UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2003
OR
[ ] TRANSITION REPORT REQUIRED PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________.
Commission File Number 1-9065
Ecology and Environment, Inc. 401(k) Plan
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(Full title of the Plan)
368 Pleasant View Drive, Lancaster, New York 14086
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(Address of the Plan)
Ecology and Environment, Inc.
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(Name of issuer of the securities held pursuant to the Plan)
368 Pleasant View Drive, Lancaster, New York 14086
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(Address of principal executive office)
REQUIRED INFORMATION
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ITEM 1. Not applicable.
ITEM 2. Not applicable.
ITEM 3. Not applicable
ITEM 4. FINANCIAL STATEMENTS OF THE PLAN
The Financial Statements of the Ecology and Environment, Inc. 401(k) plan
the "Plan") for the fiscal years ended December 31, 2003 and 2002, together
with the report of PricewaterhouseCoopers LLP, Independent Registered Public
Accounting Firm, are included in this Annual Report on Form 11-K, and are by
specific reference incorporated herein and filed as a part hereof. The
Financial Statements and the Notes thereto are presented in lieu of the
financial statements required by Items 1, 2 and 3 of Form 11-K. The Plan is
subject to the requirements of the Employee Retirement Income Security Act
of 1974 (ERISA).
EXHIBIT
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Exhibit Number Description of Exhibit
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23.1 Consent of Independent
Registered Public Accounting
Firm
Ecology and Environment, Inc.
401(k) Plan
Notes to Financial Statements
December 31, 2003 and 2002
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Page
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Report of Independent Registered Public Accounting Firm 1
Financial Statements:
Statements of Net Assets Available for Benefits 2
Statements of Changes in Net Assets Available for Benefits 3
Notes to Financial Statements 4-8
Supplemental Schedule:
Schedule H, line 4i - Schedule of Assets Held at End of Year 9
Page 1
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Report of Independent Registered Public Accounting Firm
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To the Participants and Administrator of the
Ecology and Environment, Inc. 401(k) Plan
In our opinion, the accompanying statements of net assets available for
benefits and the related statements of changes in net assets available for
benefits present fairly, in all material respects, the net assets available
for benefits of the Ecology and Environment, Inc. 401(k) Plan (the "Plan")
at December 31, 2003 and 2002, and the changes in net assets available for
benefits for the years then ended in conformity with accounting principles
generally accepted in the United States of America. These financial
statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance
with auditing standards generally accepted in the United States of America,
which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets
held at end of year is presented for the purpose of additional analysis and
is not a required part of the basic financial statements but is
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement
Income Security Act of 1974. The supplemental schedule is the
responsibility of the Plan's management. The supplemental schedule has been
subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/s/ PRICEWATERHOUSECOOPERS LLP
------------------------------
PRICEWATERHOUSECOOPERS LLP
Buffalo, New York
December 17, 2004
Page 2
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Ecology and Environment, Inc.
401(k) Plan
Statements of Net Assets Available for Benefits
December 31, 2003 and 2002
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2003 2002
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Assets
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Investments, at fair value (see Note 5) $16,520,302 $12,173,356
Participant contributions receivable 79,399 68,726
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Net assets available for benefits $16,599,701 $12,242,082
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See accompanying notes to the financial statements.
Page 3
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Ecology and Environment, Inc.
401(k) Plan
Statements of Changes in Net Assets Available for Benefits
Years Ended December 31, 2003 and 2002
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2003 2002
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Additions:
Additions to net assets attributed to:
Interest $ 10,881 $ 9,204
Dividends 240,135 137,626
Net appreciation in fair value of
investments (see Note 5) 2,759,393 ---
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3,010,409 146,830
Contributions:
Participant 1,974,479 1,806,002
Rollovers 177,518 200,947
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2,151,997 2,006,949
Total additions 5,162,406 2,153,779
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Deduction from net assets:
Net depreciation in fair value of
investments (see Note 5) --- 1,806,562
Benefits paid to participants 778,503 1,010,582
Administrative expenses 26,284 19,128
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Total deductions 804,787 2,836,272
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Net increase (decrease) 4,357,619 (682,493)
Net assets available for benefits:
Beginning of year 12,242,082 12,924,575
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End of year $16,599,701 $12,242,082
============ ============
See accompanying notes to the financial statements.
