $ 247,949 $ 333,443 $ 273,452 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 58,276 73,677 61,206 Amortization of stock-based awards 33,946 31,155 28,607 Deferred income taxes ( 11,297 ) ( 19,980 ) ( 21,204 ) Provision for losses on accounts receivables 3,150 — — Impairment of goodwill 92,416 — — Fair value adjustments to contingent consideration ( 12,228 ) 2,541 12,255 Right-of-use operating lease asset impairment — — 16,385 Fair value adjustment to foreign currency forward contract — — ( 89,402 ) Acquisition and integration expenses — 7,138 — Other non-cash items 9,024 5,369 975 Changes in operating assets and liabilities, net of effects of business acquisitions and divestitures: Accounts receivable and contract assets ( 112,755 ) ( 40,188 ) ( 19,783 ) Prepaid expenses and other assets ( 30,563 ) ( 20,894 ) 78,686 Accounts payable 2,398 18,091 ( 19,214 ) Accrued compensation 18,879 6,657 37,094 Contract liabilities 73,489 4,704 44,152 Cash settled contingent earn-out liability ( 11,170 ) ( 7,943 ) — Income taxes receivable/payable 23,227 ( 35,530 ) 40,527 Other liabilities 72,944 468 ( 75,273 ) Net cash provided by operating activities 457,685 358,708 368,463 Cash flows from investing activities: Payments for business acquisitions, net of cash acquired ( 97,263 ) ( 93,650 ) ( 854,319 ) Settlement of foreign currency forward contract — — 109,306 Capital expenditures ( 18,633 ) ( 18,135 ) ( 26,901 ) Proceeds from sales of assets 919 742 715 Proceeds from company-owned life insurance policies 1,934 — — Proceeds from divested business, net 2,406 — — Proceeds from loan repayment from divested business 3,883 — — Net cash used in investing activities ( 106,754 ) ( 111,043 ) ( 771,199 ) Cash flows from financing activities: Proceeds from borrowings 715,000 217,000 994,859 Repayments on long-term debt ( 771,027 ) ( 287,000 ) ( 1,026,051 ) Proceeds from issuance of convertible notes — — 575,000 Payments of debt issuance costs ( 2,738 ) — ( 14,451 ) Capped call transactions — — ( 51,750 ) Repurchases of common stock ( 249,984 ) — — Shares repurchased for tax withholdings on share-based awards ( 14,047 ) ( 12,982 ) ( 16,833 ) Payments of contingent earn-out liabilities ( 15,055 ) ( 46,107 ) ( 21,328 ) Stock options exercised 469 3,067 626 Dividends paid ( 65,039 ) ( 58,828 ) ( 52,113 ) Principal payments on finance leases ( 7,823 ) ( 6,530 ) ( 5,579 ) Net cash (used in) provided by financing activities ( 410,244 ) ( 191,380 ) 382,380 Effect of exchange rate changes on cash and cash equivalents ( 5,004 ) 7,573 4,093 Net increase (decrease) in cash and cash equivalents ( 64,317 ) 63,858 ( 16,263 ) Cash and cash equivalents at beginning of year 232,689 168,831 185,094 Cash and cash equivalents at end of year $ 168,372 $ 232,689 $ 168,831 Supplemental information: Cash paid during the year for: Interest $ 34,956 $ 36,855 $ 47,367 Income taxes, net of refunds received of $ 17.2 million, $ 4.2 million and $ 2.2 million $ 110,830 $ 180,707 $ 93,176 Non-cash financing activities: Excise taxes accrued but not paid $ 2,010 $ — $ — Reconciliation of cash and cash equivalents: Cash and cash equivalents $ 167,459 $ 232,689 $ 168,831 Cash and cash equivalents included in assets held-for-sale 913 — — Total $ 168,372 $ 232,689 $ 168,831 See accompanying Notes to Consolidated Financial Statements. 51 Tetra Tech, Inc. Consolidated Statements of Equity Fiscal Years Ended October 1, 2023, September 29, 2024, and September 28, 2025 (in thousands) Common Stock Additional Paid-in Capital Accumulated Other Comprehensive (Loss) Income Retained Earnings Total Tetra Tech Equity Non-Controlling Interests Total Equity Shares Amount BALANCE AT OCTOBER 2, 2022 264,903 $ 2,650 $ — ( 208,144 ) $ 1,388,581 $ 1,183,087 $ 50 $ 1,183,137 Comprehensive income, net of tax: Net income — — — — 273,420 273,420 32 273,452 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 ) Comprehensive income, net of tax 286,269 31 286,300 Distributions paid to noncontrolling interests — — — — — — ( 8 ) ( 8 ) Cash dividends of $ 0.196 per common share — — — — ( 52,113 ) ( 52,113 ) — ( 52,113 ) Stock-based compensation — — 28,607 — — 28,607 — 28,607 Restricted & performance shares released 746 7 ( 16,840 ) — — ( 16,833 ) — ( 16,833 ) Stock options exercised 97 — 626 — — 626 — 626 Shares issued for Employee Stock Purchase Plan 492 5 12,623 — — 12,628 — 12,628 Reclassification of APIC — — 26,734 — $ ( 26,734 ) — — — 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 Comprehensive income, net of tax 449,802 61 449,863 Distributions paid to noncontrolling interests — — — — — — ( 43 ) ( 43 ) Cash dividend s of $ 0.220 per common share — — — — ( 58,828 ) ( 58,828 ) — ( 58,828 ) Stock-based compensation — — 31,155 — — 31,155 — 31,155 Restricted & performance shares released 547 5 ( 12,987 ) — — ( 12,982 ) — ( 12,982 ) Stock options exercised 410 4 3,063 — — 3,067 — 3,067 Shares issued for Employee Stock Purchase Plan 522 6 14,669 — — 14,675 — 14,675 BALANCE AT SEPTEMBER 29, 2024 267,717 2,677 35,900 ( 78,875 ) 1,870,620 1,830,322 91 1,830,413 Comprehensive income, net of tax: Net income — — — — 247,724 247,724 225 247,949 52 Common Stock Additional Paid-in Capital Accumulated Other Comprehensive (Loss) Income Retained Earnings Total Tetra Tech Equity Non-Controlling Interests Total Equity Shares Amount Foreign currency translation adjustments — — — ( 17,165 ) — ( 17,165 ) — ( 17,165 ) Pension — — — 263 — 263 — 263 Comprehensive income, net of tax 230,822 225 231,047 Distributions paid to noncontrolling interests — — — — — — ( 120 ) ( 120 ) Acquisition — — — — — — 183 183 Cash dividends of $ 0.246 pe r common share — — — — ( 65,039 ) ( 65,039 ) — ( 65,039 ) Stock-based compensation — — 33,946 — — 33,946 — 33,946 Restricted & performance shares released 481 5 ( 14,052 ) — — ( 14,047 ) — ( 14,047 ) Stock options exercised 66 1 468 — — 469 — 469 Shares issued for Employee Stock Purchase Plan 459 4 15,302 — — 15,306 — 15,306 Stock repurchase ( 7,305 ) ( 73 ) ( 71,564 ) — ( 180,357 ) ( 251,994 ) — ( 251,994 ) BALANCE AT SEPTEMBER 28, 2025 261,418 $ 2,614 $ — $ ( 95,777 ) $ 1,872,948 $ 1,779,785 $ 379 $ 1,780,164 See accompanying Notes to Consolidated Financial Statements. 53 Tetra Tech, Inc. Notes to Consolidated Financial Statements 1. Description of Business 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. We typically begin at the earliest stage of a project by identifying technical solutions and developing execution plans tailored to our clients’ needs and resources. Our solutions may span the entire life cycle of high-end consulting and engineering projects and include applied science, data analysis, research, engineering, design and project management. We manage our operations under two reportabl e segments. Our Government Services Group (“GSG”) reportable segment primarily includes activities with U.S. government clients (federal, state and local) and all activities with development agencies worldwide. Our Commercial/International Services Group (“CIG”) reportable segment primarily includes activities with U.S. commercial clients and international clients other than development agencies . These reportable segments allow us to capitalize on our growing market opportunities and enhance the development of high-end consulting and technical solutions to meet our growing client demand. 2. 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. dollars. All significant intercompany balances and transactions have been eliminated in consolidation. Fiscal Year. We operate on a 52 or 53-week year, ending on the Sunday nearest September 3 0. Fiscal years 2025, 2024 and 2023 are 52-week years. Use of Estimates. 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. Stock Split. 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. Cash and cash equivalents include highly liquid investments with original maturities of 90 days or less. Occasionally, we have bank overdrafts, which occur when a bank honors disbursements in excess of funds on deposit in our bank accounts. We classify bank overdrafts as short-term borrowings on our consolidated balance sheets, and report the change in overdrafts as a financing activity in our consolidated statements of cash flows. Insurance Matters, Litigation and Contingencies. In the normal course of business, we are subject to certain contractual guarantees and litigation. In addition, we maintain insurance coverage for various aspects of our business and operations. We record in our consolidated balance sheets amounts representing our estimated liability for these legal and insurance obligations. Any adjustments to these liabilities are recorded in our consolidated statements of income. Accounts Receivable - Net. Net accounts receivable consists of billed and unbilled accounts receivable, and allowances for doubtful accounts. Billed accounts receivable represent amounts billed to clients that have not been collected. 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 fiscal 2025 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. These amounts are recorded only when they can be reliably estimated, and realization is probabl e. 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 conditions that may affect our clients' ability to pay. Contract Assets and Contract Liabilities. Contract assets represent revenue recognized in excess of the amounts for which we have the contractual right to bill our customers. Contract retentions, included in contract assets, represent amounts 54 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. The majority of these amounts are expected be earned within 12 months and are classified as current liabilities. Prepaid and Other Current Assets. Prepaid assets consist primarily of payments for insurance and software costs and are amortized over the estimated period of benefit. Other current assets include primarily sales/services and use tax receivables from our U.S and foreign operations. Property and Equipment. Property and equipment are recorded at cost and d epreciated over their estimated useful lives using the straight-line method. When property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are removed from our consolidated balance sheets and any resulting gain or loss is reflected in our consolidated statements of income. Expenditures for maintenance and repairs are expensed as incurred. Generally, estimated useful lives range from three to seven years for equipment, furniture and fixtures. Leasehold improvements are amortized on a straight-line basis over the shorter of their estimated useful lives or the lease term. Assets held for sale are measured at the lower of carrying amount (i.e., net book value) and fair value less cost to sell, and are reported within "Prepaid expenses and other current assets" on our consolidated balance sheets. Once assets are classified as held for sale, they are no longer depreciated. Long-Lived Assets. We evaluate the recoverability of our long-lived assets when the facts and circumstances suggest that the assets may be impaired. This assessment is performed based on the estimated undiscounted cash flows compared to the carrying value of the assets. If the future cash flows (undiscounted and without interest charges) are less than the carrying value, a write-down would be recorded to reduce the related asset to its estimated fair value. Leases. We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use ("ROU") assets, and current and long-term operating lease liabilities in the consolidated balance sheets. Our finance leases are reported in "Other long-term assets", "Other current liabilities" and "Other long-term liabilities" on our consolidated balance sheet. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, incremental borrowing rates are used based on the information available at commencement date in determining the present value of lease payments. The operating lease ROU asset at the commencement date also includes any lease payments made to the lessor at or before the commencement date and initial direct costs less lease incentives received. Lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term. We recognize a liability for contra ct termination costs associated with an exit activity for costs that will continue to be incurred under a lease for its remaining term without economic benefit to us, initially measured at its fair value at the cease-use date. The fair value is determined based on the remaining lease rentals, adjusted for the effects of any prepaid or deferred items recognized under the lease, and reduced by estimated sublease rentals. Business Combinations. The cost of an acquired company is assigned to the tangible and intangible assets purchased and the liabilities assumed based on their fair values at the date of acquisition. The determination of fair values of these assets and liabilities requires us to make estimates and use valuation techniques when a market value is not readily available. Any excess of purchase price over the fair value of net tangible and intangible assets acquired is allocated to goodwill. Goodwill typically represents the value paid for the assembled workforce and enhancement of our service offerings. Transaction costs associated with business combinations are expensed as incurred. Goodwill and Intangible Assets. Goodwill represents the excess of the aggregate purchase price over the fair value of the net assets acquired in a business acquisition. Following an acquisition, we perform an analysis to value the acquired company's tangible and identifiable intangible assets and liabilities. With respect to identifiable intangible assets, we consider backlog, non-compete agreements, client relations, trade names, patents and other assets. We amortize our intangible assets based on the period over which the contractual or economic benefits of the intangible assets are expected to be realized. We assess the recoverability of the unamortized balance of our intangible assets when indicators of impairment are present based on expected future profitability and undiscounted expected cash flows and their contribution to our overall operations. Should the review indicate that the carrying value is not fully recoverable, the excess of the carrying value over the fair value of the intangible assets would be recognized as an impairment loss. We test our goodwill for impairment on an annual basis, and more frequently when an event occurs, or circumstances indicate that the carrying value of the asset may not be recoverable. 