Good morning, and thank you for joining us. By now youshould have received a copy of this press release. If you have not, pleasecontact the corporate offices at 626-351-4664 and we will get one to you rightaway. With us today from management are Dan Batrack, CEO and COO;Sam Box, President; and David King, CFO. They will provide a brief overview ofthe results and will then open up the call for questions. During the course of the conference call Tetra Techmanagement may make forward-looking statements within the meaning of thePrivate Securities Litigation Reform Act of 1995. These include statementsconcerning future events and Tetra Tech's future financial performance. The statements are only predictions and may differmaterially from actual future events or results. Tetra Tech's forms 10-K and10-Q reports to the Securities and Exchange Commission identify certain riskfactors that could cause actual results to differ materially from theforward-looking statements. Tetra Tech undertakes no duty to updateforward-looking statements. At this time I like to inform you that all participants arein a listen-only mode. At the request of the company we will open up theconference for questions and answers after the presentation. With that I would now like to turn the call over to DanBatrack. Please go ahead, Mr. Batrack.

Thank you very much, and good morning and welcome to ourfourth quarter and fiscal year 2007 earnings release conference call. I'm verypleased to announce that we had a very strong fourth quarter and an excellent2007 overall. First of all, as a review of our 2007 results, all of oursegments exceeded their financial goals both for the quarter and for the yearwith our revenue of approximately 10% and our earnings per share for the yearup nearly 25%, excellent performance. Second, we improved our operational risk profile with bettercontracts, better terms and pricing, that resulted in an increase in ouroperating margin up to 8.5%, an 18% increase in our operating margin from theyear prior. We finished the fourth quarter with nearly 9% operatingmargin across our collective groups. We also won several new programs; we had14 different programs that we won with clients in amounts greater than $25million for each of those programs and that drove our backlog up by 20%year-on-year, which was already on a record pace a year ago. And finally as a summary, we initiated and completed twolarge acquisitions this last year and five smaller acquisitions that we referto as tuck-in acquisitions, which provide Tetra Tech access to new clients andadditional resources, and of those acquisitions four of them were in the last90 days. Three of the small tuck-in at the end of the fourth quarter,and one of them we closed on the first day of this new first quarter of fiscalyear 2008. We finished fiscal year 2007 with our business segments representingtwo-thirds of our workforce and our revenues in the Resource Managementsegment, that's where scientists, geologists, technical professionals reside,and approximately one-third of our staffing and revenues in our infrastructurebusiness. Our overall customers remained relatively stable from prioryears, although we did see growth and strength in our state and local…

Thank you, Dan. The quarter '07 top line grew both revenueand net revenue of nearly 10%. We experienced very strong growth in our stateand local and commercial business. In the state and local side we grew on ayear-over-year basis 59%. Commercial business we grew 14% year-over-year. Our net earnings guidance was 270; we ended the year with275.5, 9.8% growth here. Income from operations grew 22.3% from $20 million to$24.5 million and margin, as Dan mentioned earlier, of 8.9% compared with 8%last year. Excluding acquisition related charges of $700,000, on thatbasis we were at 9.1%. Again, I have a slide later on to further elaborate onthis as we initiate and reinitiate acquisitions, we will talk about that. At ahigh level it is a non-cash charge as a result of assessing certain intangibleassets for acquisitions. As Dan mentioned earlier, all segments are performing verywell. On resource management we have margin of 9.3% for Q4, infrastructure at9.7% and communication 12.5%. EPS grew from $0.20 to $0.24 a 20% increase, EBITguidance of $0.21 to $0.22. Again, excluding this non-cash charge above we willbe at $0.25. SG&A cost from $27.7 million to $32.6 million, first weare a 10% bigger company than last year. In this quarter, as Dan mentionedearlier, we actually dedicated incremental resources to pursue some largeprograms and we expanded about $125 million just the fourth quarter alone topursue these hard jobs, and again, there was a $700,000 acquisition-relatedcharge, non-cash, of $700,000. On a full year basis our SG&A cost actually dropped11.7% to 11.3% as we continue to increase the S part of our SG&A andmaintain and control the G&A cost of it. Net interest expense continued tobe relatively low as a result of our low borrowing and the strong cashperformance. Tax expenses were 9.9% as a result of increased earnings.Our Q4 tax rate…