Page 4
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Ecology and Environment, Inc.
401(k) Plan
Notes to Financial Statements
December 31, 2003 and 2002
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1. Description of Plan
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The following description of the Ecology and Environment 401(k) Plan
(the Plan) is provided for general information purposes only. Participants
should refer to the Plan agreement for a more comprehensive description of
the Plan's provisions. On August 1, 2002, the Plan changed the Recordkeeper
from Dreyfus Retirement Services (Dreyfus) to MFS Retirement Services, Inc.
(MFS) and changed the Trustee and Account Owner from Dreyfus to Reliance
Trust Company. In connection with these changes, a new plan agreement was
adopted (new plan agreement) on August 1, 2002.
General
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The Plan was established January 1, 1994 as a defined-contribution plan
to cover all eligible employees of Ecology and Environment, Inc. (the
Company). Under the old plan agreement, eligibility was defined as an
employee who has completed a minimum of 1,000 hours of service and was age
twenty-one or older. Under the new plan agreement, the hours of service
requirement was eliminated and employees age twenty-one or older are
immediately eligible to participate in the plan during the month following
their date of hire. Contributions to the Plan were not permitted prior to
July 1, 1994. The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA).
Contributions
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Prior to August 1, 2002, participants could elect to make voluntary
contributions up to 15% of their annual compensation subject to the maximum
amount allowable by the Internal Revenue code sections 401(k), 402(g), 404
and 415. Beginning August 1, 2002, participants may elect to make voluntary
contributions subject only to the limitations of the Internal Revenue Code.
The Internal Revenue Services' maximum deferral contribution amount was
$12,000 for 2003 and $11,000 for 2002. The elective deferral percentage may
be modified the first day of any month. Upon enrollment in the Plan, a
participant may direct their contributions in any combination of the
investment options in at least 10 percent increments in each option selected.
Under both the old and new plan agreements, the Company may make
contributions in the form of matching contributions and/or an annual
discretionary contribution fixed by appropriate action of the Company. There
were no Company contributions for the 2003 and 2002 plan years.
Participant accounts
--------------------
Each participant's account is credited with the participant's
contributions and allocations of the Company's contributions (if any) and
the Plan earnings, and charged with an allocation of the portion of
administrative expenses borne by the Plan. Allocations are based on
participant account balances, as defined in the Plan documents. The benefit
to which a participant is entitled is the participant's vested account
balance.
Vesting
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Participants are immediately vested in their contributions plus actual
earnings thereon. Vesting in the Company's matching and discretionary
contribution portion of their accounts plus actual earnings thereon is based
on years of continuous service. A participant is 100% vested in the Company
contributions after five years of credited service. There is no partial
vesting.
Page 5
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Participant loans
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Under both the old and new plan agreements, participants may borrow from
their account a minimum of $1,000 with a maximum equal to the lesser of
$50,000 or 50% of their vested account balance. Loans are treated as a
transfer to (from) the respective investment fund from (to) the Loan Fund.
Loan terms range from one to five years or from five to twenty years when the
loan is made for the purchase of a primary residence. The loans are
collateralized by the balance in the participant's account and bear interest
at a rate commensurate with local prevailing rates as determined by the Plan
Administrator. Principal and interest are paid ratably through bi-weekly
payroll deductions.
Payment of benefits
-------------------
On termination of service due to death, disability, or retirement, a
participant may elect to receive either a lump-sum amount equal to the value
of the participant's vested interest in his or her account, or monthly,
quarterly, semi-annual or annual installments over a period not to exceed
the life of the participant or the life of a designated beneficiary.