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 55 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. These changes could result in future impairments. We perform our annual goodwill impairment review at the beginning of our fiscal fourth qu arter. Our last annual review was performed at June 30, 2025 (i.e., the first day of our fiscal fourth quarter). 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. Our operating segments are the same as our reportable segments and our reporting units for goodwill impairment testing are the components one level below our reportable segments. These components constitute a business for which discrete financial information is available and where segment management regularly reviews the operating results of that component. We aggregate components within an operating segment that have similar economic characteristics. The impairment test for goodwill involves the comparison of the estimated fair value of each reporting unit to the reporting unit's carrying value, including goodwill. We estimate the fair value of reporting units based on a comparison and weighting of the income approach, specifically the discounted cash flow method and the market approach, which estimates the fair value of our reporting units based upon comparable market prices and recent transactions and also validates the reasonableness of the multiples from the income approach. The development of the present value of future cash flow projections includes assumptions and estimates derived from a review of our expected revenue growth rates, operating profit margins, discount rates and the terminal growth rate. If the fair value of a reporting unit exceeds its carrying amount, the goodwill of that reporting unit is not considered impaired. However, if its carrying value exceeds its fair value, our goodwill is impaired, and we are required to record a non-cash charge that could have a material adverse effect on our consolidated financial statements. An impairment loss recognized, if any, should not exceed the total amount of goodwill allocated to the reporting unit. Contingent Consideration. Most of our acquisition agreements include contingent earn-out arrangements, which are generally based on the achievement of future operating income thresholds. The contingent earn-out arrangements are based upon our valuations of the acquired companies and reduce the risk of overpaying for acquisitions if the projected financial results are not achieved. The fair values of these earn-out arrangements are included as part of the purchase price of the acquired companies on their respective acquisition dates. For each transaction, we estimate the fair value of contingent earn-out payments as part of the initial purchase price and record the estimated fair value of contingent consideration as a liability in "Current contingent earn-out liabilities" and "Long-term contingent earn-out liabilities" on the consolidated balance sheets. 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; and (2) the former owners of acquired companies that remain as key employees receive compensation other than contingent earn-out payments at a reasonable level compared with the compensation of our other key employees. The contingent earn-out payments are not affected by employment termination. 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. We use a probability weighted discounted income approach as a valuation technique to convert future estimated cash flows to a single present value amount. The significant unobservable inputs used in the fair value measurements are operating income projections over the earn-out period (generally three or five years ) and the probability outcome percentages we assign to each scenario. Significant increases or decreases to either of these inputs in isolation would result in a significantly higher or lower liability, with a higher liability capped by the contractual maximum of the contingent earn-out obligation. Ultimately, the liability will be equivalent to the amount paid, and the difference between the fair value estimate and amount paid will be recorded in earnings. The amount paid that is less than or equal to the contingent earn-out liability on the acquisition date is reflected as cash used in financing activities in our consolidated statements of cash flows. Any amount paid in excess of the contingent earn-out liability on the acquisition date is reflected as cash used in operating activities in our consolidated statements of cash flows. We review and reassess the estimated fair value of contingent consideration on a quarterly basis, and the updated fair value could differ materially from the initial estimates. Changes in the estimated fair value of our contingent earn-out liabilities related to the time component of the present value calculation are reported in interest expense. Adjustments to the estimated fair value related to changes in all other unobservable inputs are reported in operating income. 56 Other Current Liabilities. Other current liabilities consist primarily of accrued insurance, contingent liabilities, sales/services and use taxes due to our U.S. and foreign operations, other tax accruals and accrued professional fees. Fair Value of Financial Instruments. We determine the fair values of our financial instruments, including short-term investments, debt instruments, derivative instruments and pension plan assets bas ed on inputs or assumptions that market participants would use in pricing an asset or a liability. We categorize our instruments using a valuation hierarchy for disclosure of the inputs used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument; and Level 3 inputs are unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value. The classification of a financial asset or liability within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximate fair values based on their short-term nature. The carrying amounts of our revolving credit facility approximates fair value because the interest rates are based upon variable reference rates. Certain other assets and liabilities, such as contingent earn-out liabilities and amounts related to cash-flow hedges, are required to be carried in our consolidated financial statements at fair value. Our fair value measurement methods may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Although we believe our valuation methods are appropriate and consistent with those used by other market participants, the use of different methodologies or assumptions to determine fair value could result in a different fair value measurement at the reporting date. Derivative Financial Instruments. We account for our derivative instruments as either assets or liabilities and carry them at fair value. For derivative instruments that hedge the exposure to variability in expected future cash flows that are designated as cash flow hedges, the effective portion of the gain or loss on the derivative instrument is reported as a component of accumulated other comprehensive income in stockholders' equity and reclassified into income in the same period or periods during which the hedged transaction affects earnings. The ineffective portion of the gain or loss on the derivative instrument, if any, is recognized in current income. To receive hedge accounting treatment, cash flow hedges must be highly effective in offsetting changes to expected future cash flows on hedged transactions. The net gain or loss on the effective portion of a derivative instrument that is designated as an economic hedge of the foreign currency translation exposure generated by the re-measurement of certain assets and liabilities denominated in a non-functional currency in a foreign operation is reported in the same manner as a foreign currency translation adjustment. Accordingly, any gains or losses related to these derivative instruments are recognized in current income. Derivatives that do not qualify as hedges are adjusted to fair value through current income. Deferred Compensation. We maintain a non-qualified defined contribution supplemental retirement plan for certain key employees and non-employee directors that is accounted for in accordance with applicable authoritative guidance on accounting for deferred compensation arrangements where amounts earned are held in a rabbi trust and invested. 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. Our consolidated balance sheets reflect our investment in variable life insurance contracts in "Other long-term assets." Our obligation to participating employees is reflected 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 . Pension Plan . We assumed a defined benefit pension plan from an acquisition. We calculate the market-related value of assets, which is used to determine the return-on-assets component of annual pension expense and the cumulative net unrecognized gain or loss subject to amortization. This calculation reflects our anticipated long-term rate of return and amortization of the difference between the actual return (including capital, dividends, and interest) and the expected return. Cumulative net unrecognized gains or losses that exceed 10% of the greater of the projected benefit obligation or the fair market-related value of plan assets are subject to amortization. Income Taxes. We file a consolidated U.S. federal income tax return. In addition, we file other returns that are required in the states, foreign jurisdictions and other jurisdictions in which we do business. We account for certain income and expense items differently for financial reporting and income tax purposes. Deferred tax assets and liabilities are computed for the difference between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to reverse. In determining the need for a valuation allowance, management reviews both positive and negative evidence, including current and historical results of operations, future income projections, scheduled reversals of deferred tax amounts, availability of carrybacks and potential tax planning strategies. Based on our assessment, we have concluded that a portion of the deferred tax assets will not be realized. 57 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. This guidance also addresses de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and disclosure requirements for uncertain tax positions. Assets and Liabilities Held-for-Sale. We classify assets as held-for-sale in the period when the following conditions are met: (i) management, having the authority to approve the action, commits to a plan to sell the disposal group; (ii) the disposal group is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such disposal group; (iii) an active program to locate a buyer and other actions required to complete the plan to sell the disposal group have been initiated; (iv) the sale of the disposal group is probable, and transfer of the disposal group is expected to qualify for recognition as a completed sale within one year, except if events or circumstances beyond our control extend the period of time required to sell the disposal group beyond one year; (v) the disposal group is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and (vi) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. The disposal group that is classified as held-for-sale is initially measured at the lower of its carrying value or fair value less any costs to sell. The fair value of a disposal group less any costs to sell is assessed each reporting period it remains classified as held-for-sale and any subsequent change is reported as an adjustment to the carrying value of the disposal group, as long as the new carrying value does not exceed the carrying value of the asset at the time it was initially classified as held-for-sale. Upon determining that a disposal group meets the criteria to be classified as held-for-sale, we report the assets and liabilities of the disposal group as held-for-sale in our consolidated balance sheets. Once assets are classified as held for sale, they are no longer depreciated. Concentration of Credit Risk. Financial instruments that subject us to credit risk consist primarily of cash and cash equivalents and net accounts receivable. In the event that we have surplus cash, we place our temporary cash investments with lower risk financial institutions and, by policy, limit the amount of investment exposure to any one financial institution. Approximately 27 % of accounts receivable were due from various agencies of the U.S. federal government at fiscal 2025 year-end. The remaining accounts receivable are generally diversified due to the large number of organizations comprising our client base and their geographic dispersion. We perform ongoing credit evaluations of our clients and maintain an allowance for potential credit losses. Approximately 32 %, 14 %, 17 % and 37 % of our fiscal 2025 revenue was generated from our U.S. federal government, U.S. state and local government, U.S. commercial and international clients, respectively. Foreign Currency Translation. 