SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act in 1934
For Quarter Ended April 27, 2002 Commission File #1-9065
ECOLOGY AND ENVIRONMENT, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
New York 16-0971022
---------------------------- ------------------------------------
(State or other jurisdiction (I.R.S. Employer Identification No.)
organization)
368 Pleasant View Drive
Lancaster, New York 14086
----------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: 716-684-8060
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
----- -----
At May 31, 2002, 2,389,035 shares of Registrant's Class A Common Stock
(par value $.01) and 1,689,109 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
April 27, July 31,
2002 2001
(Unaudited)
------------ ------------
Assets
- ------
Current assets:
Cash and cash equivalents $ 9,841,241 $ 7,831,972
Investment securities available for sale 3,818,680 3,705,115
Contract receivables, net 24,214,995 22,686,467
Deferred income taxes 2,112,079 2,178,782
Income taxes receivable 1,014,179 540,952
Other current assets 2,044,989 1,514,960
------------ ------------
Total current assets 43,046,163 38,458,248
Property, building and equipment, net 17,927,059 17,490,485
Deferred income taxes 515,815 515,815
Other assets 1,619,669 1,700,475
------------ ------------
Total assets $63,108,706 $58,165,023
============ ============
Liabilities and Shareholders' Equity
- ------------------------------------
Current liabilities:
Accounts payable $ 3,751,261 $ 5,035,475
Accrued payroll costs 3,778,995 4,040,299
Income taxes payable 1,052,596 1,187,309
Cash advances payable 7,309,000 ---
Other accrued liabilities 2,316,971 3,943,063
------------ ------------
Total current liabilities 18,208,823 14,206,146
Long-term debt 1,133 39,516
Minority interest 1,601,963 869,499
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 - 2,460,521 and 2,414,009 shares 24,604 24,140
Class B common stock, par value $.01 per
share; authorized - 10,000,000 shares
issued - 1,719,368 and 1,756,280 shares 17,195 17,563
Capital in excess of par value 17,599,356 17,436,204
Retained earnings 26,831,546 26,540,891
Unearned compensation (443,475) (343,513)
Treasury stock - Class A Common, 79,754 and
75,444 shares; Class B common, 26,259
and 26,259 shares, at cost (732,439) (625,423)
------------ ------------
Total shareholders' equity 43,296,787 43,049,862
------------ ------------
Total liabilities and shareholders' equity $63,108,706 $58,165,023
============ ============
The accompanying notes are an integral part of these financial statements.
Ecology and Environment, Inc.
Consolidate Statement of Income
(Unaudited)
Three months ended Nine months ended
-------------------------- ---------------------------
April 27, April 28, April 27, April 28,
2002 2001 2002 2001
------------ ------------- ------------ ------------
Gross revenues $21,852,146 $19,884,185 $63,990,840 $66,093,102
Less: direct subcontract costs 3,557,228 2,876,606 10,918,518 10,715,410
------------ ------------ ------------ ------------
Net revenues 18,294,918 17,007,579 53,072,322 55,377,692
Operating costs and expenses:
Cost of professional services and
other direct operating expenses 9,814,567 8,322,903 28,092,352 29,444,258
Administrative and indirect operating
expenses 5,274,194 5,898,934 15,883,510 16,897,218
Marketing and related costs 2,149,379 1,848,314 6,136,105 5,581,193
Depreciation 318,661 283,288 1,030,080 925,753
------------ ------------ ------------ ------------
Total operating costs & expenses 17,556,801 16,353,439 51,142,047 52,848,422
------------ ------------ ------------ ------------
Income from operations 738,117 654,140 1,930,275 2,529,270
Interest expense (20,893) (24,378) (26,215) (108,394)
Interest income 70,545 97,576 243,445 388,826
Other income (expense) (7,551) --- (156,027) ---
Net foreign currency exchange loss --- (5,007) --- (8,944)
------------ ------------ ------------ ------------
Income before income taxes and minority interest 780,218 722,331 1,991,478 2,800,758
Total income tax provision 284,856 361,895 831,512 1,166,872
------------ ------------ ------------ ------------
Net income before minority interest 495,362 360,436 1,159,966 1,633,886
Minority interest (95,516) (115,720) (206,369) (342,726)
============ ============ ============ ============
Net income $ 399,846 $ 244,716 $ 953,597 $ 1,291,160
============ ============ ============ ============
Net income per common share: Basic and Diluted $ 0.10 $ 0.06 $ 0.23 $ 0.31
============ ============ ============ ============
Weighted average common shares outstanding:
Basic 4,076,849 4,103,673 4,068,712 4,105,634
============ ============ ============ ============
Diluted 4,079,383 4,103,673 4,071,246 4,105,634
============ ============ ============ ============
The accompanying notes are an integral part of these financial statements.