Administration
--------------
The Plan is administered by the Company. The Company utilized Dreyfus
as the Recordkeeper and Trustee of the Plan through July 31, 2002.
Beginning August 1, 2002, the Company selected MFS to be the Recordkeeper of
the Plan and Reliance Trust Company as the Trustee and Account Owner.
Administrative expenses are paid by the participants and the Company.
An asset-based fee is paid by the participants on an annual basis. This
amount is deducted from participant accounts and placed in a holding
account, which is merged with the MFS Fixed Fund. Any remaining
administrative expenses in excess of the amounts which are set aside by the
Plan are paid by the Company.
2. Summary of Accounting Policies
------------------------------
Basis of Accounting:
The financial statements of the Plan are prepared under the accrual
method of accounting.
Investments and Related Transactions:
The Plan's investments are reflected at current market value as measured
by quoted market prices in an active market or as determined in good faith
by the Trustee. Investments in Ecology and Environment, Inc. common stock
are valued at the last reported sales price on the last business day of the
month. Shares of mutual funds are valued at the net asset value of shares
held by the Plan at year-end. Net appreciation/(depreciation) in fair
value of investments includes both realized gains and losses and unrealized
appreciation/(depreciation). Interest and dividend income is recognized as
earned. Investment transactions are accounting for on the trade date.
Participant loans are valued at cost, which approximates fair value.
Page 6
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Payment of Benefits:
Benefits are recorded when paid.
Use of Estimates:
The preparation of the Plan's financial statements in conformity with
accounting principals generally accepted in the United States requires the
Plan Administrator to make estimates and assumptions that affect the
reported amounts of net assets and disclosures of contingent net assets at
the date of the financial statements and the reported amounts of change in
net assets during the reporting period. Actual results could differ from
those estimates.
3. Plan Termination
----------------
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue the Plan at any time and to terminate
the Plan subject to the provisions of ERISA. In the event of Plan
termination, participants will become 100 percent vested in their accounts.
4. Tax Status
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The Plan Administrator has not applied to the Internal Revenue Service
for a determination letter for the Plan. From the commencement of the Plan
through July 31, 2002, the Plan was based upon a prototype plan designed by
the Dreyfus Corporation and received a favorable determination letter dated
September 1, 1994. Beginning August 1, 2002, the Plan is based upon a
prototype plan designed by MFS Retirement Services Inc. which received a
favorable determination letter dated April 23, 2002. The Plan has been
amended since receiving the determination letter. However, the Plan
Administrator and the Plan's legal counsel believe that the Plan is
currently designed and being operated in compliance with the applicable
requirements of the Internal Revenue Code. Therefore, no provision for
income taxes has been included in the Plan's financial statements.
Page 7
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5. Investments
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The following presents investments that represent five percent or more
of the Plan's net assets at December 31, 2003 and 2002:
2003 2002
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MFS Mid Cap Growth Fund,
399,082 and 393,059 shares, respectively $ 3,116,833 $ 2,229,807
MFS Value Fund, 133,750 and 128,870 shares,
respectively 2,720,481 2,128,932
MFS Fixed Fund - Institutional, 2,134,192
and 1,758,654 shares, respectively 2,134,192 1,758,654
MFS Core Growth Fund, 118,379 and 124,966
shares, respectively 1,774,498 1,543,326
MFS Research Bond Fund, 99,923 and 83,790
shares, respectively 1,050,196 873,093
Barclays S&P 500 Stock Fund, 24,199 and
23,834 shares, respectively 3,260,527 2,543,290
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Total of investments representing 5 percent
or more of the Plan's net assets 14,056,727 11,077,102
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Ecology and Environment, Inc. Common Stock,
31,665 and 44,802 shares, respectively 308,556 356,199
Other 2,155,019 740,055
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Total investments $16,520,302 $12,173,356
============ ============
The Plan's investments for the years ended December 31, 2003 and 2002
(including gains and losses on investments bought and sold, as well as held
during the year) appreciated (depreciated) in value as follows:
2003 2002
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Mutual funds $ 2,665,316 $(1,907,055)
Common stock 94,077 100,493
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$ 2,759,393 $(1,806,562)
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Page 8
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6. Transactions with parties-in-interest
As of December 31, 2003 and 2002, the Plan held certain securities
issued by the Company as follows:
December 31, 2003 December 31, 2002
Number of Fair Number of Fair
shares value shares value
--------------------- ---------------------
Ecology and Environment, Inc.