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 Australian and Canadian dollars, British pounds, and Euros. Where the functional currency is not the U.S. dollar, translation of assets and liabilities to U.S. dollars is based on exchange rates at the balance sheet date. Translation of revenue and expenses to U.S. dollars is based on the average rate during the period. Translation gains or losses are reported as a component of other comprehensive income. Gains or losses from foreign currency transactions are included in income from operations. Recently Issued Accounting Pro nouncements In September 2025, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) No. 2025-05, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which clarifies and modernizes the accounting for costs related to internal-use software guidance in subtopic 350-40. The guidance removes all references to project stages throughout Accounting Standards Codification ("ASC") 350-40 and clarifies the threshold entities apply to begin capitalizing costs. The amendments in this ASU are effective for annual periods beginning after December 15, 2027 (fiscal 2029 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 it before fiscal 2029. In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Loss for Accounts Receivable and Contract Assets, which provides a practical expedient (for all entities) and an accounting policy election (for all entities, other than public business entities, that elect the practical expedient) related to the estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under ASC Topic 606, "Revenue from Contracts with Customers". The amendments in this ASU are effective for annual periods beginning after December 15, 2025 (fiscal 2027 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 it before fiscal 2027. In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improve ments to Reportable Segment Disclosures , which requires that an entity report segment information in accordance with Topic 280, Segment 58 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 (fiscal 2025 year-end for us), and interim periods within fiscal years beginning after December 15, 2024 (first quarter of fiscal 2026 for us). The related disclosures are included in Note 19 , " Reportable Segments ". 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. The adoption of this ASU will not have a material impact on our consolidated financial statements. In November 2024, the FASB issued ASU No. 2024-03, Income Statement (Topic 220): Reporting Comprehensive Income. ASU 2024-03 does not change or remove current expense presentation requirements within the consolidated statements of income. However, the amendments require disclosure, on an annual and interim basis, of disaggregated information about certain income statement expense line items within the notes to the consolidated financial statements. The amendments in this update are effective for annual reporting periods beginning after December 15, 2026 (fiscal 2028 for us), and interim reporting periods beginning after December 15, 2027 (first quarter of fiscal 2029 for us). Early adoption is permitted. The adoption of t his ASU will not have a material impact on our consolidated financial statements. In November 2024, the FASB issued ASU No. 2024-04, Debt—Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments, which clarifies the requirements related to accounting for the settlement of a debt instrument as an induced conversion. The amendments in this update are effective for annual reporting periods beginning after December 15, 2025, including interim periods within those fiscal years (first quarter of fiscal 2027 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 this ASU before fiscal 2027. 3. Revenue and Contract Balances We recognize revenue over time as the related performance obligation is satisfied by transferring control of a promised good or service to our 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 our judgment to faithfully depict the value of the services transferred to the customer. For certain on-call engineering or consulting and similar contracts, we recognize revenue in the amount which we have the right to invoice the customer if that amount corresponds directly with the value of our 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. 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. When the current estimate of total costs indicates a loss, a provision for the entire estimated loss on the contract is made in the period in which the loss becomes evident. 59 Disaggregation of Revenue We disaggregate revenue by client sector and contract type, as we believe it best depicts how the nature, timing and uncertainty of revenue and cash flows are affected by economic factors. The following tables present revenue disaggregated by client sector and contract type (in thousands): Fiscal Year Ended September 28, 2025 September 29, 2024 October 1, 2023 Client Sector: U.S. federal government (1) $ 1,718,831 $ 1,675,996 $ 1,387,101 U.S. state and local government 789,968 613,185 607,074 U.S. commercial 899,298 909,642 869,460 International (2) 2,034,493 1,999,856 1,658,915 Total $ 5,442,590 $ 5,198,679 $ 4,522,550 Contract Type: Fixed-price $ 2,365,680 $ 2,016,638 $ 1,643,849 Time-and-materials 2,319,766 2,337,913 2,166,671 Cost-plus 757,144 844,128 712,030 Total $ 5,442,590 $ 5,198,679 $ 4,522,550 (1) Includes revenue generated under U.S. federal government contracts performed outside the United States. (2) Includes revenue generated from non-U.S. clients, primarily i n Australia, Canada and the United Kingdom. Other than the U.S. federal government, no single client accounted for more than 10% of our revenue for fiscal 2025, 2024 and 2023. Contract Asset s and Contract Liabilities We invoice customers based on the contractual terms of each contract. However, the timing of revenue recognition may differ from the timing of invoice issuance. Contract assets represent revenue recognized in excess of the amounts for which we have the contractual right to bill our customers. Such amounts are recoverable from customers based upon various measures of performance, including achievement of certain milestones or completion of a contract. In addition, many of our time-and-materials arrangements are billed in arrears pursuant to contract terms that are standard within the industry, resulting in contract assets and/or unbilled receivables being recorded, as revenue is recognized in advance of billings. 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 consist of billings in excess of revenue recognized. Contract liabilities decrease as we recognize revenue from the satisfaction of the related performance obligation and increase as billings in advance of revenue recognition occur. Contract assets and liabilities are reported in a net position on a contract-by-contract basis at the end of each reporting period. There were no substantial non-current contract assets for the periods presented. Net contract assets/liabilities consisted of the following (in thousands): Fiscal Year Ended September 28, 2025 September 29, 2024 Contract assets (1) $ 138,232 $ 129,678 Contract liabilities ( 420,254 ) ( 351,738 ) Contract liabilities - non-current (2) ( 2,628 ) — Net contract liabilities $ ( 284,650 ) $ ( 222,060 ) (1) Inclu des $ 12.8 million and $ 7.9 million of contract retentions at fiscal 2025 and 2024 year-ends, respectively. (2) Reported under "Other non-current liabilities" on our consolidated balance sheet as of September 28, 2025. 60 Both our contract assets and contract liabilities increased at fiscal 2025 year-end compared to fiscal 2024 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 contracts. In fiscal 2025 and 2024, we recognized revenue of approximately $ 251 million and $ 247 million, respectively, from amounts included in the contract liability balances at the end of fiscal 2024 and 2023, respectively. Revenue is recognized by measuring progress over time under ASC 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 2025, 2024 and 2023, we recognized net favorable revenue and operating income adjustments of $ 46.4 million, $ 29.8 million and $ 11.0 million, respective ly. 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 28, 2025 and September 29, 2024, our consolidated balance sheets included liabilities for anticipated losses of $ 13.5 million and $ 15.1 million, respectively. The estimated cost to complete these related contracts at the end of fiscal 2025 and 2024 was approximately $ 78 million and $ 101 million, respectively. Accounts Receivable, Net Net accounts receivable consisted of the following (in thousands): Fiscal Year Ended September 28, 2025 September 29, 2024 Billed $ 855,026 $ 707,406 Unbilled 310,818 348,907 Total accounts receivable 1,165,844 1,056,313 Allowance for doubtful accounts ( 6,916 ) ( 4,852 ) Total accounts receivable, net $ 1,158,928 $ 1,051,461 Billed accounts receivable represent amounts billed to clients that have not been collected. 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 fisc al 2025 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 estimate the 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 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 2025 and 2024 year-ends. 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 $ 4.1 billion of RUPO as of September 28, 2025. 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 2025 year- end over the following periods (in thousands): Amount Within 12 months $ 2,848,652 Beyond (1) 1,252,475 Total $ 4,101,127 (1) The majority of this amount is expected to be recognized over the subsequent two-year period. 61 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; therefore, the remaining performance obligations on such contracts are limited to the notice period required for the termination (usually 30 , 60 or 90 days). 4. Stock Repurchase and Dividends On May 5, 2025, our Board of Directors authorized an additional $ 500 million stock repurchase program in addition to the previous $ 400 million stock repurchase program authorized on October 5, 2021. In fiscal 2025, we repurchased and settled 7,304,697 shares with an average price of $ 34.22 per share for a total cost of $ 250.0 million in the open market. In fiscal 2024 and 2023, we did not repurchase any shares of our common stock. At fiscal 2025 year-end, we had a remaining balance of $ 597.8 million under our stock repurchase program. The following table presents dividends declared and paid in fiscal 2025, 2024 and 2023: Declare Date Dividend Paid Per Share Record Date Payment Date Dividends Paid (in thousands) November 11, 2024 $ 0.058 November 27, 2024 December 13, 2024 $ 15,549 January 27, 2025 0.058 February 12, 2025 February 26, 2025 15,351 May 5, 2025 0.065 May 23, 2025 June 5, 2025 17,092 July 28, 2025 0.065 August 15, 2025 August 29, 2025 17,047 Total dividends paid as of September 28, 2025 $ 65,039 November 13, 2023 $ 0.052 November 30, 2023 December 13, 2023 $ 13,873 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 August 7, 2023 0.052 August 23, 2023 September 6, 2023 13,845 Total dividends paid as of October 1, 2023 $ 52,113 Subsequent Events. On November 10, 2025, our Board of Directors declared a quarterly cash dividend of $ 0.065 p er share payable on December 12, 2025 to stockholders of record as of the close of business on December 1, 2025. 5. Acquisitions and Divestitures Acquisitions In fiscal 2025, we acquired Carron + Walsh ("CAW"), based in the Republic of Ireland. CAW delivers project and cost management solutions for large-scale commercial, life science, residential and infrastructure programs across Europe. CAW has valued relationships and framework agreements with life science clients, public sector bodies, housing authorities, financial lenders and private development companies. In fiscal 2025, we also acquired SAGE Group Holdings ("SAGE"), an Australian consulting firm that provides innovative technology and high-quality automation services that optimize operational efficiency and drive digital transformation for commercial and government clients across the municipal water, energy, transportation, defense and manufacturing sectors. Both CAW and SAGE are included in our CIG segment. The aggregate fair value of the purchase price of these two acquisitions was $ 147 million. This amount consisted of $ 104 million in initial cash payments and $ 43 million of the estimated fair value of contingent earn-out obligations, with a maximum of $ 60 million, based on the achievement of specified operating income targets in each of the three years following their respective acquisition dates. The $ 147 million purchase price was allocated $ 13 million to net tangible assets, $ 14 million to identifiable intangible assets, $ 4 million to deferred income tax liability and $ 124 million to goodwill. The purchase price allocations for these acquisitions are 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. 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 62 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. All of the aforementioned acquisitions in fiscal 2025 and 2024 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. On November 3, 2022, RPS' shareholders approved the scheme of arrangement. 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 delivers 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. The total purchase price of RPS was approximately £ 633 million ($ 784 million). In connection with the transaction, we incurred acquisition and integration costs of $ 33.2 million, primarily for professional fees, substantially all of which were paid as of fiscal 2023 year-end. On January 23, 2023, we also settled a foreign exchange forward contract that was integral to our plan to finance the RPS acquisition. The cash gain of $ 109.3 million did not qualify for hedge accounting. As a result, the gain was recognized as non-operating income over the life of the contract and not included in the purchase price allocation below. However, the cash proceeds of $ 109.3 million economically reduced the purchase price for the shares of RPS to approximately $ 675 million. This forward contract is explained further in Note 15, "Derivative Financial Instruments". 