UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended October 29, 2005
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from __________ to __________
Commission File Number 1-9065
ECOLOGY AND ENVIRONMENT, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
New York 16-0971022
------------------------------- ----------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
368 Pleasant View Drive
Lancaster, New York 14086-1397
------------------------------ ----------
(Address of principal executive Zip code
offices)
(716) 684-8060
----------------------------------------------------
(Registrant's telephone number, including area code)
NOT APPLICABLE
------------------------------------------
(Former name, former address and former
fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
At December 1, 2005, 2,418,268 shares of Registrant's Class A Common
Stock (par value $.01) and 1,643,045 shares of Class B Common Stock (par
value $.01) were outstanding.
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
--------------------
Ecology and Environment, Inc.
Consolidated Balance Sheet
October 29, July 31,
2005 2005
------------ ------------
Assets
------
Current assets:
Cash and cash equivalents $ 6,718,505 $ 7,872,116
Investment securities available for sale 120,378 120,533
Contract receivables, net 33,876,248 30,044,340
Deferred income taxes 5,017,296 5,016,908
Other current assets 2,245,531 2,005,426
Assets of discontinued operations held
for sale 16,212 26,821
------------ ------------
Total current assets 47,994,170 45,086,144
Property, building and equipment, net 7,806,406 7,967,883
Deferred income taxes 1,044,524 1,044,524
Other assets 2,324,552 1,878,984
------------ ------------
Total assets $59,169,652 $55,977,535
============ ============
Liabilities and Shareholders' Equity
------------------------------------
Current liabilities:
Accounts payable $ 5,485,589 $ 5,979,588
Accrued payroll costs 4,304,653 3,837,435
Income taxes payable 366,106 36,122
Deferred revenue 181,477 231,611
Current portion of long-term debt and
capital lease obligations 227,403 324,071
Other accrued liabilities 8,982,580 6,673,337
Liabilities of discontinued operations held
for sale 289,180 290,950
------------ ------------
Total current liabilities 19,836,988 17,373,114
Long-term debt and capital lease obligations 344,564 328,053
Minority interest 1,911,142 1,992,544
Commitments and contingencies (see note #9) --- ---
Shareholders' equity:
Preferred stock, par value $.01 per share
authorized - 2,000,000 shares; no shares
issued --- ---
Class A common stock, par value $.01 per
share; authorized - 6,000,000 shares;
issued - 2,514,235 shares 25,143 25,143
Class B common stock, par value $.01 per
share; authorized - 10,000,000 shares
issued - 1,669,304 shares 16,693 16,693
Capital in excess of par value 17,504,811 17,622,172
Retained earnings 22,748,398 22,002,059
Accumulated other comprehensive income (2,226,445) (2,236,051)
Unearned compensation, net of tax --- (158,993)
Treasury stock - Class A Common, 94,818 and
94,235 shares; Class B common, 26,259
and 26,259 shares, at cost (991,642) (987,199)
------------ ------------
Total shareholders' equity 37,076,958 36,283,824
------------ ------------
Total liabilities and shareholders' equity $59,169,652 $55,977,535
============ ============
The accompanying notes are an integral part of these financial statements.
Ecology and Environment, Inc.
Consolidate Statement of Income
Unaudited
Three months ended
---------------------------
October 29, October 30,
2005 2004
------------ -------------
Gross revenues $23,525,340 $22,716,296
Less: direct subcontract costs 3,250,481 3,557,884
------------ ------------
Net revenues 20,274,859 19,158,412
Cost of professional services and
other direct operating expenses 10,266,062 9,587,191
------------ ------------
Gross profit 10,008,797 9,571,221
Administrative and indirect operating
expenses 5,991,634 6,154,291
Marketing and related costs 2,185,920 2,577,034
Depreciation 251,015 419,541
------------ ------------
Income from operations 1,580,228 420,355
Interest expense (21,828) (40,791)
Interest income 42,362 14,387
Other expense (164,527) (94,445)
Net foreign currency exchange gain 2,621 3,597
------------ ------------
Income from continuing operations before
income taxes and minority interest 1,438,856 303,103
Total income tax provision 496,473 27,924
------------ ------------
Net income from continuing operations
before minority interest 942,383 275,179
Minority interest (159,288) (223,319)
------------ ------------
Net income from continuing operations $ 783,095 $ 51,860
Loss from discontinued operations (60,059) (71,875)
Income tax benefit on loss from discontinued
operations 23,303 25,156
------------ ------------
Net income $ 746,339 $ 5,141
============ ============
Net income (loss) per common share: basic
Continuing operations $ 0.20 $ 0.01
Discontinued operations (0.01) (0.01)
------------ ------------
Net income per common share: basic $ 0.19 $ ---
============ ============
Net income (loss) per common share: diluted
Continuing operations $ 0.20 $ 0.01
Discontinued operations (0.01) (0.01)
------------ ------------
Net income per common share: diluted $ 0.19 $ ---
============ ============
Weighted average common shares outstanding:
basic 3,983,005 3,987,195
============ ============
Weighted average common shares outstanding:
diluted 3,983,688 4,052,688
============ ============
The accompanying notes are an integral part of these financial statements.
Ecology and Environment, Inc.
