831641--12/28/2006--TETRA_TECH

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Our quarterly and annual operating results may fluctuate significantly, which could have a negative effect on the price of our common stock Our failure to properly manage projects may result in additional costs or claims Demand for our services is cyclical and vulnerable to economic downturns. If the economy weakens, then our revenues, profits and our financial condition may deteriorate We derive the majority of our revenue from government agencies, and any disruption in government funding or in our relationship with those agencies could adversely affect our business A significant shift in U.S. defense spending could harm our operations and significantly reduce our future revenues The loss of key personnel or our inability to attract and retain qualified personnel could significantly disrupt our business Our actual results could differ from the estimates and assumptions that we use to prepare our financial statements, which may significantly reduce our profits Our use of the percentage-of-completion method of accounting could result in reduction or reversal o f previously recorded revenue and profits The value of our common stock could be volatile There are risks associated with our acquisition strategy that could adversely impact our business and operating results If we are not able to successfully manage our growth strategy, our business and results of operations may b e adversely affected Adverse resolution of an Internal Revenue Service examination process may harm our financial results If we do not successfully implement our new enterprise resource planning system, our cash flows may be impaired and we may incur further costs to integrate or upgrade our systems As a government contractor, we are subject to a number of procurement rules and regulations and other public sector liabilities, any deemed violation of which could lead to fines or penalties or lost business Most of our government contracts are awarded through a regulated competitive bidding process, and the inability to complete existing government contracts or win new government contracts over an extended period could harm our operations and adversely affect our future revenue A negative government audit could result in an adverse adjustment of our revenue and costs, could impair our reputation, and could result in civil and criminal penalties Our business and operating results could be adversely affected by our inability to accurately estimate th e overall risks, revenue or costs on a contract Our backlog is subject to cancellation and unexpected adjustments, and is an uncertain indicator of future operating results Our international operations expose us to risks such as foreign currency fluctuations and different business cultures, laws and regulations If our co-venturers fail to perform their contractual obligations on a project, we could be exposed to legal liability, loss of reputation and profit reduction or loss on the project Our future revenues depend on our ability to consistently bid and win new contracts and renew existing contracts and, therefore, our failure to effectively obtain future contracts could adversely affect our profitability Our inability to find qualified subcontractors could adversely affect the quality of our service and our ability to perform under certain contracts Changes in existing environmental laws, regulations and programs could reduce demand for our environmental services, which could cause our revenue to decline The consolidation of our client base could adversely impact our business Our revenue from commercial clients is significant, and the credit risks associated with certain of these clients could adversely affect our operating results Our industry is highly competitive and we may be unable to compete effectively Restrictive covenants in our Credit Agreement and Note Purchase Agreement relating to our senior secured notes may restrict our ability to pursue certain business strategies Our services expose us to significant risks of liability and it may be difficult to obtain or maintain adequate insurance coverage Our liability for damages due to legal proceedings may harm our operating results or financial condition Our business activities may require our employees to travel to and work in high security risk countries, which may result in employee death or injury, repatriation costs or other unforeseen costs. Our failure to implement and comply with our safety program could adversely affect our operating results or financial condition Our inability to obtain adequate bonding could have a material adverse effect on our future revenues and business prospects We may be precluded from providing certain services due to conflict of interest issues Changes in accounting for equity-related compensation affects the way we use stock-based compensation to attract and retain employees Compliance with changing regulation of corporate governance and public disclosure will result in additional expenses Force majeure events, including natural disasters and terrorists actions could negatively impact the economies in which we operate or disrupt our operations, which may affect our financial condition, results of operations or cash flows

Full 10-K form ▸

831641--12/28/2006--TETRA_TECH_INC