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): 63 Amount Cash and cash equivalents $ 32,093 Accounts receivable and contract assets 202,303 Prepaid expenses and other current assets 45,999 Income taxes receivables 1,999 Property and equipment 38,435 Right-of-use assets, operating leases 40,179 Intangible assets 174,094 Deferred income taxes 35,084 Other long-term assets 1,061 Total assets acquired 571,247 Account payable $ ( 44,376 ) Accrued compensation ( 19,073 ) Contract liabilities ( 46,287 ) Income tax payable ( 7,083 ) Short-term lease liabilities, operating leases ( 13,477 ) Other current liabilities ( 135,474 ) Current portion of long-term debt ( 91,973 ) Long-term lease liabilities, operating leases ( 26,702 ) Other long-term liabilities ( 13,742 ) Deferred tax liabilities ( 41,613 ) Total liabilities assumed ( 439,800 ) Fair value of net assets acquired 131,447 Goodwill 652,762 Total purchase consideration $ 784,209 The following table summarizes the estimated fair values that were assigned to intangible assets at the acquisition date: Fair Value Weighted-Average Estimated Useful Life (in thousands) (in years) Backlog $ 27,880 1.6 Trade names 27,260 3.0 Client relations 118,954 11.1 Total intangible assets acquired $ 174,094 8.3 Estimated fair value measurements for the intangible assets related to the RPS acquisition were made using Level 3 inputs including discounted cash flow techniques. Fair value was estimated using a multi-period excess earnings method for backlog and client relations and a relief from royalty method for trade names. The significant assumptions used in estimating fair value of backlog and 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 names include the royalty rates and discount rates. 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 2023 (in tho usands) : 64 Fiscal Year Ended October 1, 2023 Revenue $ 4,780,404 Net income including noncontrolling interests 223,857 Our fiscal 2023 consolidated results reflect RPS' contribution of revenue of approximately $ 600 million, with net income, including interest expense, of $ 3.6 million, or $ 0.01 per share, before the related intangible amortization of $ 26.8 million. In fiscal 2023, we also acquired Amyx, Inc. (“Amyx”), an enterprise technology services, cybersecurity and management consulting firm based in Reston, Virginia. With over 500 employees, Amyx provides application modernization, cybersecurity, systems engineering, financial management and program management support on over 30 Federal Government programs. Amyx is included in our GSG segment. 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. The majority of the goodwill from fiscal 2024 acquisitions is deductible for tax purposes, while the majority of the goodwill from the fiscal 2023 and 2025 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 2025, our goodwill additions from CAW and SAGE acquisitions reflect the anticipated synergies related to proven systems and technology in project management, cost management, project controls and automation services which will provide superior project outcomes and drive digital transformation for defense, government and commercial customers, as delivered by a workforce with extensive technical expertise. 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. 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. For detailed information regarding our intangible assets, see Note 6 , “ Goodwill and Intangible Assets ”. Most of our acquisition agreements include contingent earn-out agreements, which are generally based on the achievement of future operating income thresholds. The contingent earn-out arrangements are based on our valuations of the acquired companies and reduce the risk of overpaying for acquisitions if the projected financial results are not achieved. The fair values of any earn-out arrangements are included as part of the purchase price of the acquired companies on their respective acquisition dates. For each transaction, we estimate the fair value of contingent earn-out payments as part of the initial purchase price and record the estimated fair value of contingent consideration as a liability in “Current contingent earn-out liabilities” and “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: (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; and (2) the former owners of acquired companies that remain as key employees receive compensation other than contingent earn-out payments at a reasonable level compared with the compensation of our other key employees. The contingent earn-out payments are not affected by employment termination. 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. We use a probability-weighted discounted income approach as a valuation technique to convert future estimated cash flows to a single present value amount. The significant unobservable inputs used in the fair value measurements are operating income projections over the earn-out period (generally three or five years ) and the probability outcome percentages we assign to each scenario. Significant increases or decreases to either of these inputs in isolation would result in a significantly higher or lower liability, with a higher liability capped by the contractual maximum of 65 the contingent earn-out obligation. Ultimately, the liability will be equivalent to the amount paid, and the difference between the fair value estimate and amount paid will be recorded in earnings. The amount paid that is less than or equal to the contingent earn-out liability on the acquisition date is reflected as cash used in financing activities in our consolidated statements of cash flows. Any amount paid in excess of the contingent earn-out liability on the acquisition date is reflected as cash used in operating activities in our consolidated statements of cash flows. We review and reassess the estimated fair value of contingent consideration on a quarterly basis, and the updated fair value could differ materially from the initial estimates. Changes in the estimated fair value of our contingent earn-out liabilities related to the time component of the present value calculation are reported in interest expen se. Adjustments to the estimated fair value related to changes in all other unobservable inputs are reported in operating income. In each quarter during fiscal 2025, 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 2025, we recorded adjustments to our contingent earn-out liabilities and reported a net gain to operating income of $ 12.2 million. The net gain primarily resulted from lower valuations of the contingent consideration liabilities for our prior acquisitions of LST and CCE, reflecting decreased valuations as their forecasted revenues and earnings did not become realized as previously anticipated. 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 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. The net loss primarily resulted from increased valuations of the contingent consideration liabilities for our prior acquisitions of Segue Technologies, Inc., Hoare Lea, LLP, The Integration Group of America and Piteau Associates, reflecting their financial performance that exceeded our previous expectations. These increases were partially offset by a decreased valuation of the contingent consideration for Amyx. The following table summarizes the changes in the fair value of estimated contingent consideration (in thousands): Fiscal Year Ended September 28, 2025 September 29, 2024 October 1, 2023 Beginning balance $ 48,746 $ 73,422 $ 65,566 Estimated earn-out liabilities for acquisitions 43,493 23,038 12,248 Payments of contingent consideration ( 26,225 ) ( 54,050 ) ( 21,328 ) Adjustments to fair value reported in earnings ( 12,228 ) 2,541 12,255 Interest accretion expense 2,661 2,639 2,480 Effect of foreign currency exchange rate changes 514 1,156 2,201 Ending balance $ 56,961 $ 48,746 $ 73,422 Maximum potential payout at end of period $ 120,182 $ 102,006 $ 113,820 Divestitures In fiscal 2025, our Board of Directors approved a plan to divest a Norwegian subsidiary that we acquired with RPS ("RPS Norway"), a non-core business reported within our CIG segment. Management expects to complete the disposition within 12 months. In accordance with FASB ASC Topic 205, “Presentation of Financial Statements,” we determined that the divestiture of RPS Norway did not represent a strategic shift that would have a major effect on our consolidated results of operations, and therefore it’s results of operations were not reported as discontinued operations. We also concluded that the planned divestiture of RPS Norway met all the requisite held-for-sale criteria as of fiscal 2025 year-end. Therefore, the related assets and liabilities were reclassified as held-for-sale on our consolidated balance sheet as of September 28, 2025 and will be until the date of sale. No loss related to assets held-for-sale was recognized for the fiscal year ended September 28, 2025. This divestiture was not considered material to our consolidated financial statements. As a result, no pro forma information has been provided. 66 6. Goodwill and Intangible Assets The following table summarizes the changes in the carrying value of goodwill by reportable segment (in thousands): GSG CIG Total Balance at October 1, 2023 $ 659,942 $ 1,220,302 $ 1,880,244 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 Acquisition activity — 124,292 124,292 Goodwill impairment ( 92,416 ) — ( 92,416 ) Classified as held-for-sale — ( 18,533 ) ( 18,533 ) Translation and other adjustments 110 ( 10,148 ) ( 10,038 ) Balance at September 28, 2025 $ 658,511 $ 1,391,363 $ 2,049,874 Goodwill amounts are presented net of reductions from historical impairment adjustments. The fiscal 2025 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 June 30, 2025 (i.e., the first day of our fourth quarter in fiscal 2025) 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 June 30, 2025, we had no reporting units that had estimated fair values that exceeded their carrying values by less than 38 %, except for our Global Development Services reporting unit ("GDS") as described below. We also regularly evaluate whether events and c ircumstances have occurred that may indicate a potential change in the recoverability of goodwill. We perform interim goodwill impairment reviews between our annual reviews if certain events and circumstances have occurred, such as a deterioration in general economic conditions; an increase in the 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. Although we believe that our estimates of fair value for these reporting units are reasonable, if financial performance for these reporting units falls significantly below our expectations or market prices for similar business decline, the goodwill for these reporting units could become impaired. During the second quarter of fiscal 2025, events and circumstances occurred that indicated a potential change in the recoverability of the goodwill in GDS. GDS provides consulting and engineering services for international development agencies supporting humanitarian programs worldwide. Although several agencies are supported by this work (primarily for the U.S., Australia and United Kingdom governments), over eighty percent of the activity has historically been for the United States Agency for International Development ("USAID"). On January 20, 2025, President Trump signed Executive Order 14169, titled "Reevaluating and Realigning United States Foreign Aid", which initiated a 90-day pause on all U.S. foreign development assistance programs to assess their alignment with U.S. foreign policy objectives with few exemptions. Following a six-week review, on February 27, 2025, U.S. Secretary of State Rubio announced the cancellation of 83 % of USAID programs, totaling approximately 5,200 contracts. Subsequently, we were notified that virtually all of our contracts with USAID were terminated for convenience. As a result of these events and circumstances, we performed an interim impairment review of the goodwill in GDS at our fiscal period end for February 2025. We considered two methods to determine the fair value of the GDS reporting unit: (i) the Income Approach and (ii) the Market Approach. While each of these approaches is initially considered in the valuation of the business enterprise, the nature and characteristic of the reporting unit indicates which approach is most applicable. The Income Approach utilizes the discounted cash flow method, which focuses on the expected cash flow of the reporting unit. In applying this approach, the cash flow available for distribution is calculated for a finite period of years. Cash flow available for distribution is defined, for purposes of this analysis, as the amount of cash that could be distributed as a dividend without impairing the future profitability or operations of the reporting unit. The cash flow available for distribution and the terminal value (the value of the reporting unit at the end of the estimation period) are then discounted to present value to derive an indication of the value of the business enterprise. The Market Approach is comprised of the guideline public company method and guideline transactions method. The guideline company method focuses on comparing the reporting unit to select reasonably similar (or “guideline”) publicly 67 traded companies. Under this method, valuation multiples are (i) derived from the operating data of selected guideline companies; (ii) evaluated and adjusted based on