Consolidated Statement of Cash Flows
Unaudited
Three months ended
------------------------------
October 29, October 30,
2005 2004
------------ ------------
Cash flows from operating activities:
Net income from continuing operations $ 783,095 $ 51,860
Net loss from discontinued operations (36,756) (46,719)
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation 251,015 419,541
Amortization 43,241 43,568
(Gain) loss on disposition of property and equipment (3,026) 7,151
Minority interest, net of distributions (81,402) (47,233)
Provision for contract adjustments 257,401 57,099
(Increase) decrease in:
- contracts receivable, net (4,089,309) (3,608,395)
- other current assets (240,105) (331,174)
- other non-current assets (445,568) 340,807
- assets held for sale 10,609 (1,958)
Increase (decrease) in:
- accounts payable (493,999) (2,461,764)
- accrued payroll costs 467,218 (574,246)
- income taxes payable 329,984 968,219
- deferred revenue (50,134) (450,119)
- other accrued liabilities 2,309,243 2,663,604
- liabilities held for sale (1,770) 132
----------- -----------
Net cash used in operating activities (990,263) (2,969,627)
----------- -----------
Cash flows provided by (used in) investing activities:
Purchase of property, building and equipment, gross (92,564) (233,942)
Disposal of property, building and equipment, gross --- 68,580
Payment for the purchase of bond (814) (1,469)
----------- -----------
Net cash used in investing activities (93,378) (166,831)
----------- -----------
Cash flows provided by (used in) financing activities:
Proceeds from debt 76,388 2,624,981
Repayment of debt (156,545) (6,465)
Net proceeds from issuance of common stock --- 1,812
Purchase of treasury stock --- (161,778)
----------- -----------
Net cash provided by (used in) financing activities (80,157) 2,458,550
----------- -----------
Effect of exchange rate changes on cash and cash equivalents 10,187 (38,543)
----------- -----------
Net decrease in cash and cash equivalents (1,153,611) (716,451)
Cash and cash equivalents at beginning of period 7,872,116 4,240,333
----------- -----------
Cash and cash equivalents at end of period $6,718,505 $3,523,882
=========== ===========
The accompanying notes are an integral part of these financial statements.
Ecology and Environment, Inc.
Consolidated Statement of Changes in Shareholders' Equity
---------------------------------------
Common Stock
---------------------------------------
Class A Class B Capital in
------------------ ------------------- Excess of Retained
Shares Amount Shares Amount Par Value Earnings
------------------ ------------------- ------------ ------------
Balance at July 31, 2004 2,501,985 $25,021 1,681,304 $16,813 $17,592,444 $24,972,691
========= ======= ========== ======== ============ ============
Net loss --- --- --- --- --- (1,586,540)
Foreign currency translation reserve --- --- --- --- --- ---
Cash dividends paid ($.34 per share) --- --- --- --- --- (1,384,092)
Unrealized investment gain, net --- --- --- --- --- ---
Conversion of common stock - B to A 12,000 120 (12,000) (120) --- ---
Repurchase of Class A common stock --- --- --- --- --- ---
Stock options exercised 250 2 --- --- 1,810 ---
Issuance of stock under stock award plan, net --- --- --- --- 38,230 ---
Amortization, net of tax --- --- --- --- --- ---
Forfeitures --- --- --- --- (10,312) ---
--------- ------- ---------- -------- ------------ ------------
Balance at July 31, 2005 2,514,235 $25,143 1,669,304 $16,693 $17,622,172 $22,002,059
========= ======= ========== ======== ============ ============
Accumulated
Other Treasury Stock
Comprehensive Unearned --------------------- Comprehensive
Income Compensation Shares Amount Income
------------- ------------- ---------- ---------- -------------
Balance at July 31, 2004 $ (2,336,723) $ (193,282) 87,749 $(694,121) $ 2,176,424
============= ============= ========== ========== =============
Net loss --- --- --- --- (1,586,540)
Foreign currency translation reserve 100,725 --- --- --- 100,725
Cash dividends paid ($.34 per share) --- --- --- --- ---
Unrealized investment gain, net (53) --- --- --- (53)
Conversion of common stock - B to A --- --- --- --- ---
Repurchase of Class A common stock --- --- 62,500 (530,057) ---
Stock options exercised --- --- --- --- ---
Issuance of stock under stock award plan, net --- (134,971) (33,531) (265,230) ---
Amortization, net of tax --- 164,717 --- --- ---
Forfeitures --- 4,543 3,776 (28,251) ---
------------- ------------- ---------- ---------- --------------
Balance at July 31, 2005 $ (2,236,051 $ (158,993) 120,494 $(987,199) $ (1,485,868)
============= ============= ========== ========== ==============
---------------------------------------
Common Stock
---------------------------------------
Class A Class B Capital in
------------------ ------------------- Excess of Retained
Shares Amount Shares Amount Par Value Earnings
------------------ ------------------- ------------ ------------
Net income --- --- --- --- --- 746,339
Reclassification due to adoption of FAS 123R --- --- --- --- (158,993) ---
Foreign currency translation reserve --- --- --- --- --- ---
Unrealized investment gain, net --- --- --- --- --- ---
Amortization, net of tax --- --- --- --- 41,632 ---
Other --- --- --- --- --- ---
--------- ------- ---------- --------- ------------ ------------
Balance at October 29, 2005
2,514,235 $25,143 1,669,304 $16,693 $17,504,811 $22,748,398
========= ======= ========== ======== ============ ============
Accumulated
Other Treasury Stock
Comprehensive Unearned --------------------- Comprehensive
Income Compensation Shares Amount Income
------------- ------------- ---------- ---------- -------------
Net income --- --- --- --- 746,339
Reclassification due to adoption of FAS 123R --- 158,993 --- --- ---
Foreign currency translation reserve 10,187 --- --- --- 10,187
Unrealized investment gain, net (581) --- --- --- (581)
Amortization, net of tax --- --- --- --- ---
Other --- --- 583 (4,443) ---
------------- ------------ ---------- ---------- --------------
Balance at October 29, 2005 $ (2,226,445) $ --- 121,077 $(991,642) $ 755,945
============= ============= ========== ========== ==============
ECOLOGY AND ENVIRONMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Summary of Operations and Basis of Presentation
-----------------------------------------------
The consolidated financial statements included herein have been
prepared by Ecology and Environment, Inc., ("E & E" or the "Company"),
without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. The financial statements reflect all
adjustments that are, in the opinion of management, necessary for a fair
statement of such information. All such adjustments are of a normal
recurring nature. Although E & E believes that the disclosures are
adequate to make the information presented not misleading, certain
information and footnote disclosures, including a description of
significant accounting policies normally included in financial
statements prepared in accordance with accounting principles generally
accepted in the United States of America, have been condensed or omitted
pursuant to such rules and regulations. Therefore, these financial
statements should be read in conjunction with the financial statements
and the notes thereto included in E & E's 2005 Annual Report on Form
10-K filed with the Securities and Exchange Commission. The results
of operations for the three months ended October 29, 2005 are not
necessarily indicative of the results for any subsequent period or the
entire fiscal year ending July 31, 2006.