Thank you very much, David. As we move into 2008 I'd like toput into context where we've been as a company and where we're going in thenext couple years, not just 2008. Back in 2005 and 2006, a few years ago, wereally put an extraordinary focus throughout the Corporation on aligning ouroperations with our core markets and servicing two primary areas; NaturalResource Management and Water Infrastructure markets. The focus was primarily internally aligning our operations,increasing our efficiency, increasing backlog organically and driving ourmargins back up to historical levels they've been before. This 2007 reallywasn't focused so much on alignment, it was really focused on expanding ourcore water business. As David has indicated, our SG&A went up because weincreased our sales investment substantially as a result of the increase inbacklog; it also allowed us to reinitiate our strategic acquisitions. We looked at and bid large acquisitions in alternativeenergy, which added to our Natural Resource Management areas. We also added aninternational component, which we had a recent acquisition here just a littleover a month ago which will begin to give Tetra Tech the presenceinternationally. And we also expanded our capability being a turnkey providerfor our clients. We're seeing more and more our largest clients look forturnkey solutions that are really provided only by the largest firms. As we go into 2008 we're going to continue to focus onNatural Resource Management markets, we expect big growth in mining, we expectbig growth in alternative energy, and of course our core business, which isenvironmental work and water infrastructure projects. We also expect in 2008 and technically speaking, the firstday of fiscal year 2008 we completed an acquisition that has all of its workperformed overseas, the ARD acquisition. And so we'll look to initiate furtherinternational growth strategies primarily through acquisitions. That's what you'll see in 2008…

(Operator Instructions) Your first question comes fromRichard Paget with Morgan Joseph.

Good morning, everyone.

Good morning, Richard.

I wonder if we could talk about margin trends ininfrastructure. If I look at the first half of the year they were low 7s andnow in the second half you did 9.6 in the third quarter, 9.7 this quarter. Is this more now the trend and is this utilization hasgotten better, some better pricing? How should we think about theinfrastructure margins going into '08?

Well, no doubt they have improved. We had an excellentfourth quarter. Fourth quarter is seasonally our strongest quarter; we havefolks not only busy in the office but also folks out in the field doingconstruction management oversight, different types of items that drive ourutilization on a seasonable basis higher. We've indicated in the past and we'll remain consistent witha range of 8% to 9%, so it is an improvement. But on an annual basis we expectit to be 8% to 9% and of course we'd always be looking for the upper end ofthat range. But that's what we would expect out of our infrastructure group.

Okay. So going into the first half of '08 we should expect Iguess at least a sequential drop at minimum?

That's correct.

Okay. And then with WRDA, do you expect to start winningcontracts at the end of next year? Or is it you will actually start doing theactual work?

We think we're going to bid and win them earlier in the yearand we expect revenue contribution late in '08. A lot of these projects havebeen slated. The Army Corps Engineers, which is the group that, the federalentity that will be administering almost all of the Water Resource DevelopmentAct funds, has been preparing for this for sometime. They've been sort of under a spotlight of doing this muchmore efficiently than perhaps they've had on other programs. They're wellpositioned to put vehicles in place, many of which we have already whichaccounts for some of the difference between our backlog at $1.2 billion and ourcontract capacity at up of $7 billion to $8 billion. So that difference are vehicles that are in place that allowthe corps. to move quickly on these task orders or procurements. We do think itwill be six to nine months before we actually see funding in dollars so it willbe a little bit toward the late end of '08, but we things we'll see revenuecontributions late in the year.

And then beyond some of the larger projects around Louisianaor coastal restoration, what are some of the other kind of plum awards thatyou'd be looking to target?