Ecology and Environment, Inc.
Consolidated Statement of Cash Flows
(Unaudited)
Nine Months Ended
------------------------------
April 27, April 27,
2002 2001
------------ ------------
Cash flows from operating activities:
Net income $ 953,597 $ 1,291,160
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation 1,030,080 925,753
Amortization 196,101 105,834
Gain on disposition of property and equipment 1,250 4,600
Minority interest 1,192,923 342,726
Provision for contract adjustments 381,530 381,530
(Increase) decrease in:
- contracts receivable, net (1,910,058) 2,276,117
- other current assets (530,029) 208,716
- income taxes receivable (406,524) (341,688)
- other non-current assets (163,653) (51,884)
Increase (decrease) in:
- accounts payable (1,284,214) (1,060,884)
- accrued payroll costs (261,304) (85,424)
- cash advances payable 7,309,000 ---
- other accrued liabilities (1,626,092) (992,172)
- income taxes payable (134,713) 378,402
----------- -----------
Net cash provided by operating activities 4,747,894 3,382,786
----------- -----------
Cash flows used in investing activities:
Acquisitions (216,000) ---
Purchase of property, building and equipment, net (1,362,031) (1,694,644)
Payment for the purchase of bond (113,565) (112,165)
----------- -----------
Net cash used in investing activities (1,691,596) (1,806,809)
----------- -----------
Cash flows used in financing activities:
Dividends paid (662,942) (657,111)
Repayment of long-term debt (38,383) (7,907)
Net proceeds from issuance of common stock 70,300 ---
Purchase of treasury stock (416,004) ---
----------- -----------
Net cash used in financing activities (1,047,029) (665,018)
----------- ------------
Net increase in cash and cash equivalents 2,009,269 910,959
Cash and cash equivalents at beginning of period 7,831,972 4,997,771
----------- -----------
Cash and cash equivalents at end of period $9,841,241 $5,908,730
=========== ===========
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 Treasury stock
------------------ ------------------- Excess of Retained Unearned -----------------------
Shares Amount Shares Amount Par Value Earnings Compensation Shares Amount
------------------ ------------------- ------------ ------------ ------------ --------- -------------
Balance at July 31, 1999 2,375,302 $23,753 1,794,987 $17,946 $17,591,436 $26,412,508 --- 203,319 $(1,504,079)
========= ======= ========= ======= =========== =========== ============ ========= ============
Net income --- $ --- --- $ --- $ --- $ 779,016 --- --- $ ---
Cash dividends paid
($.32 per share) --- --- --- --- --- (1,276,958) --- --- ---
Unrealized investment
loss, net --- --- --- --- --- (8,026) --- --- ---
Conversion of Class B
common stock to Class A
common stock 17,407 174 (17,407) (174) --- --- --- --- ---
Repurchase of Class A
common stock --- --- --- --- --- --- --- 2,350 ---
Purchase of Walsh
Environmental --- --- --- --- (125,000) --- --- (50,000) 425,000
--------- ------- ---------- -------- ------------ ------------ ------------ --------- ------------
Balance at July 31, 2000 2,392,709 $23,927 1,777,580 $17,772 $17,466,436 $25,906,540 --- 155,669 $(1,079,079)
========= ======= ========= ======= =========== =========== ============ ========= ============
Net income --- $ --- --- $ --- $ --- $ 1,895,291 --- --- $ ---
Cash dividends paid
($.32 per share) --- --- --- --- --- (1,312,759) --- --- ---
Unrealized investment
loss, net --- --- --- --- --- 71,779 --- --- ---
GAC Dividends --- --- --- --- --- (19,960) --- --- ---
Conversion of Class B
common stock to Class A
common stock 21,300 213 (21,300) (209) --- --- --- --- ---
Repurchase of Class A
common stock --- --- --- --- --- --- --- 28,366 (216,391)
Issuance of stock under
stock award plan --- --- --- --- (51,063) --- (570,333) (82,332) 746,941
Amortization --- --- --- --- --- --- 190,000 --- ---
Forfeitures --- --- --- --- 20,831 --- 36,820 --- (76,894)
--------- ------- ---------- -------- ------------ ------------ ------------ --------- ------------
Balance at July 31, 2001 2,414,009 $24,140 1,756,280 $17,563 $17,436,204 $26,540,891 $ (343,513) 101,703 $ (625,423)