1. Summary of significant accounting principles
--------------------------------------------
a. Consolidation
The consolidated financial statements include the accounts of the
Company and its wholly owned and majority owned subsidiaries. Also reflected
in the financial statements is the 50% ownership in the Chinese operating
joint venture, The Tianjin Green Engineering Company. This joint venture is
accounted for under the equity method. All significant intercompany
transactions and balances have been eliminated.
b. Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results may differ from those estimates.
c. Revenue recognition
The majority of the Company's revenue is derived from environmental
consulting work, with the balance derived from sample analysis (E & E
Analytical Services Center, in operation through January 2005) and
aquaculture. The consulting revenue is principally derived from the sale
of labor hours. The consulting work is performed under a mix of fixed
price, cost-type, and time and material contracts. Contracts are required
from all customers. Revenue is recognized as follows:
Contract Type Work Type Revenue Recognition Policy
------------------- ----------- ---------------------------------------
Fixed Price Consulting Percentage of completion based on
the ratio of total costs incurred
to date to total estimated costs.
Cost-type Consulting Costs as incurred. Fixed fee
portion is recognized using percentage
of completion determined by the
percentage of level of effort (LOE)
hours incurred to total LOE hours in
the respective contracts.
Time and Materials Consulting As incurred at contract rates.
Unit Price Laboratory/ Upon completion of reports (laboratory)
Aquaculture and payment from customers (aquaculture).
d. Translation of foreign currencies
The financial statements of foreign subsidiaries where the local
currency is the functional currency are translated into U.S. dollars using
exchange rates in effect at period end for assets and liabilities and average
exchange rates during each reporting period for results of operations.
Translation adjustments are deferred in accumulated other comprehensive
income.
The financial statements of foreign subsidiaries located in highly
inflationary economies are remeasured as if the functional currency were the
U.S. Dollar. The remeasurement of local currencies into U.S. dollars creates
translation adjustments which are included in net income. There were no highly
inflationary economy translation adjustments for fiscal years 2005-2006.
e. Income Taxes
The Company follows the asset and liability approach to account for
income taxes. This approach requires the recognition of deferred tax
liabilities and assets for the expected future tax consequences of temporary
differences between the carrying amounts and the tax bases of assets and
liabilities. Although realization is not assured, management believes it is
more likely than not that the recorded net deferred tax assets will be
realized. Since in some cases management has utilized estimates, the amount
of the net deferred tax asset considered realizable could be reduced in the
near term. No provision has been made for United States income taxes
applicable to undistributed earnings of foreign subsidiaries as it is the
intention of the Company to indefinitely reinvest those earnings in the
operations of those entities.
f. Earnings per share
Basic EPS is computed by dividing income available to common shareholders
by the weighted average number of common shares outstanding for the period.
Diluted EPS reflects the potential dilution that would occur if securities or
other contracts to issue common stock were exercised or converted into common
stock or resulted in the issuance of common stock that then shared in the
earnings of the Company. See Footnote No. 7.
g. Impairment of Long-Lived Assets
In January 2005, the Company recognized a $1.6 million impairment loss as
a result of its decision to close its Analytical Services Center (ASC) located
in Lancaster, New York. At that time, the impairment of the land and buildings
was determined based on the results of an independent appraisal and the
equipment values were determined by equipment offers the Company had received.
Operations continued beyond the end of the Company's second quarter ended
January 2005 and all backlog was completed by the end of February.
Consequently, at January 2005 the impairment loss was shown as from "continuing
operations" and the assets were classified as "held for use."
In April 2005, the Company recorded an additional impairment loss on
its remaining ASC land and building assets in the amount of $1.2 million. This
was the result of information obtained from various commercial brokers in
April 2005 that provided the Company with additional information on current
market conditions affecting the value of the real estate. The reduced
valuation is based on the likelihood that the facility will not be sold to an
existing laboratory or research company, but will rather be sold as combination
office and warehouse space. The testing equipment was sold during the third
quarter. Although business operations have ceased at the ASC, any impairment
losses are shown as from "continuing operations" due to the uncertainty that
the assets can be sold within one year under current market conditions.
2. Contract Receivables, Net
-------------------------
October 29, July 31,
2005 2005
------------ ------------
United States government
Billed $ 2,209,792 $ 2,418,683
Unbilled 4,334,207 3,801,977
------------ ------------
6,543,999 6,220,660
------------ ------------
Industrial customers and state
and municipal governments
Billed 26,048,544 22,065,280
Unbilled 4,930,999 5,348,293
------------ ------------
30,979,543 27,413,573
------------ ------------
Less allowance for contract
adjustments (3,647,294) (3,589,893)
------------ ------------
$33,876,248 $30,044,340
============ ============
United States government receivables arise from long-term U.S. government
prime contracts and subcontracts. Unbilled receivables result from revenues
which have been earned, but are not billed as of period-end. The above
unbilled balances are comprised of incurred costs plus fees not yet processed
and billed; and differences between year-to-date provisional billings and year-
to-date actual contract costs incurred and fees earned of approximately
$(64,000) at October 29, 2005 and $179,000 at July 31, 2005. Management
anticipates that the October 29, 2005 unbilled receivables will be
substantially billed and collected within one year. Included in the balance
of receivables for industrial customers and state and municipal customers are
receivables due under the contracts in Saudi Arabia and Kuwait of $10.4
million and $8.5 million at October 29, 2005 and July 31, 2005, respectively.
Within the above billed balances are contractual retainages in the amount of
approximately $556,407 at October 29, 2005 and $713,000 at July 31, 2005.
Management anticipates that the October 29, 2005 retainage balance will be
substantially collected within one year.
Included in other accrued liabilities is an additional allowance for
contract adjustments relating to potential cost disallowances on amounts
billed and collected in current and prior years' projects of approximately
$1.4 million at October 29, 2005 and $1.2 million at July 31, 2005. Also
included in other accrued liabilities is a reclassification of billings in
excess of recognized revenues of approximately $2.3 million at October 29,
2005 and $1.8 million at July 31, 2005. An allowance for contract
adjustments is recorded for contract disputes and government audits when
the amounts are estimatable.
The contracts in Saudi Arabia are through the Company's majority owned
(66 2/3%) subsidiary, Ecology and Environment of Saudi Arabia Co., Ltd.