We'd love to get the entire Everglades restoration programbecause there's a lot of dollars there. So Everglades is one of the world'slargest water handling programs and wetland restoration programs. We're presentthere now, we have contracts with the South Florida Water Management District,which is funded through many different agencies including contributions withother programs for the Corps of Engineers, that's one area. We're going to see the upper Mississippi navigationalupgrades and that's going to be coastal protection, navigational, dredging,sediment work. We're also going to see work that would be funded for SacramentoRiver Delta, which is about 1,600 miles, 1,600 miles of levies that will beaddressed, investigated, assessed, designed and upgraded. So those are just afew of them that we're positioned, we have a large presence in and those areprograms that are exactly what we do.

Okay. And then finally, with the amortization going to nextyear, how will that flow quarter to quarter? Will it be spread out evenly or isit also front and loaded?

It will be on an annual basis, it will be equally on aquarter-to-quarter basis.

Okay. Thanks. I'll get back in queue.

Your next question comes from Corey Greendale with FirstAnalysis.

Good morning.

Good morning, Corey.

I wanted to ask first for an update on the labor front. Itlooks like you were able to add some FTEs in addition to the ones you got fromthe tuck-in acquisitions, is that right and what are the labor markets lookinglike and what are your internal hiring plans for this year?

We did, we added about 200 staff, a bit over 200 staff fromthe third quarter to the fourth quarter so we were up. We have about 450opening if you went to Tetra Tech's web page and looked at our posted listingsthere' just over 450 positions we're looking to fill right now. It continues to be a tight market; it continues to besomething that we wish we could add the right people very quickly. But it hasnot been a factor that has slowed us down or limited our ability to win orexecute programs. The three tuck-ins were actually late in Q4, so they reallydidn't add staff to us that impact or contributed to our net revenue. There wassuch a very short period of time. But the one thing you will see as we continueto add heads or add staff and additional resources is you will watch the growthon gross revenue and net revenue more closely be aligned. In fact, you saw that this fourth quarter where we hadapproximately 10% both at the gross level and the net level.

Makes sense. It sounds like you are targeting internationalmore. You have spoken in the past about kind of a mid 15% revenue growth targetwith half of that organic, half from acquisitions. First of all, is that stillwhat you are targeting, and can you kind of quantify where international fitsinto that picture?

Well, that's exactly right, the 15% is exactly as you haveportrayed, half of it organically from our internal operations and the otherhalf from additional acquisitions that we will bring on. I did, on thismorning's presentation, mention the word international probably as many as anyother word. But I want to make one thing clear, it is in addition towhat we are doing now, not in lieu of. We're going to continue to be veryaggressive here domestically. We're going to have our largest investments inour core businesses and our key clients and services. But we're looking to add. It is not hard for us to make huge increases in ourinternational presence when only 1% of our work is internationally. So if wecan add 1%, we have doubled our business. The actual contribution from aninternational acquisition in 2008, if we find the right one, it will be lumpy. You will either see nothing or if we find the right one atthe right location at the right price, then that will be a move we have. It’snot an imperative for us in 2008, and it’s not something that we have actuallyincluded into our forecast or guidance. So our guidance, if we actually broke it down into businesssectors or geographic locations, does not include appreciable change in theinternational presence.

Okay. So just to be clear, the 15% growth target, that wouldnot include in international would be gravy on top of that for the near-term?

Well, I would say it is a very small component of that 15%,very small.

Okay.

So, if turns out to be a large move for us, then that wouldbe additional upside.

Okay. And then I also wanted to follow up on the WRDA thing.Of the $23 billion, about how much of that do you think you could easily do,given your expertise?

Well, we think maybe 90% of it falls into service areas thateither we or that we can perform internally or teams that we construct thathave construction components into it. But overall, with the vertical capability, we have all theway through implementation, which would be construction of these with theappropriate teams we have we think about 90% of it we could pursue.

Okay. And if I could just sneak in one more, State andlocal, I know you said it's strong across the board, but could you highlightjust a couple of things that were particularly strong that drove the growth?

CSOs? CSOs combined to our overflows were particularlystrong for us. We're up to 16 different municipalities that we have CSOs with.It has been an area that one of that represents some of our largest wins thatwe had, new contracts that we’ve had, particularly in the Northeast. I am very happy to announce this is an area that we actuallyfocused on and have great success. It wasn't something that came in that wastangential to our focus. So that was really one of the big drivers for us.