========= ======= ========== ======== ============ ============ ============ ========= ============
Net income --- $ --- --- $ --- $ --- $ 953,597 --- --- $ ---
Cash dividends paid
($.16 per share) --- --- --- --- --- (662,942) --- --- ---
Conversion of Class B
common stock to Class A
common stock 36,912 368 (36,912) (368) --- --- --- --- ---
Repurchase of Class A
common stock --- --- --- --- --- --- --- 50,284 (416,004)
Stock options 9,600 96 --- --- 70,204 --- --- --- ---
Issuance of stock under
award plan --- --- --- --- 92,948 --- (296,063) (50,242) 308,988
Amortization --- --- --- --- --- --- 196,101 --- ---
Forfeitures --- --- --- --- --- --- --- --- ---
--------- ------- ---------- -------- ------------ ------------ ------------ --------- ------------
Balance at April 27, 2002 2,460,521 $24,604 1,719,368 $17,195 $17,599,356 $26,831,546 $ (443,475) 101,745 $ (732,439)
========= ======= ========== ======== ============ ============ ============ ========= ============
The accompanying notes are an integral part of these financial statements.
ECOLOGY AND ENVIRONMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 are the 50% ownership in two
Chinese operating joint ventures, Beijing Yi Yi Ecology and
Engineering Co. Ltd. and The Tianjin Green Engineering Company.
These joint ventures are accounted for under the equity method. All
significant intercompany transactions and balances have been
eliminated. Certain amounts in the prior years' consolidated
financial statements have been reclassified to conform with the
current year presentation. The consolidated balance sheet at April 27,
2002 and the accompanying consolidated statements of income, cash
flows, and of changes in shareholders' equity are unaudited. In the
opinion of management, all adjustments necessary for a fair presentation
of such financial statements have been included. Such adjustments
consisted only of normal recurring items. The accompanying financial
statements should be reviewed in conjunction with the Company's fiscal
year ended July 31, 2001 audited financial statements.
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 reported amounts of
assets and liabilities and disclosures of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reported
period. Actual results could differ from those estimates.
c. Revenue Recognition
-------------------
Certain amounts of the Company's revenues are derived from
cost-plus-fixed fee contracts using the percentage of completion
method based on costs incurred plus the fee earned. The fees under
certain government contracts are determined in accordance with
performance. Such awards are recognized at the time the amounts
can be reasonably determined. Fixed price contracts are also
accounted for on the percentage of completion method. Provisions
for estimated contract adjustments relating to cost based contracts
have been deducted from gross revenues in the accompanying consolidated
statement of income. These provisions are estimated and accrued
annually based on goverment sales volume. Such adjustments typically
arise as a result of interpretations of cost allowability under cost
based contracts.
Revenues related to long-term government contracts are subject to
audit by an agency of the United States government. Government
audits have been completed through fiscal year 1993 and are
currently in process for fiscal years 1994 through 2000. The
majority of the balance in the allowance for contract adjustments
accounts represents a reserve against possible adjustments for
fiscal years 1992 through 2001.
The Company adopted Staff Accounting Bulletin No. 101, "Revenue
Recognition in Financial Statements" (SAB101") in the fourth quarter
of fiscal year 2001. The adoption of SAB101 did not have a material
impact on the Company's operating results or financial position.
d. 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.
e. Reclassification
----------------
Certain prior year balances have been reclassified to conform to
the current quarter presentation.