(EESAL). The company has an agreement with its minority shareholder to divide
any profits in EESAL from the current contracts equally, and to pay to the
minority shareholder a commission of 5% of the total contract values. The
commission and additional profit sharing covers on-going representation in the
Kingdom, logistical support including the negotiation and procurement of Saudi
national personnel, facilities, equipment, licenses, permits, and any other
support deemed necessary in the implementation and performance of the Saudi
contracts. As of October 29, 2005 the Company has incurred expense of
$1,985,000 ($9,000 for the first three months of fiscal year 2006, $141,000
in fiscal year 2005, $944,000 in fiscal year 2004, $505,000 in fiscal year
2003 and $386,000 in fiscal year 2002 under the terms of this commission
agreement).
3. Line of Credit
--------------
The Company maintains an unsecured line of credit available for working
capital and letters of credit of $20 million with a bank at 1/2% below the
prevailing prime rate. A second line of credit has been established at another
bank for up to $13.5 million exclusively for letters of credit and is renewed
annually. At October 29, 2005 and July 31, 2005, respectively, the Company
had letters of credit outstanding totaling $2,277,800 and $2,373,602,
respectively. The Company had no outstanding borrowings for working capital
at October 29, 2005 and July 31, 2005.
The Company is in compliance with all bank loan covenants at October 29,
2005.
4. Long-Term Debt and Capital Lease Obligations
--------------------------------------------
Debt inclusive of capital lease obligations at October 29, 2005 and
July 31, 2005 consist of the following:
October 29, July 31,
2005 2005
---------- ----------
Various bank loans and advances at interest rates
ranging from 5% to 14 1/2% $ 402,363 $ 508,978
Capital lease obligations at varying interest
rates averaging 12% 169,604 143,146
---------- ----------
571,967 652,124
Less: current portion of debt (153,291) (255,298)
current portion of lease obligations (74,112) (68,773)
---------- ----------
Long-term debt and capital lease obligations $ 344,564 $ 328,053
========== ==========
The aggregate maturities of long-term debt and capital lease obligations at
October 29, 2005 are as follows:
October 29,
2005
-----------
FY 2006 $ 227,403
FY 2007 101,865
FY 2008 91,389
FY 2009 34,117
FY 2010 22,901
Thereafter 94,292
----------
$ 571,967
==========
5. Stock Award Plan
----------------
Effective March 16, 1998, the Company adopted the Ecology and Environment,
Inc. 1998 Stock Award Plan (the "1998 Plan"). To supplement the 1998 Plan,
the 2003 Stock Award Plan (the "2003 Plan") was approved by the shareholders
at the annual meeting held in January 2004 (the 1998 Plan and the 2003 Plan
collectively referred to as the "Award Plan"). The 2003 Plan was approved
retroactive to October 16, 2003 and will terminate on October 15, 2008.
Under the Award Plan key employees (including officers) of the Company or
any of its present or future subsidiaries may be designated to received awards
of Class A Common stock of the Company as a bonus for services rendered to the
Company or its subsidiaries, without payment therefore, based upon the fair
market value of the Company stock at the time of the award. The Award Plan
authorizes the Company's board of directors to determine for what period of
time and under what circumstances awards can be forfeited.
The Company issued 33,531 shares in fiscal year 2005, 47,795 shares in
fiscal year 2004, and 38,712 shares in fiscal year 2003 pursuant to the Award
Plan. Compensation costs are recorded in accordance with FAS 123R at the time
of issuance and are being amortized over the vesting period.
6. Shareholders' Equity - Restrictive Agreement
--------------------------------------------
Messrs. Gerhard J. Neumaier, Frank B. Silvestro, Ronald L. Frank and
Gerald A. Strobel entered into a Stockholders' Agreement in 1970 which
governs the sale of certain shares of common stock owned by them, the former
spouse of one of the individuals and some of their children. The agreement
provides that prior to accepting a bona fide offer to purchase all or any
part of their shares, each party must first allow the other members to the
agreement the opportunity to acquire on a pro rata basis, with right of
over-allotment, all of such shares covered by the offer on the same terms
and conditions proposed by the offer.
7. Earnings Per Share
-------------------
The computation of basic earnings per share reconciled to diluted earnings
per share follows:
Three Months Ended
-----------------------------
10/29/05 10/30/04
-----------------------------
Income from continuing operations
available to common stockholders $ 783,095 $ 51,860
Loss from discontinued operations
available to common stockholders (36,756) (46,719)
-----------------------------
Total income available to common
stockholders 746,339 5,141
Weighted-average common shares outstanding
(basic) 3,983,005 3,987,195
Basic earnings (loss) per share:
Continuing operations $ .20 $ .01
Discontinued operations (.01) (.01)
-----------------------------
Total basic earnings per share $ .19 $ ---
Incremental shares from assumed conversion
of stock options and restricted stock
awards 683 65,493
-----------------------------
Adjusted weighted-average common shares
outstanding 3,983,688 4,052,688
Diluted earnings (loss) per share:
Continuing operations $ .20 $ .01
Discontinued operations (.01) (.01)
-----------------------------
Total diluted earnings per share: $ .19 $ ---
=============================
8. Segment Reporting
-----------------
Ecology and Environment, Inc. has three reportable segments:
consulting services, analytical laboratory services, and aquaculture. The
consulting services segment provides broad based environmental services
encompassing audits and impact assessments, surveys, air and water quality
management, environmental engineering, environmental infrastructure planning,
and industrial hygiene and occupational health studies to a world wide base
of customers. The analytical laboratory provides analytical testing services
to industrial and governmental clients for the analysis of waste, soil and
sediment samples. The analytical segment recognized a pretax impairment loss
in the amount of $2.8 million in fiscal year 2005 as a result of its decision
to close its Analytical Services Center (ASC) located in Lancaster, N.Y. The
fish farm located in Jordan produces tilapia fish grown in a controlled
environment for markets worldwide. In fiscal year 2004, an impairment loss
of $442,000 ($139,000 net of minority interest and tax) was recognized
for the long-term assets at the Company's fish farm operations in Jordon.
The Company evaluates segment performance and allocates resources based
on operating profit before interest income/expense and income taxes. The
accounting policies of the reportable segments are the same as those described
in the summary of significant accounting policies. Intercompany sales from the
analytical services segment to the consulting segment are recorded at market
selling price, intercompany profits are eliminated. The Company's reportable
segments are separate and distinct business units that offer different products.