the strengths and weaknesses of the reporting units relative to the selected guideline companies; and (iii) applied to the operating data of the reporting unit to arrive at an indication of value. In the similar transactions method, consideration is given to prices paid in recent transactions that have occurred in the reporting unit’s industry or in related industries. For the interim impairment analysis of GDS, we utilized the Income Approach as it has the most direct correlation to the specific economics of the reporting unit. The estimated fair value of equity of GDS was made using Level 3 inputs including the estimated discount rate that reflects the level of risk associated with receiving future cash flows and the forecasted long-term growth rates of GDS's revenue and operating income. Based on our analysis, an impairment of $ 92.4 million was calculated as the deficit between the fair value of equity of the GDS reporting unit as compared to its carrying value, including goodwill of $ 130.5 million at our fiscal period end for February 2025. As a result, we recorded a non-cash goodwill impairment charge of $ 92.4 million included in operating income in the second quarter of fiscal 2025. The remaining $ 38.1 million of goodwill in GDS was primarily supported by our work for the Australia and United Kingdom foreign aid government agencies. At of the annual impairment review date, the estimated fair value of the GDS reporting unit continued to approximate its carrying value. Accordingly, a future reduction in foreign aid budgets could result in additional impairment to the GDS reporting unit. Long-term assets other than goodwill in GDS are not material. The gross amounts of goodwill for GSG were $ 768.6 million and $ 768.5 million at fiscal 2025 and 2024 year-ends, respectively, excluding accumulated impairment of $ 110.1 million and $ 17.7 million, respectively, for each period. The gross amounts of goodwill for CIG were $ 1,512.9 million and $ 1,417.3 million at fiscal 2025 and 2024 year-ends, respectively, excluding accumulated impairment of $ 121.5 million for each period. The fo llowing tabl e presents the gross amount and accumulated amortization of our acquired identifiable intangible assets with finite useful lives included in "Intangible assets, net" on the consolidated balance sheets ($ in thousands): Fiscal Year Ended September 28, 2025 September 29, 2024 Weighted- Average Remaining Life (in years) Gross Amount Accumulated Amortization Net Amount Gross Amount Accumulated Amortization Net Amount Client relations 7.3 $ 169,807 $ ( 56,241 ) $ 113,566 $ 198,726 $ ( 57,975 ) $ 140,751 Backlog 1.0 43,919 ( 40,397 ) 3,522 75,194 ( 71,101 ) 4,093 Trade names 0.5 34,805 ( 30,733 ) 4,072 40,926 ( 25,185 ) 15,741 Total $ 248,531 $ ( 127,371 ) $ 121,160 $ 314,846 $ ( 154,261 ) $ 160,585 Amortization expense for the identifiable intangible assets for fiscal 2025, 2024 and 2023 was $ 37.1 million, $ 50.0 million and $ 41.2 million, respectively. Foreign currency translation adjustments increased net identifiable intangible assets by $ 13.4 million in fiscal 2024. These adjustments were immaterial in fiscal 2025. Estimated amortization expense for the succeeding five fiscal years and beyond is as follows (in thousands ): Amount 2026 $ 26,546 2027 17,398 2028 16,636 2029 15,722 2030 11,571 Beyond 33,287 Total $ 121,160 68 7. Property and Equipment Property and equipment consisted of the following (in thousands): Fiscal Year Ended September 28, 2025 September 29, 2024 Equipment, furniture and fixtures $ 140,695 $ 139,070 Leasehold improvements 46,883 44,883 Total property and equipment 187,578 183,953 Accumulated depreciation ( 121,430 ) ( 110,888 ) Property and equipment, net $ 66,148 $ 73,065 The depreciation expense related to property and e quipment was $ 21.2 million, $ 23.7 million and $ 20.0 million for fiscal 2025, 2024 and 2023, respectively. 8. Income Taxes Income before income taxes, by geographic area, was as follows (in thousands): Fiscal Year Ended September 28, 2025 September 29, 2024 October 1, 2023 Income before income taxes: United States $ 176,118 $ 294,401 $ 287,295 Foreign 201,499 169,065 113,683 Total income before income taxes $ 377,617 $ 463,466 $ 400,978 Income tax expense consisted of the following (in thousands): Fiscal Year Ended September 28, 2025 September 29, 2024 October 1, 2023 Current: Federal $ 75,166 $ 76,851 $ 110,371 State 16,005 20,997 16,025 Foreign 49,794 44,402 28,970 Total current income tax expense 140,965 142,250 155,366 Deferred: Federal ( 21,982 ) ( 18,734 ) ( 18,062 ) State ( 3,451 ) ( 6,747 ) ( 4,976 ) Foreign 14,136 13,254 ( 4,802 ) Total deferred income tax (benefit) expense ( 11,297 ) ( 12,227 ) ( 27,840 ) Total income tax expense $ 129,668 $ 130,023 $ 127,526 69 Total income tax expense was different from the amount computed by applying the U.S. federal statutory rate to pre-tax income as follows: Fiscal Year Ended September 28, 2025 September 29, 2024 October 1, 2023 Tax at federal statutory rate 21.0 % 21.0 % 21.0 % State taxes, net of federal benefit 2.6 2.4 2.2 Research and Development ("R&D") credits ( 1.8 ) ( 1.2 ) ( 0.5 ) Tax differential on foreign earnings 2.8 2.0 1.5 Goodwill impairment 3.2 — — Legal settlements 1.8 — — Stock compensation 0.2 ( 0.4 ) ( 0.4 ) Valuation allowance 0.4 ( 0.1 ) 1.3 Change in uncertain tax positions 0.9 1.3 11.6 Return to provision ( 0.8 ) ( 1.0 ) 1.1 Disallowed officer compensation 1.2 0.9 1.2 Unremitted earnings 0.2 0.4 0.2 Hedging gain — — ( 5.7 ) Deferred tax adjustments ( 0.7 ) 0.8 ( 2.3 ) Audit settlements — 0.9 — Receivables/payables adjustments 1.7 — — Other 1.6 1.1 0.6 Total income tax expense 34.3 % 28.1 % 31.8 % The effective tax rates for fiscal 2025, 2024 and 2023 wer e 34.3 %, 28.1 % and 31.8 %, respectively. In fiscal 2025, w e recognized a $ 92.4 million goodwill impairment as described in Note 6, “Goodwill and Intangible Assets”. We determined that $ 58.3 million of goodwill impairment is not deductible for income tax purposes. We also recognized a $ 115.0 million non-recurring charge related to legal contingencies as describe d in Note 18 , " Commitments and Contingencies ". We determined that $ 31.3 million of this charge is not tax deductible. 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) 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 $ 1.6 million , $ 4.5 million and $ 4.6 million of excess tax benefits on share-based payments in fiscal 2025, 2024 and 2023, respectively. Excluding the impact of the excess tax benefits on share-based payments in all years, the goodwill impairment and the legal contingency charge in fiscal 2025, the settlement amount in fiscal 2024, and the non-operating tax expenses in fiscal 2023, our effective tax rates for fiscal 2025, 2024 and 2023 w ere 27.4 %, 28.1 % and 27.8 %, respectively. In the normal course of business, we are subject to examination by tax authorities throughout the world. The major jurisdictions where we file income tax returns are the United States, Australia, Canada, and the United Kingdom. In the United States, Australia, and the United Kingdom, our income tax returns prior to fiscal year 2021 are no longer open for examination by tax authorities. In Canada, we are currently under examination for fiscal years 2014 to 2022. Temporary differences comprising the net deferred income tax asset shown on the accompanying consolidated balance sheets were as follows (in thousands): 70 Fiscal Year Ended September 28, 2025 September 29, 2024 Deferred Tax Assets: State taxes $ 2,973 $ 3,916 Reserves and contingent liabilities 7,620 — Accounts receivable including the allowance for doubtful accounts 6,674 5,315 Accrued liabilities 51,924 64,929 Lease liabilities, operating leases 57,769 51,841 Stock-based compensation 1,772 1,923 Unbilled revenue 13,524 9,273 Loss and other carry-forwards 30,201 48,256 Property and equipment 8 — Capitalized research and development 54,969 37,417 Capped call transactions 7,841 10,311 Valuation allowance ( 17,791 ) ( 16,841 ) Total deferred tax assets 217,484 216,340 Deferred Tax Liabilities: Prepaid expense ( 1,775 ) ( 3,065 ) Reserves and contingent liabilities — ( 153 ) Right-of-use assets, operating leases ( 55,736 ) ( 51,841 ) Intangibles ( 74,883 ) ( 81,623 ) Undistributed earnings ( 3,647 ) ( 2,708 ) Property and equipment — ( 1,583 ) Total deferred tax liabilities ( 136,041 ) ( 140,973 ) Net deferred tax assets $ 81,443 $ 75,367 Reported As: Deferred tax assets excluding held-for-sale $ 106,238 $ 105,529 Deferred tax assets held-for-sale — — Deferred tax assets 106,238 105,529 Deferred tax liabilities excluding held-for-sale ( 21,333 ) ( 30,162 ) Deferred tax liabilities held-for-sale ( 3,462 ) — Deferred tax liabilities ( 24,795 ) ( 30,162 ) Net deferred tax assets $ 81,443 $ 75,367 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 September 28, 2025, we had available state net operating loss carry forwards of $ 25.3 million, of which $ 24.7 million expire at various dates from 2026 to 2044, and $ 0.6 million have no expiration date; and available foreign NOL carry forwards of $ 71.1 million, of which $ 12.7 million expire at various dates from 2026 to 2045, and $ 58.4 million have no expiration date. In addition, we had foreign capital loss carryforwards of $ 40.4 million, foreign corporate interest restriction allowances of $ 4.4 million. We have performed an assessment of positive and negative evidence regarding the realization of the deferred tax assets. This assessment included the evaluation of scheduled reversals of deferred tax liabilities, availability of carrybacks, cumulative losses in recent years, estimates of projected future taxable income and tax planning strategies. 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 $ 17.8 million has been provided. 71 At September 28, 2025, we had $ 40.9 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 significantly decrease in the next 12 months. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands) : Fiscal Year Ended September 28, 2025 September 29, 2024 October 1, 2023 Beginning balance $ 41,440 $ 53,619 $ 8,908 Acquisition of RPS Group — — 6,012 Additions for current fiscal year tax positions 688 1,000 27,272 Additions for prior fiscal year tax positions — 1,000 14,602 Reductions for prior fiscal year tax positions ( 737 ) — ( 1,358 ) Settlements ( 532 ) ( 14,179 ) ( 1,817 ) Ending balance $ 40,859 $ 41,440 $ 53,619 We recognize potential interest and penalties related to unrecognized tax benefits in income tax expense. During fiscal 2025 , 2024 and 2023 , we accrued additional interest and penalties of $ 3.4 million , $ 3.8 million and $ 4.6 million, respectively. Additionally, we recorded reductions in accrued interest and penalties of $ 3.2 million and $ 2.0 million for fiscal 2024 and 2023, respe ctively, as a result of audit settlements and other prior-year adjustments. The amount of interest and penalties accrued at September 28, 2025, September 29, 2024 and October 1, 2023 was $ 12.0 million , $ 8.6 million and $ 8.0 million, respectively. 9. Long-Term Debt Long-term debt consisted of the following (in thousands): Fiscal Year Ended September 28, 2025 September 29, 2024 Credit facilities $ 200,000 $ 250,000 Convertible notes 575,000 575,000 Debt issuance costs and discount ( 11,637 ) ( 12,366 ) Long-term debt $ 763,363 $ 812,634 On August 22, 2023, we issued $ 575.0 million in convertible notes that bear interest at a rate of 2.25 % per annum payable in arrears on February 15 and August 15 of each year, beginning on February 15, 2024 and mature on August 15, 2028, unless converted, redeemed or repurchased (the "Convertible Notes"). Prior to May 15, 2028, the Convertible Notes will be convertible at the option of the holders only upon the occurrence of certain events and during certain periods. 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 was 25.4275 shares (5.0855 pre-stock split) of our common stock per $1,000 principal amount of the Convertible Notes, which was equivalent to an initial price of approximately $ 39.33 per share ($ 196.64 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. The applicable conversion rate was 25.4614 shares of common stock per $1,000 principal amount of the Convertible Notes (equivalent to an adjusted conversion price of approximately $ 39.28 per share of common stock) at September 28, 2025. 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. In addition, upon the occurrence of a "fundamental change" as defined in the indenture governing the Convertible Notes, holders may require us to repurchase for cash all or any portion of their Convertible Notes at a fundamental change repurchase price equal to 100 % of the principal amount of the Convertible Notes to be repurchased plus any accrued and unpaid interest. If certain corporate events occur prior to the maturity date of the Convertible Notes or if we deliver a notice of redemption, we will, in certain circumstances, increase the conversion rate for a holder who elects to convert its Convertible Notes in connection with such event or notice of redemption. We will not be able to redeem the Convertible Notes prior to August 20, 2026. On or after August 20, 2026, we have the option to redeem for cash all or any portion of the Convertible Notes if the last reported sale price of our common stock is equal to or greater than 130 % of the conversion price for a specified period of time at a redemption price equal to 100 % of the 72 principal amount of the Convertible Notes to be redeemed, plus any accrued but unpaid interest. In addition, as described in the indenture governing the Convertible Notes, certain events of default including, but not limited to, bankruptcy, insolvency or reorganization, may result in the Convertible Notes becoming due and payable immediately. 