2. Contract Receivables, Net
-------------------------
Contract receivables are comprised of:
April 27, July 31,
2002 2001
------------ ------------
United States government
Billed $ 2,981,679 $ 5,011,673
Unbilled 1,288,144 1,187,218
------------ ------------
4,269,823 6,198,891
------------ ------------
Industrial customers and state
and municipal governments
Billed 17,460,572 13,991,415
Unbilled 5,013,052 4,732,568
------------ ------------
22,473,624 18,723,983
------------ ------------
Less allowance for contract
adjustments (2,528,452) (2,236,407)
------------ ------------
$24,214,995 $22,686,467
============ ============
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 $10,679 at April 27, 2002 and $325,000 at
July 31, 2001. Unbilled contracts receivable are reduced by billings
in excess of costs incurred of $3,401,000 at April 27, 2002 and
$2,548,000 at July 31, 2001. Within the above billed balances are
contractual retainages in the amount of approximately $666,888 at
April 27, 2002 and $773,000 at July 31, 2001. Included in other
accrued liabilities is an additional allowance for contract adjust-
ments relating to potential cost disallowances on amounts billed and
collected in current and prior years' projects of aproximately
$2,254,000 at April 27, 2002 and $2,031,000 at July 31, 2001. An
allowance for contract adjustments is recorded for contract disputes
and government audits when the amounts are determinable.
3. 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.
4. 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 infrastruc-
ture 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 shrimp aquaculture
facility, located in Costa Rica, produces shrimp grown in a controlled
environment for markets worldwide. The fish farm located in Jordan was
purchased in July 2001 and ponds are currently being stocked and awaiting
the first harvests.
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 segment data for the nine months ended April 27, 2002 are as
follows:
Consulting Analytical Aquaculture Elimination Total
----------- ----------- ------------ ------------- ------------
Net revenues from external customers $49,038,965 $3,141,819 $ 891,538 $ --- $53,072,322
Intersegment net revenues 1,901,975 --- --- (1,901,975) ---
----------- ----------- ------------ ------------ ------------
Total consolidated net revenues $50,940,940 $3,141,819 $ 891,538 $(1,901,975) $53,072,322
=========== =========== ============ ============ ============
Depreciation expense $ 579,179 $ 312,939 $ 137,962 $ --- $ 1,030,080
Segment profit (loss) 4,208,911 (694,981) (1,522,452) --- 1,991,478
Segment assets 47,798,706 6,865,000 8,445,000 --- 63,108,706
Expenditures for long-lived assets 650,795 483,286 533,118 --- 1,667,199
Geographic Information:
Net Long-lived
Revenues (1) Assets
------------- ------------
United States $41,414,322 $23,391,285
Foreign countries 11,658,000 6,982,000
(1) Net revenues are attributed to countries based on the location of the
customers.
Reportable segment data for the nine months ended April 28, 2001 are as
follows:
Consulting Analytical Aquaculture Elimination Total
----------- ----------- ----------- ------------ -----------
Net revenues from external customers $52,528,453 $2,832,760 $ 16,479 $ --- $55,377,692
Intersegment revenues 1,507,068 --- --- (1,507,068) ---
----------- ----------- ----------- ------------ -----------
Total consolidated net revenues $54,035,521 $2,832,760 $ 16,479 $(1,507,068) $55,377,692
=========== =========== =========== ============ ===========
Depreciation expense $ 616,431 $ 267,803 $ 41,519 $ --- $ 925,753
Segment profit (loss) 4,221,012 (626,880) (793,374) --- 2,800,758
Segment Assets 39,977,488 6,660,000 6,126,000 --- 52,763,488
Expenditures for long-lived assets 521,821 192,653 1,074,159 --- 1,788,633
Geographic Information:
Net Long-lived
Revenues (1) Assets
------------ ------------
United States $48,988,692 $35,716,023
Foreign countries $6,389,000 $5,355,000
(1) Net revenues are attributed to countries based on the location of the
customers.