Consulting services are sold on the basis of time charges while analytical
services and aquaculture products are sold on the basis of product unit prices.
Reportable segments for the three months ended October 29, 2005 are as follows:
Aquaculture
--------------------------
Consulting Analytical Continued Discontinued Elimination Total
----------- ----------- ------------ ------------ ------------ ------------
Net revenues from external
customers $20,241,311 $ - $ 33,548 $ - $ - $20,274,859
Intersegment net revenues - - - - - -
----------- ----------- ------------ ----------- ------------ ------------
Total consolidated net revenues $20,241,311 $ - $ 33,548 $ - $ - $20,274,859
=========== ============ ============ ============ ============ ============
Depreciation expense $ 247,850 $ - $ 3,165 $ - $ - $ 251,015
Segment profit (loss) before income
taxes and minority interest $ 1,444,705 $ - $ (8,646) $ (60,059) $ - $ 1,376,000
Segment assets $56,748,652 $ 2,100,000 $ 305,000 $ 16,000 $ - $59,169,652
Expenditures for long-lived
assets - gross $ 92,564 $ - $ - $ - $ - $ 92,564
Geographic Information:
Net Long-Lived
Revenues (1) Assets - Gross
--------------- --------------
United States $17,459,859 $22,721,262
Foreign Countries 2,815,000 548,000
(1) Net revenues are attributed to countries based on the location of the
customers. Net revenues in foreign countries includes $129,000 in Saudi
Arabia and $544,000 in Kuwait.
Reportable segments for the three months ended October 30, 2004 are as follows:
Aquaculture
--------------------------
Consulting Analytical Continued Discontinued Elimination Total
----------- ----------- ------------ ------------ ------------ ------------
Net revenues from external
customers $18,254,921 $ 885,477 $ 18,014 $ - $ - $19,158,412
Intersegment net revenues 178,336 - - - (178,336) -
----------- ----------- ----------- ----------- ------------ ------------
Total consolidated net revenues $18,433,257 $ 885,477 $ 18,014 $ - $ (178,336) $19,158,412
=========== =========== ============ ============ ============ ============
Depreciation expense $ 281,737 $ 134,639 $ 3,165 $ - $ - $ 419,541
Segment profit (loss) before income
taxes and minority interest $ 669,644 $ (355,960) $ (10,581) $ (71,875) $ - $ 231,228
Segment assets $58,225,222 $6,796,000 $ 18,000 $ 32,000 $ - $65,071,222
Expenditures for long-lived
assets - gross $ 233,942 $ - $ - $ - $ - $ 233,942
Geographic Information:
Net Long-Lived
Revenues (1) Assets - Gross
--------------- --------------
United States $15,734,412 $26,778,729
Foreign Countries 3,424,000 501,000
(1) Net revenues are attributed to countries based on the location of the
customers. Net revenues in foreign countries includes $1.4 million in
Saudi Arabia and $544,000 in Kuwait.
9. Commitments and Contingencies
-----------------------------
Certain contracts contain termination provisions under which the customer
may, without penalty, terminate the contracts upon written notice to the
Company. In the event of termination, the Company would be paid only
termination costs in accordance with the particular contract. Generally,
termination costs include unpaid costs incurred to date, earned fees and
any additional costs directly allocable to the termination.
On or about October 28, 2005 several Plaintiffs filed an action in
District Court in the City and County of Boulder in Colorado, Case No.
05 CV 1008, against three named Defendants, one of which is Walsh
Environmental Scientists & Engineers, LLC (Walsh). Walsh is a majority-owned
subsidiary of the Company. The Company is not named as a Defendant. The
Plaintiffs' Complaint alleges claims of negligence, breach of contract and
trespass for unspecified damages against the Defendants resulting from a forest
fire that ignited from a fallen power line during a wind storm that took place
in Boulder County, Colorado in October 2003. Walsh's legal counsel has
received other communication from the Plaintiffs' attorneys, which indicates
that Plaintiffs may be seeking damages, in the aggregate, in excess of
$17,000,000.00. The Company's liability insurance extends to its subsidiaries.
Walsh believes the claims asserted against it are without merit and intends to
vigorously defend this lawsuit.
The Company is involved in other litigation arising in the normal course
of business. In the opinion of management, any adverse outcome to other
litigation arising in the normal course of business would not have a material
impact on the financial results of the Company.
10. Recent Accounting Pronouncements
--------------------------------
In December 2004, the Financial Accounting Standards Board (FASB) issued
its final standard on accounting for share-based payments (SBP), FASB
Statement No. 123R (revised 2004), Share-Based Payment. The Statement
requires companies to expense the value of employee stock options and similar
awards. Under FAS 123R, SBP awards result in a cost that will be measured
at fair value on the awards' grant date, based on the estimated number of
awards that are expected to vest. Compensation cost for awards that vest
would not be reversed if the awards expire without being exercised. The
Company adopted FAS 123R effective August 1, 2005. The unearned stock
compensation balance of $158,993 as of July 31, 2005, which was accounted
for under Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees" (APB 25), was reclassified into additional paid-in-capital
upon adoption of SFAS 123(R). The impact on the Company's financial statements
was not material.
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Liquidity and Capital Resources
Operating activities consumed $990,000 of cash during the first quarter
of fiscal year 2006 compared to a use of $3.0 million of cash in the
first quarter of the prior year. The decreased cash flow was mainly
attributable to a $3.9 million increase in accounts receivable due to an
increase in work volume during the first quarter of fiscal year 2006 as well
as a slow down in collections. Accounts Payable decreased $494,000 during the
quarter. Accrued payroll costs and other accrued liabilities both contributed
as sources of cash during the first quarter of fiscal year 2006. Accrued
payroll increased $467,000 while other accrued liabilities increased $2.1
million. The Company purchased $93,000 of new capital equipment compared to
depreciation charges of $251,000.
The Company maintains an unsecured line of credit of $20.0 million with a bank
at 1/2% below the prevailing prime rate. A second line of credit is available
at another bank for up to $13.5 million, exclusively for letters of credit.