Common Stock 31,665 $ 308,556 44,802 $ 356,199
Certain plan investments are shares of mutual funds and pooled separate
accounts offered by MFS Retirement Services, Inc. (MFS). MFS is also
recordkeeper of the plan and custodian of all investments other than Company
stock. AS of December 31, 2003 and 2002, the Plan held the following
investments offered by MFS:
December 31, 2003 December 31, 2002
Number of Fair Number of Fair
shares value shares value
--------------------- ---------------------
Mid Cap Growth Fund 399,082 $3,116,833 393,959 $2,229,807
Value Fund 133,750 2,720,481 128,870 2,128,932
Fixed Fund - Institutional 2,134,192 2,134,192 1,758,654 1,758,654
Core Growth Fund 118,379 1,774,498 124,966 1,543,326
Research Bond Fund 99,923 1,050,196 83,790 873,093
Total Return Fund 26,423 398,989 13,167 174,731
New Discovery Fund 9,301 142,776 5,000 57,155
Aggressive Growth Allocation
Fund 5,574 65,723 --- ---
Growth Allocation Fund 1,301 15,210 --- ---
Consecutive Allocation Fund 797 8,628 --- ---
Moderate Allocation Fund 309 3,490 --- ---
Page 9
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Ecology and Environment, Inc.
401(k) Plan
Schedule H - line 4i - Schedule of Assets Held at End of Year
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(b) (c) Identity of Issue and (e) Current
(a) Shares Description of Investment (d) Cost Value
MFS Retirement Services, Inc.
-----------------------------
* 399,082 Mid Cap Growth Fund ** $ 3,116,833
* 133,750 Value Fund ** 2,720,481
* 2,134,192 Fixed Fund - Institutional ** 2,134,192
* 118,379 Core Growth Fund ** 1,774,498
* 99,923 Research Bond Fund ** 1,050,196
* 26,423 Total Return Fund ** 398,989
* 9,301 New Discovery Fund ** 142,776
* 5,574 Aggressive Growth Allocation Fund ** 65,723
* 1,301 Growth Allocation Fund ** 15,210
* 797 Consecutive Allocation Fund ** 8,628
* 309 Moderate Allocation Fund ** 3,490
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11,431,016
Other Investments
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24,199 Barclays S&P 500 Stock Fund ** 3,260,527
51,764 Franklin Templeton Group of Funds
Templeton Foreign Fund ** 550,766
14,990 Fidelity Low Price Stock Fund ** 524,345
* 31,665 Ecology and Environment, Inc. **
Common Stock 308,556
* --- Participant Loans, 5.00%-10.50%, ** 253,064
collateralized by participant
account balances and maturing
between 1-20 years
* 118,759 Brokerage Access Account ** 118,759
2,663 Domini Social Equity Fund ** 72,729
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$16,520,302
============
* Indicates parties-in-interest to the Plan
** Cost is not required to be presented for participant directed investments
SIGNATURE
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The Plan. Pursuant to the requirements of the Securities Exchange Act of
1934, the Plan Administrator has duly caused this annual report to be signed
by the undersigned thereunto duly authorized.
Ecology and Environment, Inc.
401(k) Plan
-----------------------------
(Name of Plan)
By: Ecology and Environment, Inc.
401(k) Plan Committee
Plan Administrator
By: /s/ RONALD L. FRANK
-----------------------------
RONALD L. FRANK
COMMITTEE MEMBER
DATE: May 4, 2005