TETRA TECH INCTTEK

TETRA TECH INC Leases Disclosure

10-KFiled Nov 20, 20253 min read
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 term 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 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.
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):
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-current154,695 140,095 
Total operating lease liabilities$223,794 $203,514 
Weighted-average remaining lease term:
Operating leases4.4 years4.5 years
Weighted-average discount rate:
Operating leases4.2 %3.6 %
As of fiscal 2025 year-end, 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 liabilities at fiscal 2025 year-end is as follows (in thousands):
Amount
2026$74,692 
202762,620 
202839,533 
202924,744 
203018,778 
Beyond21,421 
Total lease payments241,788 
Less: imputed interest(17,994)
Total present value of lease liabilities$223,794 

Historical Timeline

Fiscal YearFiled
2025Nov 20, 2025Showing above
2024Nov 19, 2024
2023Nov 22, 2023
2022Nov 25, 2022
2021Nov 24, 2021
2020Nov 23, 2020
2019Nov 29, 2019
2018Nov 16, 2018
2017Nov 20, 2017
2016Nov 22, 2016
2015Nov 20, 2015

About Leases Disclosures

Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.

Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.

Other Available Disclosures

Income TaxesRevenueEarnings Per ShareFair ValuePP&EGoodwill & IntangiblesSegmentsDebtCommitmentsStock CompensationNew Standards