The Company has outstanding letters of credit (LOC's) at October 29, 2005 in
the amount of $2.3 million. These LOC's were obtained to secure advance
payments and performance guarantees for contracts in the Middle East. After
LOC's, there are no outstanding borrowings under the lines of credit and there
is $31.2 million of line still available at October 29, 2005. There are no
significant additional working capital requirements pending at October 29, 2005.
The Company believes that cash flows from operations and borrowings against the
line of credit will be sufficient to cover all working capital requirements for
at least the next twelve months and the foreseeable future.
Results of Operations
Net Revenue
Fiscal Year 2006 vs 2005
Net revenues for the first quarter of fiscal year 2006 were $20.3 million, up
6% from the $19.2 million reported in fiscal year 2005. The increase in net
revenues was attributable to increased work on projects in the Gulf Coast
associated with the relief efforts for hurricanes Katrina and Rita as well
as an increase in work at one of the Company's subsidiaries, Walsh
Environmental. The Company reported net revenues from these Gulf Coast
contracts of $1.2 million during the first quarter of fiscal year 2006.
Walsh Environmental reported net revenues of $3.6 million during the first
quarter of fiscal year 2006, up 53% from the $2.3 million reported in the
prior year. The increase in Walsh is due to higher revenues from both its
subsidiary in Peru and Gustavson Associates, which was acquired during the
fourth quarter of fiscal year 2004. Net revenues from state clients
increased $851,000 or 20% from the $4.3 million reported in the first
quarter of fiscal year 2005. The increase in state net revenues is
attributable to increased work levels on contracts mainly in Florida and
New York. Net revenues from commercial clients increased $936,000 or 36%
from the $2.6 million reported in the first quarter of fiscal year 2005.
The increase in commercial net revenues is attributable to increased
activity on various LNG contracts. Offsetting these increases were
decreases in net revenues from the contracts in Saudi Arabia and Kuwait.
These contracts in the Middle East decreased $1.3 million or 65% as these
contracts continue to approach completion. The contracts in the Middle East
are substantially finished and range from 93% to 100% complete. Net
revenues decreased $537,000 during the first quarter of fiscal year 2006 due
to the completion of the Company's Superfund Technical Assessment and
Response Team (START) contract in EPA Region III in June 2005. The two
remaining START contracts are scheduled to end in December 2005, although
an extension for up to three additional months has been exercised on one
of the remaining contracts. Both of the remaining START contracts were
rebid in September 2005 and the EPA anticipates award announcements during
E&E's second quarter of fiscal year 2006. The Company closed its Analytical
Services Center in Lancaster, N.Y. during the second quarter of the fiscal
year 2005. As a result, ASC net revenues decreased $885,000 during the first
quarter of fiscal year 2006.
Fiscal Year 2005 vs 2004
Net revenues for the first quarter of fiscal year 2005 were $19.2 million,
down 14% from the $22.3 million reported in the first quarter of fiscal year
2004. Decreased net revenues from the Company's contracts in Saudi Arabia and
Kuwait accounted for the majority of this reduction. Net revenues from those
contracts decreased $5.2 million or 73%. Percentage of completion on these
contracts in the Middle East range from 85% to 94% and it was anticipated that
most of the contracts would be substantially completed by the end of fiscal
year 2005. Net revenues from state clients increased $413,000 or 11% from the
$3.9 million reported in the first quarter of fiscal year 2004. Walsh
Environmental reported net revenues of $2.3 million for the first quarter of
fiscal year 2005, an increase of $407,000 from the $1.9 million reported in
the first quarter of fiscal year 2004. The majority of the increase was due
to the consolidation of Gustavson Associates, acquired by Walsh Environmental
during the fourth quarter of fiscal year 2004. Gustavson Associates reported
net revenues of $373,000 during the first quarter of fiscal year 2005.
Included in the $5.2 million reduction in net revenues from the contracts in
the Middle East, net revenues from the Central Environmental Laboratory (CEL)
operation in Kuwait decreased approximately $600,000 from the prior year.
Income From Continuing Operations Before Income Taxes and Minority Interest
Fiscal Year 2006 vs 2005
The Company's income from continuing operations before income taxes and
minority interest for the first quarter of fiscal year 2006 was $1.4 million,
compared to the $303,000 of income reported in the first quarter of the prior
year. This increase was due mainly to increased labor utilization as well as
decreased indirect costs. Indirect costs decreased $554,000 during the first
quarter of fiscal year 2006 due to the Company's continued efforts to control
costs. The closing of the ASC in the second quarter of fiscal year 2005 also
assisted in the reduction of company wide indirect costs. Walsh Environmental
reported operating income of $542,000 during the first quarter of fiscal year
2006, up 282% from the $142,000 reported in the first quarter of fiscal year
2005.
Fiscal Year 2005 vs 2004
The Company's income from continuing operations before income taxes and
minority interest for the first quarter of fiscal year 2005 was $303,000,
down 78% from the $1.4 million reported in the first quarter of the prior
year. This decrease was mainly attributable to an increase in company-wide
administrative and indirect costs as well as the aforementioned reduction in
net revenues from the contracts in the Middle East. The CEL incurred a loss
of $412,000 in the first quarter of fiscal year 2005. The Company was
negotiating for recovery of these losses. The Company entered into a revised
agreement effective January 1, 2005 to June 30, 2006 including fixed monthly
rates which should compensate the Company for contract losses regardless of
volume shortfalls. Administrative and indirect costs increased $487,000 or
8.5% due to reduced staff utilization and increased costs attributable to the
Company's on-going compliance work in connection with the requirements of the
Sarbanes-Oxley Act. The Company incurred approximately $120,000 in costs
associated with the compliance work for the Sarbanes-Oxley Act during the
first quarter of fiscal year 2005. Marketing and related costs increased
$330,000 or 15% due mainly to increased bid and proposal activity in the
homeland protection and energy development sectors.
The ASC reported an operating loss of $356,000 for the first quarter of
fiscal year 2005 compared to operating loss of $501,000 for the first
quarter of the prior year. The ASC implemented cost reduction efforts
during the fourth quarter of fiscal year 2004 to streamline operating
and indirect expenses. It was estimated that the ASC would reduce costs
by approximately $1.0 million on an annual basis. The Company was looking
at other alternatives to reduce its exposure to future losses in the ASC.