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 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 under the Second Amended and Restated Credit Agreement, as well as approximately $ 89.4 million principal amount outstanding under our senior secured term loan due 2026 under the Third Amended and Restated Credit Agreement. 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 28, 2025 September 29, 2024 Principal $ 575,000 $ 575,000 Unamortized discount and issuance costs ( 8,625 ) ( 11,434 ) Net carrying amount $ 566,375 $ 563,566 The following table sets forth the interest expense recognized related to the Convertible Notes (in thousands) : Fiscal Year Ended September 28, 2025 September 29, 2024 Interest expense $ 12,938 $ 12,866 Amortization of discount and issuance costs 2,809 2,724 Total interest expense $ 15,747 $ 15,590 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 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 was initially $ 51.91 per share ($ 259.56 pre-stock split), which represented a premium of 65 % over the last reported sale price of our common stock of $ 31.46 per share ($ 157.31 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. The adjusted cap price was approximately $ 51.84 per share at September 28, 2025. We recorded the Capped Call Transactions as separate transactions from the issuance of the Convertible Notes. The cost of $ 51.8 million incurred to purchase the Capped Call Transactions was recorded as a reduction to additional paid-in capital (net of $ 12.9 million in deferred taxes) on our consolidated balance sheet as of fiscal 2023 year-end. On February 18, 2022, we entered into Amendment No. 2 to the Second Amended and Restated Credit Agreement (“Second Amended Credit Agreement”) with a total borrowing capacity of $ 1.05 billion that was scheduled to mature in February 2027. The Second Amended Credit Agreement consisted of a $ 750 million senior secured, five-year facility that provides for a $ 250 million term loan facility (“Second Term Loan Facility”) and a $ 500 million revolving credit facility (the “Second Revolving Credit Facility”). On October 26, 2022, we entered into a Third Amended and Restated Credit Agreement (“Third Amended Credit Agreement”) that provided for an additional $ 500 million senior secured term loan facility ("Third Term Loan Facility") increasing our total borrowing capacity to $ 1.55 billion. On January 23, 2023, we drew the entire amount of the $ 500 million term loan facility which was scheduled to mature in January 2026. On May 5, 2025 we repaid all facilities in full as detailed below. 73 On May 5, 2025, we entered into a Fourth Amended and Restated Credit Agreement (“Amended Credit Agreement”) with a total borrowing capacity of $ 1.5 billion that will mature in May 2030. The Amended Credit Agreement is a $ 1.1 billion senior secured, five-year facility that provides for a $ 250 million 3-year term loan facility (the “3Y Term Loan Facility”), a $ 250 million 5-year term loan facility (“the 5Y Term Loan Facility”), and a $ 600 million revolving credit facility (the “Amended Revolving Credit Facility”). In addition, the Amended Credit Agreement includes a $ 400 million accordion feature that allows us to increase the Amended Credit Agreement to $ 1.5 billion subject to lender approval. The 5Y Term Loan Facility will be subject to quarterly amortization of principal, based upon the annual percentages of the original stated amount thereof (Year 1: 0.0%, Year 2: 0.0%, Year 3: 5.0 %, Year 4: 10.0 %, Year 5: 10.0 %), with the first payment being due at the end of the first full fiscal quarter following the second anniversary of the Amendment Effective Date. The Amended Credit Agreement provides for, among other things, (i) refinance indebtedness under our Third Amended Credit Agreement; (ii) finance open market repurchases of common stock, acquisitions, and cash dividends and distributions; 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 pricing levels of the Consolidated Leverage Ratio and the removal of the Secured Overnight Financing Rate ("SOFR") credit spread adjustment. 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 $ 400 million sublimit for multicurrency borrowings and letters of credit. The entire 3Y Term Loan Facility and 5Y Term Loan Facility were drawn on May 5, 2025. The proceeds from these term loans were used to pay down our Third Term Loan Facility and the Second Revolving Credit Facility in full on May 5, 2025. We may borrow on the Amended Revolving Credit Facility, at our option, at either (a) a benchmark rate plus a margin that ranges from 1.000 % to 1.750 % per annum, or (b) a base rate for loans in U.S. dollars (the highest of the U.S. federal funds rate plus 0.50 % per annum, the bank’s prime rate or the SOFR rate plus 1.00 %, plus a margin that ranges from 0% to 0.75 % per annum). In each case, the applicable margin is based on our Consolidated Leverage Ratio, calculated quarterly. The 5Y Term Loan Facility is subject to the same interest rate provisions. The 3Y Term Loan Facility was repaid on September 26, 2025. The Amended Credit Agreement expires on May 5, 2030, or earlier at our discretion upon payment in full of loans and other obligations. At fiscal 2025 year-end, we had $ 200 million in outstanding borrowings under the Amended Credit Agreement, which consisted of $ 200 million under the 5Y Term Loan Facility and no borrowings under the Amended Revolving Credit Facility. The weighted-average interest rate of the outstanding borrowings under the credit facilities during fiscal 2025 was 5.63 %. In addition, we had $ 0.7 million in standby letters of credit under the Amended Credit Agreement. At September 28, 2025, we had $ 599.3 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. The financial covenants provide for a maximum Consolidated Leverage Ratio of 3.50 to 1.00 (total funded debt/EBITDA, as defined in the Amended Credit Agreement) and a minimum Consolidated Interest Coverage Ratio of 3.00 to 1.00 (EBITDA/Consolidated Interest Charges, as defined in the Amended Credit Agreement). Our obligations under the Amended Credit Agreement are guaranteed by certain of our domestic subsidiaries and are secured by first priority liens on (i) the equity interests of certain of our subsidiaries, including those subsidiaries that are guarantors or borrowers under the Amended Credit Agreement, and (ii) the accounts receivable, general intangibles and intercompany loans and those of our subsidiaries that are guarantors or borrowers. At fiscal 2025 year-end, we were in compliance with these covenants with a consolidated leverage ratio of 1.13 x and a consolidated interest coverage ratio of 17.31 x . In addition to the Amended Credit Agreement, we maintain other credit facilities, which may be used for short-term cash advances and bank guarantees. At fiscal 2025 year-end, there were no outstanding borrowings under these facilities and the aggregate amount of standby letters of credit outstanding was $ 53.8 million. As of September 28, 2025 we had no bank overdrafts related to our disbursement bank accounts. The following table presents scheduled maturities of our long-term debt as of fiscal 2025 year-end (in thousands) : Amount 2027 $ 3,125 2028 590,625 2029 25,000 2030 156,250 Total $ 775,000 74 10. Leases Our operating leases are primarily for corporate and project office spaces. To a much lesser extent, we have operating leases for vehicles and equipment. Our operating leases have remaining lease terms of one month to ten years , some of which may include options to extend the leases for up to five years . We determine if an arrangement is a lease at inception. Operating leases are included in "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 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. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, incremental borrowing rates are used based on the information available at commencement date in determining the present value of lease payments . The operating lease ROU asset 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 expense for operating lease payments is recognized on a straight-line basis over the lease term. In fiscal 2023, we exited certain lease arrangements as a result of the RPS acquisition and its subsequent integration. Accordingly, we evaluated the ongoing value of the ROU assets associated with the discontinued lease agreements. 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 ASC 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 consolidated statement of income, and a corresponding decrease to our ROU assets operating leases on our consolidated balance sheet at fiscal 2023 year-end. The components of lease costs are as follows (in thousands) : Fiscal Year Ended September 28, 2025 September 29, 2024 Operating lease cost $ 102,518 $ 100,002 Sublease income ( 985 ) ( 589 ) Total lease cost $ 101,533 $ 99,413 Supplemental cash flow information related to leases is as follows (in thousands): Fiscal Year Ended September 28, 2025 September 29, 2024 Operating cash flows for operating leases $ 76,536 $ 79,354 Right-of-use assets obtained in exchange for new operating lease liabilities 90,969 62,601 Supplemental balance sheet and other information related to leases are as follows (in thousands): 75 Fiscal Year Ended September 28, 2025 September 29, 2024 Operating leases: Right-of-use assets $ 197,618 $ 177,950 Lease liabilities: Current $ 69,099 $ 63,419 Non-current 154,695 140,095 Total operating lease liabilities $ 223,794 $ 203,514 Weighted-average remaining lease term: Operating leases 4.4 years 4.5 years Weighted-average discount rate: Operating leases 4.2 % 3.6 % As of fiscal 2025 year-en d, we had $ 7.0 million of operating leases that have not yet commenced. A maturity analysis of the future undiscounted cash flows associated with our lease liabili ties at fiscal 2025 year-end is as follows (in thousands): Amount 2026 $ 74,692 2027 62,620 2028 39,533 2029 24,744 2030 18,778 Beyond 21,421 Total lease payments 241,788 Less: imputed interest ( 17,994 ) Total present value of lease liabilities $ 223,794 11. Employee Benefits 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 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 the first quarter of fiscal 2024, we distributed approximately $ 10 million to our Canadian employees. The remaining was distributed in the first quarter of fiscal 2025. We have no outstanding applications for further government assistance. 12. Stockholders' Equity and Stock Compensation Plans Stock Split. 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 2025 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 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 . No awards have been made under the 2015 Equity Incentive Plan since the adoption of the 2018 Equity Incentive Plan on March 8, 2018 as described below. 76 • 2018 Equity Incentive Plan ("2018 EIP") . Key employees and non-employee directors may be granted equity awards, including stock options, PSUs and RSUs. Shares issued with respect to awards granted under the 2018 EIP other than stock options or stock appreciation rights, which are referred to as "full value awards", are counted against the 2018 EIP's aggregate share limit as one share for every share or unit issued. At fiscal 2025 year-end, there were 12.5 million shares available for future awards pursuant to the 2018 EIP. • Employee Stock Purchase Plan ("ESPP"). Purchase rights to purchase common stock are granted to our eligible full and part-time employees, and shares of common stock are issued upon exercise of the purchase rights. An aggregate of 431,811 shares may be issued pursuant to such exercise. The maximum amount that an employee can contribute during a purchase right period is $ 5,000 . The exercise price of a purchase right is the lesser of 100 % of the fair market value of a share of common stock on the first day of the purchase right period (the business day preceding January 1) or 85 % of the fair market value on the last day of the purchase right period (December 15, or the business day preceding December 15 if December 15 is not a business day). The following table presents our stock-based compensation and related income tax benefits (in thousands): Fiscal Year Ended September 28, 2025 September 29, 2024 October 1, 2023 Total stock-based compensation $ 33,946 $ 31,155 $ 28,607 Income tax benefit related to stock-based compensation ( 6,826 ) ( 6,489 ) ( 5,779 ) Stock-based compensation, net of tax benefit $ 27,120 $ 24,666 $ 22,828 We recognize the fair value of our stock-based awards as compensation expense on a straight-line basis over the requisite service period in which the award vests. Most of these amounts were included in selling, general and administrative expenses on our consolidated statements of income. Stock Options The following table presents our stock option activity for fiscal 2025 year-end: Number of Options (in thousands) Weighted- Average Exercise Price per Share Weighted- Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (in thousands) Outstanding on September 29, 2024 332 $ 8.41 Exercised ( 66 ) 5.63 Outstanding on September 28, 2025 266 $ 8.73 1.6 $ 6,528 Vested or expected to vest on September 28, 2025 266 $ 8.73 1.6 $ 6,528 Exercisable on September 28, 2025 266 $ 8.73 1.6 $ 6,528 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 2025 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 28, 2025. This amount will change based on the fair market value of our stock. No stock options were granted in fiscal 2025, 2024 and 2023. The aggregate intrinsic value of options exercised during fiscal 2025, 2024 and 2023 was $ 2.2 million, $ 12.7 million and $ 2.5 million, respectively. Net cash proceeds from the exercise of stock options were $ 0.5 million, $ 3.1 million and $ 0.6 million for fiscal 2025, 2024 and 2023, respectively. Our policy is to issue shares from our authorized shares upon the exercise of stock options. The actual income tax benefit realized from exercises of nonqualified stock options for fiscal 2025, 2024 and 2023 was $ 0.5 million, $ 2.8 million and $ 0.6 million, respectively. 