5. Acquisitions
------------
On July 26, 2001, the Company purchased an interest in a fish farm
located in Jordan. The farm currently maintains five different species
as brood stock, including tilapia and carp. The assets were purchased
for approximately $513,000 by a newly formed entity, AMARACO, of which
EEI owns 51%. The farm is located on the banks of the Jordan river, 120
kilometers north of Amman. The farm was not operating at the time of the
asset purchase. The farm is currently in production and is awaiting its
first harvest.
This acquisition has been accounted for under the purchase method
with the results of its operations consolidated with the Company's
results of operations from the acquisition date.
In July 2001, the FASB issued SFAS No. 141, Business Combinations, and
SFAS No. 142, Goodwill and Other Intangible Assets. Statement No. 141
requires that all business combinations initiated after June 30, 2001,
be accounted for using the purchase method of accounting. Statement No.
142 discusses how intangible assets that are acquired should be accounted
for in financial statements upon their acquisition and also how goodwill
and other intangible assets should be accounted for after they have
been initially recognized in the financial statements. Beginning on
August 1, 2001 with the adoption of Statement No. 142, goodwill existing
on July 31, 2001, is no longer being amortized. Rather the goodwill is
subject to an annual assessment for impairment. The adoption of SFAS No.
142 did not have a material impact on the Company's financial statements,
as presented below:
For the quarter ended
-----------------------------------
April 27, 2002 April 28, 2001
---------------- ----------------
Reported net income $399,846 $244,716
Add back: goodwill amortization --- 10,770
-------- --------
Adjusted net income $399,846 $255,486
Basic and diluted earnings per share:
Reported earnings per share $.10 $.060
Goodwill amortization --- .003
-------- --------
Adjusted earning per share $.10 $.063
For nine months ended
-----------------------------------
April 27, 2002 April 28, 2001
---------------- ----------------
Reported net income $953,597 $1,291,160
Add back: goodwill amortization --- 32,310
-------- ----------
Adjusted net income $953,597 $1,323,470
Basic and diluted earnings per share:
Reported earnings per share $.23 $.314
Goodwill amortization --- .008
-------- --------
Adjusted earning per share $.23 $.322
6. Stock Award Plan
----------------
Effective March 16, 1998, the Company adopted the Ecology and
Environment, Inc. 1998 Stock Award Plan (the "Award Plan") under
which key employees (including officers) of the Company or any of
its present or future subsidiaries may be designated to receive
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 common
stock at the time of the award.
In the first quarter of fiscal year 2001, the Company issued 92,339
shares at an average fair value of $6.19 per share. The Company issued
50,242 shares at an average fair value of $6.15 per share during the
second quarter of fiscal year 2002.
The Company estimates that if they elected to measure compensation
cost for employee stock based compensation arrangements under SFAS
No. 123 it would not have caused net income and earnings per share
for the third quarters of fiscal years 2002 and 2001 to be materially
different from their reported amounts.
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Financial Condition
- -------------------
At April 27, 2002 the Company had a working capital balance of $24.8 million,
a $.6 million increase from the balance at July 31, 2001. Cash and cash
equivalents increased $2.0 million as a result of a $1.5 million increase in
contracts receivable, a $1.2 million decrease in accounts payable, and a $5.7
million increase in other accrued liabilities. The changes were mainly
attributable to advances received on the new contracts with the Presidency for
Meteorology and Environmental (PME) and Public Authority for Assessment of
Compensation (PAAC). The PME contract was signed by the Company on October 30,
2001 through its majority owned subsidiary in Saudi Arabia. The value of this
contract was $24.4 million and covers a thirty-month period. The PAAC contract
was signed through the Company's Consortium of International Consultants (CIC)
on January 14, 2002 and is for work in Kuwait. This contract has a $75 million
value ($50 million net after subcontracts).
The Company maintains an unsecured line of credit available for working capital
and letters of credit of $20.0 million with a bank at 1/2 percent below the
prevailing prime rate. A second line of credit has been established at another
bank for up to $12.0 million, exclusively for letters of credit. There are no
working capital borrowings outstanding under these lines of credit at April 27,
2002 and none were required during the third quarter of fiscal year 2002.
