Tetra Tech Reports Third Quarter Results

Third Quarter Results

Revenue for the third quarter was $349.6 million, down 6.9% from$375.5 million for the same quarter last year, primarily due to theexit from wireless communications. Revenue, net of subcontractorcosts, for the quarter was $242.6 million, down 7.8% from $263.2million for the same quarter last year. Income from operations for thethird quarter was $15.3 million compared to $17.4 million for the sameperiod last year. Net income for the third quarter was $7.4 millioncompared to $9.0 million for the same period last year. Dilutedearnings per share was $0.13 compared to $0.16 for the same periodlast year.

Nine Month Results

Revenue for the nine months ended July 3, 2005 was $990.8 million,down 5.1% from $1,044.0 million for the same period last year,primarily due to the exit from wireless communications. Revenue, netof subcontractor costs, for the first nine months of fiscal 2005 was$695.5 million, a decrease of 7.0% from $747.7 million for the firstnine months of fiscal 2004. Including the non-cash impairment chargeof $105.6 million, loss from operations for the first nine months offiscal 2005 was $131.1 million compared to income from operations of$65.3 million for the same period last year. Net loss for the firstnine months of fiscal 2005 was $108.5 million, compared to net incomeof $35.0 million for the same period last year. Diluted loss per sharefor the first nine months of fiscal 2005 was $1.92 compared to dilutedearnings per share of $0.61 for the same period last year.
In thousands, except EPS (preliminary)

Three Months Ended Nine Months Ended
----------------------------------------------
July 3, June 27, July 3, June 27,
2005 2004 2005 2004
--------- ------------------------ -----------
Revenue $349,616 $375,527 $990,771 $1,044,024
Revenue, Net of
Subcontractor Costs 242,641 263,174 695,547 747,697
Income/(Loss) from
Operations 15,342 17,439 (131,115)(a) 65,345
Net Income/(Loss) 7,404 9,031 (108,526)(a) 35,002
Earnings/(Loss) Per
Share (EPS):
Basic $0.13 $0.16 $(1.92)(a) $0.63
Diluted $0.13 $0.16 $(1.92)(a) $0.61

Weighted Average Common
Shares Outstanding:
Basic 56,808 56,104 56,640 55,831
Diluted 57,002 57,157 56,640 57,339

(a) Reflects a non-cash impairment charge in the second quarter ofapproximately $105.6 million for goodwill and other identifiableintangible assets, based on the requirements of SFAS No. 142 -Goodwill and Other Intangible Assets.

Business Outlook

The following statements are based on current expectations. Thesestatements are forward-looking and the actual results could differmaterially. These statements do not include the potential impact ofcorporate transactions that may be completed after the date of thisrelease. The Company continues to exit from its non-coreconstruction-related business and has uncovered certain possibleirregular activities at one of its operating units that are currentlybeing investigated. Although absolute assurance cannot be given atthis time, the Company does not believe that the completion of thisinvestigation will require material changes to its financialstatements. The Business Outlook section should be read in conjunctionwith the information on forward-looking statements at the end of thisrelease.

Tetra Tech expects diluted earnings per share for the fourthquarter of fiscal 2005 to be in the range of $0.15 to $0.17. Revenue,net of subcontractor costs, for the fourth quarter is expected torange from $240 million to $250 million.

Webcast

Investors will have the opportunity to access a live audio-visualwebcast and supplemental financial information concerning the thirdquarter results through a link posted on the Company's web site atwww.tetratech.com on July 28, 2005 at 8:00 a.m. (PDT).

About Tetra Tech (www.tetratech.com)

Tetra Tech is a leading provider of consulting, engineering andtechnical services. With nearly 8,000 associates located in the UnitedStates and internationally, the Company supports commercial andgovernment clients in the areas of resource management, infrastructureand communications. Tetra Tech's services include research anddevelopment, applied science and technology, engineering design,program management, construction management, and operations andmaintenance.

Forward-Looking Statements

This news release contains forward-looking statements that aresubject to the safe harbor provisions of the Private SecuritiesLitigation Reform Act of 1995. These forward-looking statementsinclude information concerning future events and the future financialperformance of Tetra Tech that involve risks and uncertainties.Readers are cautioned that these forward-looking statements are onlypredictions and may differ materially from actual future events orresults. Readers are urged to read the documents filed by Tetra Techwith the SEC, specifically the most recent reports on Form 10-K, 10-Qand 8-K, each as it may be amended from time to time, which identifyrisk factors that could cause actual results to differ materially fromthe forward-looking statements. Among the important factors or risksthat could cause actual results or events to differ materially fromthose in the forward-looking statements in this release are:fluctuations in quarterly operating results; the impact of downturnsin the financial markets and reductions in government budgets;volatility of common stock value; concentration of revenues fromgovernment agencies and funding disruptions by these agencies; failureto properly manage projects; acquisition strategy risks; management ofgrowth strategy; use of the percentage-of-completion method ofaccounting; adverse resolution of an IRS examination; loss of keypersonnel or the inability to attract and retain qualified personnel;implementation of the enterprise resource planning system;international operations risks; credit risks associated withcommercial clients; violations of government contractor regulations;competitive bidding for government contracts; the affect of a negativegovernment audit; the inability to accurately estimate contract risks,revenue and costs; backlog cancellation and adjustments; client baseconsolidation; failure of partners to perform on joint projects;inability to find qualified subcontractors; changes in existingenvironmental laws, regulations or programs; competition; restrictivecovenants in debt agreements; risks of professional and otherliabilities; adverse resolution of litigation; conflict of interestissues; changes in accounting for equity-related compensation;expenses associated with corporate governance; and disruption ofoperations due to computer viruses or terrorism. Any projections inthis release are based on limited information currently available toTetra Tech, which is subject to change. Although any such projectionsand the factors influencing them will likely change, Tetra Tech willnot necessarily update the information, since Tetra Tech will onlyprovide guidance at certain points during the year. Readers should notplace undue reliance on forward-looking statements since suchinformation speaks only as of the date of this release.