77 RSU and PSU RSU awards are granted to our key employee and non-employee directors. The fair value of the RSU was determined at the date of grant using the market price of the underlying common stock as of the date of grant. All of the RSUs have time-based vesting over a four-year period, except that RSUs awarded to directors vest after one year . The total compensation cost of the awards is then amortized over their applicable vesting period on a straight-line basis. PSU awards are granted to our executive officers and non-employee directors. 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 diluted earnings per share ("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. The total compensation cost of the awards is then amortized over their applicable vesting period on a straight-line basis. A summary of the RSU and PSU activity under our stock plans is as follows: RSU PSU Number of Shares (in thousands) Weighted- Average Grant Date Fair Value per Share Number of Shares (in thousands) Weighted- Average Grant Date Fair Value per Share Nonvested balance at October 2, 2022 1,495 $ 22.28 1,358 $ 21.85 Granted 525 31.27 281 39.10 Vested ( 595 ) 20.81 ( 689 ) 19.97 Adjustment (1) — — 344 19.97 Forfeited ( 78 ) 28.00 ( 45 ) 38.74 Nonvested balance at October 1, 2023 1,347 26.12 1,249 25.64 Granted 723 33.14 279 41.08 Vested ( 508 ) 25.87 ( 431 ) 30.61 Adjustment (1) — — 193 30.61 Forfeited ( 75 ) 31.45 ( 29 ) 40.36 Nonvested balance at September 29, 2024 1,487 29.35 1,261 27.78 Granted 490 40.23 237 40.44 Vested ( 487 ) 31.30 ( 341 ) 48.13 Adjustment (1) — — 165 48.13 Forfeited ( 46 ) 34.87 ( 3 ) 41.31 Nonvested balance at September 28, 2025 1,444 $ 32.21 1,319 $ 27.30 (1) 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. Fiscal 2025 includes a payout adjustment of 164,907 PSUs due to the actual performance level achieved for PSUs granted in fiscal 2022 that vested during fiscal 2025. In fiscal 2025, 2024 and 2023, we awarded 490,144 , 723,420 and 525,410 shares of RSUs, respectively, to our key employees and non-employee directors. The weighted-average grant-date fair value of RSUs granted during fiscal 2025, 2024 and 2023 was $ 40.23 , $ 33.14 and $ 31.27 , respectively. At fiscal 2025 year-end, there were 1,443,600 RSUs outstanding. RSU forfeitures result from employment terminations prior to vesting. Forfeited shares return to the pool of authorized shares available for award. We use historical data as a basis to estimate the probability of forfeitures related to RSUs and the ESPP Plan. In fiscal 2025, 2024 and 2023, we awarded 236,928 , 279,180 and 281,070 shares of PSUs, respectively, to our executive officers and non-employee directors. The weighted-average grant-date fair value of PSUs granted in fiscal 2025, 2024 and 2023 was $ 40.44 , $ 41.08 and $ 39.10 , respectively. At fiscal 2025 year-end, there were 1,318,754 PSUs outstanding. The stock-based compensation expense related to RSUs and PSUs for fiscal 2025, 2024 and 2023 was $ 31.4 million, $ 29.1 million and $ 26.2 million, respectively, and was included in total stock-based compensation expense. The actual income tax benefit realized from RSUs and PSUs for fiscal 2025, 2024 and 2023 was $ 1.0 million, $ 1.6 million and $ 4.0 million, 78 respectively. At fiscal 2025 year-end, there was $ 47.4 million of unrecognized stock-based compensation costs related to nonvested RSUs and PSUs that will be substantially recognized by fiscal 2029 year-end. ESPP The following table summarizes shares purchased, weighted-average purchase price, and cash received for shares purchased under the ESPP (in thousands, except for purchase price): Fiscal Year Ended September 28, 2025 September 29, 2024 October 1, 2023 Shares purchased 458 522 492 Weighted-average purchase price per share $ 33.39 $ 28.14 $ 25.66 Cash received from exercise of purchase rights $ 15,307 $ 14,675 $ 12,628 The grant date fair value of each award granted under the ESPP was estimated using the Black-Scholes option pricing model with the following assumptions: Fiscal Year Ended September 28, 2025 September 29, 2024 October 1, 2023 Dividend yield 0.6 % 0.7 % 0.7 % Expected stock price volatility 29.2 % 27.1 % 38.0 % Risk-free rate of return, annual 4.1 % 4.7 % 4.7 % Expected life (in years) 1 1 1 For fiscal 2025, 2024 and 2023, we based our expected stock price volatility on historical volatility behavior and current implied volatility behavior. The risk-fr ee rate of return was based on constant maturity rates provided by the U.S. Treasury. The expected life was based on the ESPP terms and conditions. Stock-based compensation expense for fiscal 2025, 2024 and 2023 included $ 2.6 million, $ 2.0 million and $ 2.4 million, respectively, related to the ESPP. The unrecognized stock-based compensation costs for awards granted under the ESPP at fiscal 2025 and 2024 year-ends were $ 0.7 million and $ 0.5 million, respectively. At fiscal 2025 year-end, ESPP participants had accumulated $ 14.3 million to purchase our common stock. 79 13. Retirement Plans We have defined contribution plans in various countries where we have employees. Th is primarily includes 401(k) plans in the United States. For fiscal 2025, 2024 and 2023, employer contributions to the U.S. plans were $ 39.2 million, $ 35.3 million and $ 31.6 million, respectively. Additionally, we have established a non-qualified deferred compensation plan for certain key employees and non-employee directors. These eligible employees and non-employee directors may elect to defer the receipt of salary, incentive payments, restricted stock, PSU and RSU awards and non-employee director fees. The plan is accounted for in accordance with applicable authoritative guidance on accounting for deferred compensation arrangements where amounts earned are held in a rabbi trust and invested. 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 2025 and 2024 year-ends, our consolidated balance sheets reflect assets of $ 84.5 million and $ 70.1 million, respectively, related to the deferred compensation plan in "Other long-term assets," and liabilities of $ 80.0 million and $ 74.3 million, respectively, related to the deferred compensation plan in "Other long-term liabilities." The net gains and losses related to the deferred compensation plan were immaterial for fiscal 2025, 2024 and 2023. 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 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 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 2025, 2024 and 2023 were immaterial. The Plan's funded status was as follows (in thousands) : Fiscal Year Ended September 28, 2025 September 29, 2024 Fair value of plan assets $ 43,553 $ 46,815 Benefit obligation ( 34,901 ) ( 39,722 ) Net surplus $ 8,652 $ 7,093 The net surplus is reflected in other long-term assets on our consolidated balance sheets as of fiscal 2025 and 2024 year-ends. The benefits paid in fiscal 2025 and 2024 were $ 2.5 million and $ 1.5 million, respectively. The fair values of the plan assets are substantially categorized within Level 2 of the fair value hierarchy. The fair values of the plan assets by major asset categories were as follows (in thousands) : Fiscal Year Ended September 28, 2025 September 29, 2024 Equities $ 692 $ 3,739 Mutual funds 23,750 22,923 Liability driven investment funds 15,607 15,833 Bonds 2,647 2,657 Cash/other 857 1,663 Fair value of plan assets $ 43,553 $ 46,815 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 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. Principal assumptions used for the benefit obligation in the valuation are as follows: 80 Fiscal Year Ended September 28, 2025 September 29, 2024 Discount rate 5.85 % 5.00 % Rate of inflation 2.75 % to 3.15 % 2.70 % to 3.15 % 14. Earnings per Share Basic EPS is computed by dividing net income available to common stockholders by the weighted-average common shares outstanding 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 20 25 and fiscal 2024, our Convertible Notes, described in Note 9, "Long-Term Debt", had a dilution impact on the dilutive potential common shares, wh ich was calculated using the if-converted method. The dilution impact was due to the price of our common stock exceeding the conversion price. The relat ed Capped Call Transactions were excluded from the calculation of dilutive potential common shares as their effect is anti-dilutive. For fiscal 2025, 2024 and 2023, 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 28, 2025 September 29, 2024 October 1, 2023 Net income attributable to Tetra Tech $ 247,724 $ 333,382 $ 273,420 Weighted-average common shares outstanding – basic 264,713 267,364 266,015 Effect of diluted stock options and unvested restricted stock 1,942 2,125 2,170 Shares issuable assuming conversion of convertible notes 468 553 — Weighted-average common stock outstanding – diluted 267,123 270,042 268,185 Earnings per share attributable to Tetra Tech: Basic $ 0.94 $ 1.25 $ 1.03 Diluted $ 0.93 $ 1.23 $ 1.02 15. Derivative Financial Instruments 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. We recognize derivative instruments as either assets or liabilities on the accompanying consolidated balance sheets at fair value. We record changes in the fair value (i.e., gains or losses) of the derivatives that have been designated as cash flow hedges in our consolidated balance sheets as accumulated other comprehensive income, and in our consolidated statements of income for those derivatives designated as fair value hedges. Our derivative contracts are categorized within Level 2 of the fair value hierarchy. In the fourth quarter of fiscal 2022, we entered into a forward contract to acquire GBP 714.0 million at a rate of 1.0852 for a total of USD $ 774.8 million that was integrated with our plan to acquire RPS. This contract matured on December 30, 2022. On December 28, 2022, we entered into an extension of the integrated forward contract to acquire GBP 714.0 million at a rate of 1.086 for a total of USD $ 775.4 million, extending the maturity date to January 23, 2023, the closing date of the RPS acquisition. Although an effective economic hedge of our foreign exchange risk related to this transaction, the forward contract did not qualify for hedge accounting. As a result, the forward contract was marked-to-market with changes in fair value recognized in earnings each period. 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. On January 23, 2023, the forward contract was settled at the fair value of $ 109.3 million. We recognized additional gains of 81 $ 68.0 million and $ 21.4 million in the first and second quarters of fiscal 2023, respectively. All gains related to this transaction were reported in “Other non-operating income" on our consolidated income statements for the respective periods. In fiscal 2018, we entered into five interest rate swap agreements that we designated as cash flow hedges to fix the interest rates on the borrowings under our term loan facility. The five swaps expired on July 31, 2023. We recognized a loss of $ 2.4 million and reported on our fiscal 2023 consolidated statement of comprehensive income. There were no derivative instruments that were not designated as hedging instruments for fiscal 2025, 2024 and 2023. 16. Reclassifications Out of Accumulated Other Comprehensive Income (Loss) The accumulated balances and reporting period activities for fiscal 2025, 2024 and 2023 related to reclassifications out of accumulated other comprehensive inc ome (loss) are sum marized as follows (in thousands): Foreign Currency Translation Adjustments (Loss) Gain on Derivative Instruments Net Pension Adjustments Accumulated Other Comprehensive (Loss) Income Balances at October 2, 2022 $ ( 210,556 ) $ 2,412 $ — $ ( 208,144 ) Other comprehensive income (loss) before reclassifications 12,623 ( 5,192 ) 2,638 10,069 Amounts reclassified from accumulated other comprehensive income Interest rate contracts, net of tax (1) — 2,780 — 2,780 Net current-period other comprehensive income (loss) 12,623 ( 2,412 ) 2,638 12,849 Balances at October 1, 2023 $ ( 197,933 ) $ — $ 2,638 $ ( 195,295 ) Other comprehensive income before 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 ) Other comprehensiv e income (loss) be fore reclassifications ( 17,165 ) — 263 ( 16,902 ) Net current-period other comprehensive income (loss) ( 17,165 ) — 263 ( 16,902 ) Balances at September 28, 2025 $ ( 99,978 ) $ — $ 4,201 $ ( 95,777 ) (1) This accumulated other comprehensive component is reclassified to "Interest expense" in our consolidated statements of income. See Note 15, "Derivative Financial Instruments", for more information. 17. Fair Value Measurements We classified our assets and liabilities that were carried at fair value in one of the following categories: • Level 1: Quoted market prices in active markets for identical assets or liabilities. • Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data. • Level 3: 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 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 Note 5, "Acquisitions and Divestitures" for further information). Debt. 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 2025 and 2024. At fiscal 2025 year-end, we had $ 200 million in outstanding borrowings under the Amended Credit Agreement, which consisted of $ 200 million under the 5Y Term Loan F acility and no borrowings under the Amended Revolving Credit Facility. 82 The estimated fair value of our $ 575 million Convertible Notes was determined based on the trading price of the Convertible Notes as of the last trading day of fiscal 2025. 