However, the Company has outstanding letters of credit (LOC's) at April 27,
2002 in the amount of $14.4 million. These LOC's were obtained to secure bid
bonds, advance payments, and performance guarantees for contracts in the Middle
East. The Company has historically financed its activities through cash flows
from operations. Internally generated funds have been adequate to support the
demands for working capital, the purchase of new fixed assets and investment
securities and the payment of dividends. There are no significant working
capital requirements pending at April 27, 2002.
Results of Operations
- ---------------------
Net Revenue
- -----------
Net revenues for the third quarter of fiscal year 2002 were $18.3 million, up
$1.3 million from the $17.0 million reported in fiscal year 2001. During the
third quarter the PME and PAAC contracts reported net revenues of $3.1 million
and $1.0 million respectively. The company also reported an increase in net
revenues from various state clients for the seventh quarter in a row. Compared
to the prior year, revenues for the third quarter increased by $1.5 million for
these state clients. Net revenues from the U.S. Environmental Protection
Agency(USEPA) for the third quarter of fiscal year 2002 were $3.0 million, down
$1.3 million from the $4.3 million reported in fiscal year 2001. This decrease
was primarily due to the completion of five major contracts with the U.S.
Environmental Protection Agency (USEPA). Net revenues for the USEPA have
remained steady throughout fiscal year 2002. Ecology and Environment do Brasil
has continued to be affected by a decrease in work during the third quarter of
2002 and reported a decrease in net revenues of approximately $200,000 from the
prior year.
The Shrimp Farm operation, based in Costa Rica, reported net revenues of
$400,000 for the third quarter of fiscal year 2002 and $892,000 year to date.
Limited harvests have been successful as the operation continues its efforts to
completely restock the ponds and fully recover from the white spot syndrome
virus.
Net revenues for the third quarter of fiscal year 2001 were $17.0 million,
down 2% from the $17.3 million reported in fiscal year 2000. This decrease
was primarily due to the completion of five major contracts with the USEPA.
Offsetting this decrease in work from the USEPA was increased revenues from
the Company's international clients and the United States Department of
Defense (DOD). In particular, the Company experienced a 122% increase in net
revenues from various international clients and a 41% increase from DOD
clients.
Income Before Income Taxes and Minority Interest
- ------------------------------------------------
The Company's income before income taxes and minority interest for the third
quarter of fiscal year 2002 was $780,000, up 8% from the $722,000 reported in
the third quarter of fiscal year 2001. The Company's subsidiaries reported an
increase in international work during the third quarter of fiscal year 2002.
The new contracts in Saudi Arabia and Kuwait were the main reason for this
increase.
The shrimp farm operation, based in Costa Rica, reported an operating loss of
$481,000 for the third quarter of fiscal year 2002, an increased loss of
$226,000 from the prior year. A new farm manager has been added to the
management team and will assist the existing staff in their efforts to
increase efficiencies and meet planned production schedules.
The Company's income before income taxes and minority interest for the third
quarter of fiscal year 2001 was $722,000, up 138% from the $304,000 reported
in the third quarter of fiscal year 2000. Company-wide cost reduction
measures increased both margins and efficiencies throughout the Company.
The Company overall achieved significantly improved results for the first
three quarters of the year despite a net loss of $524,000 from its Costa
Rica based shrimp farm subsidiary. Walsh Environmental and E&E do Brasil,
two of the Company's subsidiaries, also had a positive impact on net income.
For fiscal year 2001, their income before income taxes and minority interest
was $492,000 and $396,000 respectively, compared to $0 and $41,000 for fiscal
year 2000.
PART II - OTHER INFORMATION
---------------------------
None.
SIGNATURE
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Pursuant to the requirements of the Securities Exchange Act of l934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
ECOLOGY AND ENVIRONMENT, INC.
Date: June 11, 2002 By: RONALD L. FRANK
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RONALD L. FRANK
EXECUTIVE VICE PRESIDENT -
CHIEF FINANCIAL OFFICER
(PRINCIPAL FINANCIAL
ACCOUNTING OFFICER)