Great, thank you.

Your next question comes form Debra Coy with JanneyMontgomery.

Yes, good morning, all. Dan, following up a bit on thebudget outlook, the WRDA program now approved, but the Army Corp of Engineersbudget for fiscal '08 hasn't been approved yet, nor EPAs in a few otheragencies. Do you have a sense yet of how you see that playing if wesee some delay in the fiscal year appropriations? In other words, are youexpecting just a continuation of fiscal '07 levels? How do you see that playingout over the next couple of quarters?

It is unclear to us, as many, whether or not some, many orall will get passed. There are approximately 12 different appropriations thatwill go through Congress. Some may get through. As you are aware, a year ago,to the defense portion went through; the defense appropriation went through. Funding that Tetra Tech is actually spread out through abouthalf of those. There are six different appropriation bills. So, first of all,we are not concentrated in any one area. So if one appropriation bill isn'tpassed with these new funding level that it would have any material impact. I will go back to a statement I had earlier on the federal.70% of our backlog for the federal work that Tetra Tech will provide this yearis already in backlog. New programs, I was in a meeting with the Department ofEnergy, which is one of our clients, and there are some interestingphenomenons, if you look at the underlying numbers. The continuing resolutionactually allowed the Department of Energy to have more funds to expend infiscal year '07 than it would have if the bill had passed. In the past, it had reduced budgets and in fact, the '06budgets were higher. So continuing resolution does have plus-ups in some areasas flat in others and does have declining. But the Department of Energy is anexample, with continuing resolution there's actually more funds for the entityto expend with just a continuing resolution at its prior-year levels.

Okay. That’s helpful. And just one quick follow-up on, thatwithin the Corps of Engineers, which has become your largest client, it doessound that they have gotten a lot more proactive as they are gearing up forWRDA implementation. And it also sounds like they have funds and projects andvehicles already in place, so that we could see significant work coming out ofthem even with an ongoing fight over the forward appropriation.

That’s what we see. We think that the Army Corps has done avery good job of positioning new contracts and starting upfront planning,studying evaluation projects, many of which we are involved in. That's sort ofthe precursors to these large projects that will come through WRDA. So, we think they're actually doing a very good job. It isthe right client, we think, at the federal level to be closely aligned with. Sohaving the Corps being one of our largest clients has positions us very well,so I agree with your thesis.

Okay, that is helpful. Thanks. And then a question on theforward growth, I certainly understand the impact of the non-cash charge havingan effect on margins, but I'm also trying to understand how you're thinkingabout organic growth on net revenues that your mid point of guidance range isaround 15%. Obviously, that is still including a significant amount ofacquisitions. Backlog, obviously, is growing faster than that. And your organicgrowth for fiscal '07 was only, according to the data, a little over 2%. So should we expect that the percent of subcontractedrevenues will come down or will it stay flat? How should we think about leavingacquisitions aside and ARD's contribution and so on; how should we think aboutorganic growth and net revenues over the next several quarters?

Let me comment on the organic growth. 15% is right, 15% is ourtarget, half from acquisitions, half internal, so our goal in internal is up to7 to 8%, so that's where our goal is. Now, as you've observed, we've had abouta 2% organic growth in 2007. We had one program that accounted for about 4% of our netrevenue with the Department of Energy. It's a program that was at the end ofits contracting period and went into reprocurement at the beginning of thefiscal year and we didn't see it replaced. If you take that single project out, we saw all of ouroperating units grow organically at a number of about 6%. So we actually sawthe fundamental growth, again in all of our segments in our core markets,growing at about 6%. Our goal is to pick that up to be a little bit higher thanthat, 7% and just a note on our forecast going into '08. We're going to grow15% and we are not going to forecast the timing or contribution of acquisitionsthat we make during the year. On a pure mathematical basis, you might assume if you justwent through our numbers you would forecast 8% and then as you addedacquisitions throughout the year we would increase our guidance both on revenueand earnings per share. We feel highly confident. In some ways I feel more confidentgoing into this year than I have in 10 years that we're coming into this yearwithout any contributions forecasted from future acquisitions and we're alreadyat a 15% EPS and revenue growth going into the year. So, I hope that helps.