Impairment Losses
In January 2005, the Company recognized a $1.6 million impairment loss as
a result of its decision to close the ASC. At that time, the impairment
of the land and buildings was determined based on the results of an
independent appraisal and the equipment values were determined by equipment
offers the Company had received. The impairment was precipitated by the
Company's decision to close the operation rather than to sustain further
losses while attempting to sell the segment as an on-going business.
Continued losses incurred in this segment as a result of market price
deterioration and a reduced emphasis by the Federal government on
analytical laboratory testing was the basis for this decision. In April
2005, the company recorded an additional impairment loss on its remaining
ASC land and building assets in the amount of $1.2 million. This was
the result of meetings with various commercial brokers that provided the
Company with additional information on current market conditions affecting
the value of the real estate. The reduced valuation is based on the
likelihood that the facility will not be sold to an existing laboratory
or research company, but will rather be sold as combination office and
warehouse space. The testing equipment was sold during the third quarter.
Although all business operations have ceased, the total ASC impairment
losses are shown in the accompanying financial statements as from "continuing
operations" due to the uncertainty that the assets can be sold within one
year under current market conditions.
American Jobs Creation Act of 2004
In October 2004, Congress passed, and the President signed into law, the
American Jobs Creation Act of 2004 (the "Act"). Some key provisions of the
act affecting the Company are the repeal of the United States export tax
incentive known as the extraterritorial income exclusion (EIE) and the
implementation of a domestic manufacturing deduction. The Company is still
assessing the impact of the Act. The EIE is phased out over the calendar
years 2005 and 2006 with an exemption for binding contracts with unrelated
persons entered into before September 18, 2003. These phase-out provisions
will allow the Company to maintain an EIE deduction of an undeterminable
amount through fiscal year 2007. The Company believes that it will accrue
some benefits from the domestic manufacturing deduction, although such
benefits are not expected to be material. The domestic manufacturing
deduction will be phased in over a six-year period beginning with the
Company's fiscal year 2005. The Company is currently evaluating the impact
of the repatriation provisions and expects to complete this evaluation by
the end of the 2006 fiscal year. The dollar amount of possible dividends
being considered ranges from $0 to $400,000 and the related income tax effect
would range from $0 to approximately $80,000.
Recent Accounting Pronouncements
In December 2004, the Financial Accounting Standards Board (FASB) issued its
final standard on accounting for share-based payments (SBP), FASB Statement
No. 123R (revised 2004), Share-Based Payment. The Statement requires
companies to expense the value of employee stock options and similar awards.
Under FAS 123R, SBP awards result in a cost that will be measured at fair
value on the awards' grant date, based on the estimated number of awards that
are expected to vest. Compensation cost for awards that vest would not be
reversed if the awards expire without being exercised. The Company adopted
FAS 123R effective August 1, 2005. The unearned stock compensation balance
of $158,993 as of July 31, 2005, which was accounted for under Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees"
(APB 25), was reclassified into additional paid-in-capital upon adoption of
SFAS 123(R). The impact on the Company's financial statements was not
material.
Critical Accounting Policies and Use of Estimates
Management's discussion and analysis of financial condition and results of
operations discusses the Company's consolidated financial statements, which
have been prepared in accordance with accounting principles generally
accepted in the United State of America. The preparation of these
statements requires management to make estimates and assumptions that affect
the reported amounts of assets, liabilities, revenues and expenses, and
related disclosure of contingent assets and liabilities. On an ongoing basis,
management evaluates its estimates and judgments, including those related to
revenue recognition, allowance for doubtful accounts, inventories, income
taxes, impairment of long-lived assets and contingencies. Management bases
its estimates and judgments on historical experience and on various other
factors that are believed to be reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying
value of assets and liabilities that are not readily apparent from other
sources. Actual results may differ from these estimates under different
assumptions or conditions.
Management believes the following accounting policies involve its more
significant judgments and estimates used in the preparation of its
consolidated financial statements. The Company maintains reserves for
cost disallowances on its cost based contracts as a result of government
audits. The Company recently settled fiscal years 1990 thru 1994 for
amounts within the anticipated range. However, final rates have not been
negotiated under these audits since 1994. The Company has estimated its
exposure based on completed audits, historical experience and discussions
with the government auditors. The Company recorded an impairment loss on
its shrimp farm operation in fiscal year 2003 and on its Analytical Services
Center in fiscal year 2005. An estimate of the fair value of its assets was
made based on external appraisals of the land and buildings and internal
estimates of the realizable value of the equipment. The Company recorded an
impairment loss on its fish farm operations in Jordan in fiscal year 2004.
An impairment was necessary due to the uncertainty that the farm's estimated
future net cash flows would be sufficient to recover the carrying value of
its long-lived assets. If these estimates or their related assumptions
change, the Company may be required to record additional impairment losses
or additional charges for disallowed costs on its government contracts.
Changes in Corporate Entities
On January 8, 2004 the Company entered into an agreement to grant a forty-
eight percent stake in its Brazilian subsidiary, Ecology and Environment do
Brasil, Ltda. (a limited partnership), to three new partners. The new
partners are responsible for the in-country marketing and operations of the
subsidiary. Any previous earnings, assets and liabilities remained with
Ecology and Environment, Inc. The new partners have contributed their
business contacts and staff from their old firm. The Company has provided
an $80,000 capital contribution to move the office operations from Sao Paulo
to Rio de Janeiro. Rio de Janeiro is where the Company believes it will have
a more strategic location to market its target clients. During fiscal year
2005, two of the local partners entered into an agreement to purchase the
other local partner's shares. This purchase is expected to be completed in
fiscal year 2006 and it is not expected to significantly impact the
operations of the Brazilian subsidiary.
During the second quarter of fiscal year 2005, the Company formed three new
subsidiaries as well as a new joint venture. These entities were formed
for the purpose of obtaining future work for the Company in the Middle East,
Russia, and the State of California. The new entities are as follows:
MiddleEast Environmental Consultants, LLC (MEC); E & E International, LLC;
E & E Environmental Services, LLC; and E & E Ward BMS Consulting Association
(Joint Venture). As of October 29, 2005, only MEC was operational.