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 $ 566 million and $ 620 million, respectively, at September 28, 2025, and $ 564 million and $ 743 million, respectively, at September 29, 2024 (see Note 9 , " Long-Term Debt "). Defined Benefit Pension Plan. The fair values of the plan assets are primarily categorized within Level 2 of the fair value hierarchy. For additional information about our defined benefit pension plan (see Note 13, " Retirement Plans "). 18. Commitments and Contingencies We are subject to certain claims and lawsuits typically filed against the consulting and engineering profession, alleging primarily professional errors or omissions. We carry professional liability insurance, subject to certain deductibles and policy limits, against such claims. However, in some actions, parties are seeking damages that exceed our insurance coverage or for which we are not insured. 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 of the United States Department of Justice ("the USAO") filed an amended complaint in the intervention of three qui tam actions filed against our wholly-owned subsidiary, Tetra Tech EC, Inc. ("TtEC"), in the U.S. District Court for the Northern District of California ("the Court"). The complaint alleged False Claims Act ("FCA") violations and breach of contract related to TtEC's contracts to perform environmental remediation services at the former Hunters Point Naval Shipyard in San Francisco, California (the "Covered Conduct"). 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 ("CERCLA") and common law. To explore whether a negotiated resolution was possible, TtEC began engaging in discussions with the USAO during the first quarter of fiscal 2025 regarding a potential resolution of all claims. On January 17, 2025, TtEC entered into a settlement agreement with the United States of America, acting through the USAO and on behalf of the Department of the Navy (collectively, the "United States"), an d also fil ed a proposed consent decree with the Court, to resolve this litigation. TtEC entered into the settlement agreement and consent decree to avoid delay, uncertainty and expense of protracted litigation. The settlement agreement and consent decree contain no admission of liability by TtEC. Under the terms of the settlement agreement and consent decree, TtEC agreed to pay the United States $ 57 million and $ 40 million for FCA and CERCLA claims, respectively (the "Settlement Amounts") . In the second quarter of fiscal 2025, we paid the $ 57 million settlement related to the FCA claim. The $ 40 million CERCLA settlement payment was in the fourth quarter of fiscal 2025. U pon entry of the consent decree by the Court and the United States' receipt of the Settlement Amounts, the United States released TtEC from any, and all civil or administrative monetary claims for the Covered Conduct under the civil FCA, the CERCLA, and other specified civil statutes and common law theories of liability. Several ancillary claims brought by third-party private plaintiffs arising from the same services provided by TtEC at Hunters Point are also ongoing. The settlement agreement and consent decree do not resolve these ancillary claims. TtEC has initiated litigation with the insurance carrier with which TtEC maintained liability policies regarding the reasonably possible payment or reimbursement of a significant portion of the Settlement Amounts. TtEC can give no assurances as to what portion, if any, of the Settlement Amounts will be recovered from the insurance carrier. As a result of the settlement agreement and consent decree with the United States and in connection with discussions regarding the ancillary claims, we recorded a $ 115.0 million charge to operating income ($ 97.0 million for the settlement and $ 18.0 million estimated for the ancillary claims, respectively) in the first quarter of fiscal 2025. 19. Reportable Segments We manage ou r operations under two reportable segments, GSG and CIG. GSG provides high-end consulting and engineering services primarily to U.S. government clients (federal, state and local) and international development agencies worldwide. GSG supports U.S. government civilian and defense agencies with services in water, environment, sustainable infrastructure, information technology and disaster management. GSG provides engineering design services for U.S. based federal and municipal clients, especially in water infrastructure, flood protection and solid waste. CIG provides high-end consulting and engineering services to U.S. commercial clients, and international clients, inclusive of the commercial and government sectors. CIG supports commercial clients worldwide in energy, industrial, high- 83 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). Our Chief Executive Officer serves as the chief operating decision maker (“CODM”) and is responsible for evaluating segment performance and allocating resources to our segments. The CODM assesses segment revenue and segment operating income on a monthly basis by comparing actual results against the annual plan. This evaluation supports strategic decisions related to segment profitability, resource allocation, pricing strategies, and cost optimization. The segment operating income is presented before amortization expense associated with acquisitions and other unallocated corporate costs. It is calculated as revenue less subcontractor costs, and other segment items including other costs of revenue and segment selling, general, and administrative expenses. Certain expenses are not allocated to GSG and CIG segments for purposes of making operating decisions or evaluating financial performance and are reported under corporate expenses. These expenses include amortization of intangibles, goodwill impairment charges, contingent consideration gains and losses, acquisition and integration expenses, certain legal contingency costs, as well as other costs and benefits that our CODM deems to be enterprise in nature. Corporate expenses also include stock-based compensation expense related to corporate employees. We account for inter-segment revenue and transfers as if they were to third parties; that is, by applying a negotiated fee onto the costs of the services performed. All significant intercompany balances and transactions are eliminated in consolidation. Our CODM does not use assets by segment to evaluate performance or allocate resources; therefore, we do not provide disclosure of assets by segment. The accounting policies for segment reporting are the same as for our consolidated financial statements. The tables below present financial information of our reportable segments (in thousands): Fiscal Year Ended September 28, 2025 GSG CIG Total Revenue from external customers $ 2,637,426 $ 2,805,164 $ 5,442,590 Inter-segment revenue 36,483 39,483 75,966 Segment revenue 2,673,909 2,844,647 5,518,556 Elimination of inter-segment revenue ( 75,966 ) Total consolidated revenue 5,442,590 Subcontractor costs - external ( 504,644 ) ( 320,586 ) ( 825,230 ) Subcontractor costs - inter-segment ( 39,483 ) ( 36,483 ) ( 75,966 ) Segment subcontractor costs ( 544,127 ) ( 357,069 ) ( 901,196 ) Elimination of inter-segment subcontractor costs 75,966 Total consolidated subcontractor costs ( 825,230 ) Other segment items (1) ( 1,789,231 ) ( 2,130,713 ) ( 3,919,944 ) Segment operating income 340,551 356,865 697,416 Reconciliation of profit (segment operating income): Legal contingency costs ( 115,000 ) Impairment of goodwill ( 92,416 ) Contingent consideration – fair value adjustments 12,228 Interest income 9,837 Interest expense ( 40,639 ) Other corporate expenses (3) ( 93,809 ) Income before income tax expense $ 377,617 84 Fiscal Year Ended September 29, 2024 GSG CIG Total Revenue from external customers $ 2,445,746 $ 2,752,933 $ 5,198,679 Inter-segment revenue 37,609 33,798 71,407 Segment revenue 2,483,355 2,786,731 5,270,086 Elimination of inter-segment revenue ( 71,407 ) Total consolidated revenue 5,198,679 Subcontractor costs - external ( 539,579 ) ( 337,238 ) ( 876,817 ) Subcontractor costs - inter-segment ( 33,798 ) ( 37,609 ) ( 71,407 ) Segment subcontractor costs ( 573,377 ) ( 374,847 ) ( 948,224 ) Elimination of inter-segment subcontractor costs 71,407 Total consolidated subcontractor costs ( 876,817 ) Other segment items (1) ( 1,628,952 ) ( 2,083,374 ) ( 3,712,326 ) Segment operating income 281,026 328,510 609,536 Reconciliation of profit (segment operating income): Acquisition and integration expenses ( 7,138 ) Contingent consideration – fair value adjustments ( 2,541 ) Interest income 7,288 Interest expense ( 44,559 ) Other corporate expenses (3) ( 99,120 ) Income before income tax expense $ 463,466 Fiscal Year Ended October 1, 2023 GSG CIG Total Revenue from external customers $ 2,128,330 $ 2,394,220 $ 4,522,550 Inter-segment revenue 30,559 30,429 60,988 Segment revenue 2,158,889 2,424,649 4,583,538 Elimination of inter-segment revenue ( 60,988 ) Total consolidated revenue 4,522,550 Subcontractor costs - external ( 493,020 ) ( 278,441 ) ( 771,461 ) Subcontractor costs - inter-segment ( 30,429 ) ( 30,559 ) ( 60,988 ) Segment subcontractor costs ( 523,449 ) ( 309,000 ) ( 832,449 ) Elimination of inter-segment subcontractor costs 60,988 Total consolidated subcontractor costs ( 771,461 ) Other segment items (1)(2) ( 1,403,678 ) ( 1,871,899 ) ( 3,275,577 ) Segment operating income 231,762 243,750 475,512 Reconciliation of profit (segment operating income): Acquisition and integration expenses ( 28,105 ) Right-of-use operating lease asset impairment ( 1,158 ) 85 Contingent consideration – fair value adjustments ( 12,255 ) Interest income 5,898 Interest expense ( 52,435 ) Other non-operating income 89,402 Other corporate expenses (3) ( 75,881 ) Income before income tax expense $ 400,978 (1) These amounts include $ 3.0 million, $ 3.3 million and $ 3.3 million of GSG depreciation expense for fiscal 2025, 2024 and 2023, respectively, and $ 17.8 million, $ 20.1 million and $ 16.3 million of CIG depreciation expense for fiscal 2025, 2024 and 2023, respectively. Additionally, our GSG other segment items include the equity in the net income of investees accounted for by the equity method of $ 1.1 million, $ 1.6 million and $ 2.8 million for fiscal 2025, 2024 and 2023, respectively. Our CIG other segment items also reflect the equity in the net income of investees accounted for by the equity method of $ 2.5 million, $ 3.3 million and $ 3.2 million for fiscal 2025, 2024 and 2023, respectively. (2) The fiscal 2023 amounts include lease impairment of $ 15.1 million ($ 6.8 million in GSG and $ 8.3 million in CIG) as well as acquisition and integration expenses of $ 5.1 million in CIG. (3) Other corporate expenses include the amortization expense of intangible assets of $ 37.1 million, $ 50.0 million and $ 41.2 million for fiscal 2025, 2024 and 2023, respectively. These amounts also include $ 19.3 million, $ 18.5 million and $ 16.4 million of stock-based compensation expense for fiscal 2025, 2024 and 2023, respectively. The table below presents revenue by geographic area (in thousands): Fiscal Year Ended Revenue: September 28, 2025 September 29, 2024 October 1, 2023 United States $ 3,445,844 $ 3,198,823 $ 2,863,635 United Kingdom 771,723 711,617 601,157 Australia 489,102 529,114 449,507 Canada 512,295 498,575 436,222 Others 223,626 260,550 172,029 Total $ 5,442,590 $ 5,198,679 $ 4,522,550 Long-lived assets consist of property and equipment and exclude other assets, operating lease assets, goodwill, intangible assets and deferred tax assets. The following table presents long-lived assets by geographic area (in thousands): Fiscal Year Ended Long-lived assets: September 28, 2025 September 29, 2024 United States $ 15,675 $ 17,612 United Kingdom 20,756 19,503 Australia 10,793 11,990 Netherlands 8,932 12,371 Canada 7,181 8,177 Others 2,811 3,412 Total $ 66,148 $ 73,065 20. Related Party Transactions We often provide services to unconsolidated joint ventures. The table below presents revenue and reimbursable costs related to services we provided to our unconsolidated joint ventures (in thousands): 86 Fiscal Year Ended September 28, 2025 September 29, 2024 October 1, 2023 Revenue $ 64,454 $ 67,744 $ 83,148 Related reimbursable costs 57,777 61,637 78,489 Our consolidated balance sheets also included the following amounts related to these services (in thousands): Fiscal Year Ended September 28, 2025 September 29, 2024 Accounts receivable, net $ 14,848 $ 15,612 Contract assets 1,154 1,625 Contract liabilities ( 6,583 ) ( 4,237 ) 21. Quarterly Financial Information – Unaudited In the opinion of management, the followin g unaudited quarte rly data for the fiscal 2025 and 2024 reflect all adjustments necessary for a fair statement of the results of operations (in thousands, except per share data). First Quarter Second Quarter Third Quarter Fourth Quarter Fiscal Year 2025 Revenue $ 1,420,561 $ 1,322,113 $ 1,369,816 $ 1,330,100 Income from operations 22,526 39,603 164,986 181,304 Net income attributable to Tetra Tech 747 5,388 113,844 127,745 Earnings per share attributable to Tetra Tech: Basic $ — $ 0.02 $ 0.43 $ 0.49 Diluted $ — $ 0.02 $ 0.43 $ 0.48 Weighted-average common shares outstanding: Basic 267,854 265,728 263,026 262,184 Diluted 271,886 267,439 264,855 264,247 Fiscal Year 2024 Revenue $ 1,228,267 $ 1,251,616 $ 1,344,323 $ 1,374,473 Income from operations 111,081 117,683 128,630 143,343 Net income attributable to Tetra Tech 74,972 76,446 85,810 96,154 Earnings per share attributable to Tetra Tech: Basic $ 0.28 $ 0.29 $ 0.32 $ 0.36 Diluted $ 0.28 $ 0.28 $ 0.32 $ 0.35 Weighted-average common shares outstanding: Basic 266,585 267,420 267,575 267,687 Diluted 268,690 269,375 270,260 271,656 87 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.