Yes, it does, thanks. And last question and I'll get back inline. Both you and David mentioned room for improvement on the tax rate. David,what are you thinking about for fiscal '08?

'08 we are targeting at 41.5% and let me echo what …

So that's pretty flat.

Right. Let me echo what Dan just said is we continue to lookat our state structure, try to improve one or two point, some percentage basispoints on that. Also, as we expand more internationally and that is the biggestyield from tax rate from international lower tax countries. So you will see that happen and I really can't forecast whenthat's going to happen.

Sure. All right, thanks.

Your next question comes from the line of Mark Segal withCanaccord Adams.

Hi guys, just a couple of quick questions. As you look outinto next fiscal year and evaluating to international acquisitionopportunities. Are there particular areas that you're interested in, if it'sResource Management or if it's more alternative energy slanted or how do welook at that?

Our acquisitions initially will likely be associated withwater; watershed, water quality, water supply, wastewater treatment. So likelyour largest differentiator going internationally would likely be water. The locations we would likely go to would be the geographiclocations internationally that have government institutions specifically,associated with the commonwealth countries, where they have very developedestablished and enforced regulatory and it's a regulatory enforcement and lawsto support like Clean Water Act’s, drinking water quality. And so that's where we'd be focused. Those would be placeslike Western Europe, portions of Asia, Singapore, Japan, some of the otherdeveloped locations around the world Australia and New Zealand of course.

Okay. Great. And then last quarter you touched upon a littlebit your relative mix in contract structure and its implications on marginsgoing forward. Just wondering if you could touch on that again?

Yes, the margins are generally the lowest for our federalclients. Most of the work or much of the work with the federal clients are costplus fixed fee, very low risk, long duration, large contracts, excellent forcash flow. So, many positive attributes, but typically the margins arethe lowest. We looked at sort of six to eight type percent. State and local arelarger and then of course the largest on commercial. Let me just make a notethat the addition, if you take a look at sort of a midpoint of our guidanceyou'll see that the margins for 2007 to 2008 are flat or even slightlydeclining on a margin basis. Of course income is up, EPS is up, that's going to belargely affected by the addition of ARD. ARD is a 100% federal client basedentity. All of its work is with the federal government and much of it on a costplus fixed fee basis. So again, low risk, excellent work, all of the attributes Ijust mentioned, but it does have an effect of tempering our margin just a bit.

Okay. Great. Thanks a lot.

Your next question comes from Matthew McKay with Jefferies Inc.

Just a first quick question, how much did acquisitionscontribute to backlog?

We don't have that broken out at this moment, butapproximately $40 million.

Okay. From the way you're talking, it sounds like it is notgoing to be an issue any time soon, but at the same time with what is going onwith property valuations and everything else, starting to get more questionsabout state and local economies and how potentially, if state and localeconomies do start to head south here, maybe if you could just kind of walk methrough a little bit in terms of how it potentially could impact your businessor not impact your business?

Well, there are components of state and local budgets andfunding that are highly sensitive to the residential market and residentialhousing. The areas that we receive our funding are generally not associatedwith that, areas such as the southeast in Georgia the water wars over LakeLanier and the absence of water for existing homes; have special budgets put inplace out here in California. The investigation and evaluation of the Sacramento Riverdeltas is a special bond fund that's been supported. It's also true of thecoastal protection in Connecticut and a number of states in the Northeast. So, most of the work that we are exposed to at the state andlocal level is not associated with the residential market and has earmarkedfunding through bonds or other types of user fees that are put in place forexisting households.

Okay. That's helpful. And then just one last question, justIraq, what's the current situation with you guys over there and what's yourexpectation going forward?

Well, we're still over there. We're actually forecasting aramp down throughout the year and we've forecast internally as part of ourbuildup, our work decreasing by more than 50% here in fiscal year '08.

Okay. Great. Thanks a lot, guys.

Your next question comes from Francesca McCann with StanfordGroup Company.

Hi there, Just one last question other been answered.Looking at the number you talked about hiring 200 people and there are still450 slots open. What percentage of those are specialty engineers?