In June 2005, the Company signed an agreement to sell its 50% ownership in
Beijing YiYi Ecology and Environment Engineering Co., LTD to an existing
partner for $240,000. This transaction resulted in a loss of $72,000 and
was recorded in the accompanying results of operations for fiscal year 2005.
During the fiscal year 2005, members of Walsh Unit Holders LLC exercised
their options to purchase an additional 1,146 shares of Walsh Environmental
Scientists and Engineers, LLC at a cost of $30,360. This caused the E&E,
Inc. ownership percentage in this company to drop by 1.7%. There are no
additional purchase options outstanding as they expired on June 30, 2005.
This caused a reduction in the ownership percentage of E&E, Inc. from 60%
to 58.3%.
Inflation
Inflation has not had a material impact on the Company's business because a
significant amount of the Company's contracts are either cost based or
contain commercial rates for services that are adjusted annually.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company may have exposure to market risk for change in interest rates,
primarily related to its investments. The Company does not have any
derivative financial instruments included in its investments. The Company
invests only in instruments that meet high credit quality standards. The
Company is averse to principal loss and ensures the safety and preservation
of its invested funds by limited default risk, market risk and reinvestment
risk. As of October 29, 2005, the Company's investments consisted of
corporate debt and mutual funds. The Company does not expect any material
loss with respect to its investments.
The Company is currently documenting, evaluating, and testing its internal
controls in order to allow management to report on and attest to, and its
independent public accounting firm to attest to, the Company's internal
controls as of July 31, 2007, as required by Section 404 of the Sarbanes-
Oxley Act. The Company devoted substantial time and expense to this endeavor
during fiscal year 2005 and expects to spend additional management time on
this in fiscal year 2006 and 2007. If weaknesses in our existing
information and control systems are discovered that impede our ability to
satisfy Sarbanes-Oxley reporting requirements, the Company must
successfully and timely implement improvements to those systems. There is
no assurance that the Company will be able to meet these requirements.
Item 4. Controls and Procedures
-----------------------
Company management, with the participation of the chief executive
officer and chief financial officer, evaluated the effectiveness of its
disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) under the Exchange Act) as of October 29, 2005. In designing
and evaluating the Company's disclosure controls and procedures,
management recognized that any controls and procedures, no matter how well
designed and operated, can provide only reasonable assurance of achieving
their objectives, and management necessarily applied its judgment in
evaluating the cost-benefit relationship of possible controls and
procedures. Based on this evaluation, the Company's chief executive
officer and chief financial officer concluded that, as of October 29, 2005,
the Company's disclosure controls and procedures were (1) designed to
ensure that material information relating to the Company, including its
consolidated subsidiaries, is made known to its chief executive officer
and chief financial officer by others within those entities, particularly
during the period in which this report was being prepared and (2)
effective, in that they provide reasonable assurance that information
required to be disclosed by the Company in the reports that the Company
files or submits under the Exchange Act is recorded, processed, summarized
and reported within the time period specified in the SEC's rules and forms.
There have been no significant changes in internal controls over financial
reporting during the period covered by this report.
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
-----------------
Certain contracts contain termination provisions under which the customer
may, without penalty, terminate the contracts upon written notice to the
Company. In the event of termination, the Company would be paid only
termination costs in accordance with the particular contract. Generally,
termination costs include unpaid costs incurred to date, earned fees and
any additional costs directly allocable to the termination.
On or about October 28, 2005 several Plaintiffs filed an action in
District Court in the City and County of Boulder in Colorado, Case No.
05 CV 1008, against three named Defendants, one of which is Walsh
Environmental Scientists & Engineers, LLC (Walsh). Walsh is a majority-owned
subsidiary of the Company. The Company is not named as a Defendant. The
Plaintiffs' Complaint alleges claims of negligence, breach of contract and
trespass for unspecified damages against the Defendants resulting from a forest
fire that ignited from a fallen power line during a wind storm that took place
in Boulder County, Colorado in October 2003. Walsh's legal counsel has
received other communication from the Plaintiffs' attorneys, which indicates
that Plaintiffs may be seeking damages, in the aggregate, in excess of
$17,000,000.00. The Company's liability insurance extends to its subsidiaries.
Walsh believes the claims asserted against it are without merit and intends to
vigorously defend this lawsuit.
The Company is involved in other litigation arising in the normal course
of business. In the opinion of management, any adverse outcome to other
litigation arising in the normal course of business would not have a material
impact on the financial results of the Company.
ITEM 2. Changes in Securities and Use of Proceeds
-----------------------------------------
(e) Purchased Equity Securities. The following table summarizes the
Company's purchases of its common stock during the quarter ended October 29,
2005:
Total
Number
of Shares Maximum Number
Purchased of Shares that
Average as Part of May Yet Be
Total Price Publicly Purchased
Number Paid Announced Under the
of Shares Per Plans or Plans or
Period Purchased Shares Programs (1) Programs
-------------------- --------- ------ ------------ --------------
August 1, 2005
October 1, 2005 --- --- --- 17,034
========= ======= ============= ==============
(1) The Company did not purchase any shares of its Class A common stock during
the first quarter of its fiscal year ended July 31, 2006 pursuant to a 200,000
share repurchase program approved at the October 26, 2000 Board of Directors
meeting. Purchases would be made in open-market transactions.
ITEM 3. Defaults Upon Senior Securities
-------------------------------
The Registrant has no information for Item 3 that is required to be
presented.
ITEM 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
The Registrant has no information for Item 4 that is required to be
presented.
ITEM 5. Other Information
-----------------
The Registrant has no information for Item 5 that is required to be
presented.
ITEM 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) 31.1 Certification of Principal Executive Officer Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.
31.2 Certification of Principal Financial Officer Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.
32.1 Certification of Principal Executive Officer Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
32.2 Certification of Principal Financial Officer Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
(b) Registrant did not file a Form 8-K during the first quarter ended
October 29, 2005.
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ECOLOGY AND ENVIRONMENT, INC.
Dated: December 13, 2005 /s/ RONALD L. FRANK
---------------------------------------
RONALD L. FRANK
EXECUTIVE VICE PRESIDENT, SECRETARY,
TREASURER AND CHIEF FINANCIAL OFFICER -
PRINCIPAL FINANCIAL OFFICER