Francesca, that's a good question. I don't have a breakdown,although I would, having been hired as an engineer at one time, would considerevery one of them hired would consider themselves a specialty engineer or atechnical person. The area that we have the highest demand right now is inengineering, mostly in the water supply and water treatment. So I would saythat that's the largest component that's been that portion. Our Resource Management, and I would just estimate, there'sprobably two-thirds on the engineering and one-third on the environmentalscience side, which would be the geologists, chemists and other science basedstaff. So I would say generally speaking I would approximate it at two-thirdson the engineering side, one-third on the research management side.

Okay, that's helpful. And then just the trend there, I knowwe've talked about for some time now kind of the difficulty in finding skilledengineers. Does that continue or is it increasing?

You know, we haven't seen it increase, we've seen itcontinuing about the same level, but we haven't seen any particular change inthis as a risk factor or something that's impeding any of our progress. So I'veseen it pretty flat actually. It might be a function of the tuck-in acquisitions we'vedone because they've really helped a lot. And most of the acquisitions that wecompleted have added people on this engineering side. So I think, it's reallybeen an effective way for us to address the self-performance on the engineeringside.

Okay. And then a quick question on international expansion,what are your thoughts on India?

We have an office in India, it's one of the probablyhalf-dozen countries where we are located internationally. We have a number ofwater infrastructure projects and, in fact, of all of the countries that wehave a presence in, India is the location where we have the most number ofwater infrastructure proposals currently pending. I'm hesitant to make any type of forecast until they turnfrom proposals to wins, but it is an area that we're seeing the largestproposal effort internationally. And not only the largest number of proposals,the types of projects are the largest also. So, we're very hopeful, but I'mgoing to wait and see.

Okay, great. That's all for now. Thank you.

And your final question comes from Rob Mason with Robert W.Baird.

I may have missed this in the organic growth discussionearlier, but what within your fiscal '08 revenue guidance what do we assumeacquisitions contribute? And again, speaking completed, not futureacquisitions.

Contributions from acquisitions will be about 6%.

Okay. And then just a housekeeping, Delaney contributed whatin the fourth quarter?

On a net earnings basis about $20 million.

Okay, in the fourth quarter?

Yes. They are very, very seasonal, not an annual thing.

Right, right. And then just to clarify, David, your net debtcomment for Q1 of '08, I think I missed that?

Typically, we will be using cash for the first quarter,that's a big quarter for our bonus and everything else. And so we forecastabout $30 million to $40 million usage in the first quarter on that alone. Andas a result of the acquisition of ARD we actually borrowed close to $40 millionagainst our line, so that's why I mentioned $70 million to $80 for the firstquarter.

Okay, yes. That's what I meant. And then Dan, just toclarify your comment on the DOE second line of defense, you said Tetra Tech willnot be participating there?

No, I did not say that. I said that that the ADOE programwas under procurement and it simply hasn't been finalized at this point.

Okay. So we're still waiting for some visibility on that?

That's correct.

Do you have a timeline or expected timeline?

Well, the DOE has a different calendar than some of us ontheir awards. So I'd certainly expect it in the next three to six months. It'spossible it's even sooner than that; I certainly wouldn't expect it to be anylonger than that. So three to six months.

Okay, very good. Thank you.

This will conclude the Q&A session. I will now turn theconference back over to Dan Batrack to conclude.

Thank you very much. I'd like to conclude with a few notesas we go into 2008. Number one, on a total revenue basis we're planning on exceeding$1.8 billion in total revenue as we go into 2008. We're moving toward that $2billion number, we're seeing our end markets stronger than ever that will drivethat. We continue to be focused on winning larger programs that have longerduration. We also are focused on expanding our services not only tothe U.S., but I also mentioned internationally and that will be largely bedriven by our acquisitive strategy. And with that we're looking for anotherexcellent 2008 and to continue the momentum and success we've had justconcluding 2007. Thank you very much and I look forward to talking to all ofyou next quarter.

Ladies and gentlemen, this concludes our conference fortoday. Thank you all for participating and have a nice say. All parties may nowdisconnect.