UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K

(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]

For the fiscal year ended December 31, 1995 OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

Commission file number 0-16225
EMCON
(Exact name of Registrant as specified in its charter)

California 94-1738964
(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification No.

400 South El Camino Real
Suite 1200
San Mateo, California 94402
(Address, of principal executive offices) (Zip Code)

Registrant's telephone number, including area code (415) 375-1522

Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
------------------- ---------------------
None None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock
(Title of Class)

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 if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statement
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

The aggregate market value of the voting stock of the Registrant held by
non-affiliates of the Registrant, based on the closing price of the Registrant's
Common Stock as quoted by the National Association of Securities Dealers'
Automated Quotation System on February 29, 1996, was $31,449,818. Shares of
Common Stock held by each officer and director and by each person who owns 5% or
more of the outstanding Common Stock have been excluded in that such persons may
be deemed to be affiliates. This determination of affiliate status is not
necessarily a conclusive determination for other purposes.

The number of shares of the Registrant's Common Stock outstanding as of
February 29, 1996, was 8,480,158.

DOCUMENTS INCORPORATED BY REFERENCE

Parts of the Registrant's definitive proxy statement to be filed with the
Commission within 120 days of the end of Registrant's fiscal year ended December
31, 1995 are incorporated by reference in Part III of this Form 10-K.

The Index to Exhibits appears on pages 39 of this Report. This Report,
including all exhibits and attachments, contains 58 pages.

TABLE OF CONTENTS

PART I PAGE
-----
Item 1: Business.................................................. 4

Item 2: Properties................................................. 10

Item 3: Legal Proceedings.......................................... 11

Item 4: Submission of Matters to a Vote of Security Holders........ 11

PART II
Item 5: Market for the Registrant's Common Equity and Related
Stockholder Matters....................................... 12

Item 6: Selected FinancialData..................................... 13

Item 7: Management's Discussion and Analysis of Financial
Condition and Results of Operations....................... 13

Item 8: Financial Statements and Supplementary Data................ 18

Item 9: Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure....................... 35

PART III
Item 10: Directors and Executive Officers of the Registrant......... 35

Item 11: Executive Compensation..................................... 35

Item 12: Security Ownership of Certain Beneficial Owners and
Management................................................ 35

Item 13: Certain Relationships and Related Transactions............. 35

PART IV
Item 14: Exhibits, Financial Statement Schedules, and Reports
on Form 8-K............................................... 36

Signatures................................................. 37

PART I

ITEM 1. BUSINESS

EMCON (referred to herein as "EMCON" and the "Company") provides
comprehensive environmental engineering, construction, and consulting services
to a variety of public and private clients. EMCON is a leader in the design and
remediation of solid and hazardous waste transfer, storage and disposal
facilities, having participated in the design and remediation of several hundred
such facilities in the United States, as well as Argentina, Canada, Hong Kong,
Mexico, Peru and Venezuela. EMCON's waste facility services include site
selection and evaluation, facility design, development of preprocessing and
operating plans, assistance in regulatory compliance and permitting, final
closure, and end-use planning and design. The Company's services also include
the development of programs dealing with environmental assessments and
remediation of contaminated sites, as well as services related to applied
sciences such as fuel spill damage assessment, marine fate-and-effect studies
and natural resource damage assessment. The Company also operates a
full-service, integrated network of analytical laboratories in Alaska, Arizona,
California, Florida and Washington. The Company's professional staff includes
chemical, civil, geotechnical, mechanical, electrical and environmental
engineers; marine and terrestrial biologists; oceanographers; plant ecologists;
chemists; geologists; hydrogeologists; hydrologists and toxicologists.
References to the Company and EMCON in this report include the Company's
wholly-owned subsidiaries, unless the context indicates otherwise.

On February 29, 1996, EMCON acquired all the outstanding capital stock of
Organic Waste Technologies, Inc. ("OWT"), a Cleveland-based construction,
equipment and operations and maintenance company with significant expertise in
solid waste management. The Company purchased OWT for $13,754,351 in cash plus
the issuance of convertible notes held by certain senior OWT management in the
principal amount of $1,824,649. The notes bear interest at the rate of 8% per
annum with all principal due and payable in full on March 1, 2001. The notes may
be converted into shares of OWT common stock upon an underwritten public
offering of OWT's common stock in an amount in excess of $10,000,000. In the
event the notes have not been converted into OWT shares they may instead be
converted into shares of EMCON common stock for a period of ninety days after
November 30, 2000, at a conversion price of $6.50 per share.

In conjunction with the acquisition of OWT, the Company entered into a
$20,000,000 secured credit agreement with its existing commercial bank,
replacing its previous $10,000,000 unsecured line of credit. Under the new
agreement, the Company borrowed $10,000,000 on a term loan basis with an
interest rate not to exceed the prime rate. Principal is to be amortized over
seven years, but with any unpaid amount finally due and payable on June 30,
2001. The remaining $10,000,000 under the credit agreement is available on a
line of credit basis for working capital purposes (with up to $5,000,000 also
being available for non-working capital purposes).

SERVICES

WASTE FACILITY SERVICES

The Company offers a full range of services to operators of solid and
hazardous waste transfer, storage, recycling, and disposal facilities, from the
design of the facility to post-closure, operations and maintenance, and end-use
planning. Customers may utilize the full range or a portion of the Company's
services.

Through its extensive experience in disposal site design, the Company has
developed expertise in three critical areas of waste disposal technology - liner
systems, leachate treatment, and gas control/recovery systems. To protect
surrounding soil and water, natural and synthetic liners are used to collect and
contain potentially hazardous liquids percolating through the waste
("leachate"). Leachate is then collected on the surface of the liner, withdrawn
from the landfill and treated using physical, chemical, evaporative and/or
biological methods. Gas control and recovery systems, which may be installed on
active or closed landfills, are used to control the methane gas produced by
decomposing organic refuse. Where economical, recovery systems are designed to
extract methane to generate heat and/or electricity, or in some cases to
evaporate leachate, using the Company's patented processes. Federal regulation
now requires that all new land disposal facilities utilize liners and methane
control systems, and that these systems be required to meet increasingly
stringent design standards.

EMCON's services to its clients often begin with the evaluation of
potential disposal facility sites. The Company's hydrogeological and
geotechnical staff evaluate soils, groundwater occurrence and quality, seismic
stability and potential flooding at possible locations, while other EMCON
professionals analyze operational considerations, such as proximity of a site to
water sources, visibility to the public and estimated operating expenses. Once
desirable sites are identified, the Company assists in obtaining regulatory
approvals by drafting environmental impact reports and permit applications,
appearing at hearings and negotiating with government agencies.

EMCON performs detailed cost/benefit analyses of design alternatives,
using, if possible, natural features of the site to reduce cost. EMCON engineers
design the solid or hazardous waste disposal facility, considering such factors
as the volume and types of material to be disposed at the site, land use and
public policy, physical characteristics of the site and regulatory requirements.
EMCON identifies the type of natural or synthetic liners which are appropriate
or required for the site and designs the monitoring systems, landfill gas
control systems and leachate recovery and treatment systems. EMCON is also
actively involved in the design of waste transfer stations and materials
recovery facilities.

Throughout the construction process, EMCON performs services such as
preparing detailed construction documents, assisting in contractor selection,
scheduling and monitoring work in progress, performing construction quality
assurance review, review of contractor requests for payment and assisting with
regulatory compliance and permitting. EMCON also trains disposal facility
personnel, performs environmental monitoring services, and designs site
maintenance programs and operating plans.

EMCON continues to provide on-going services while a disposal facility is
being operated. Modification to access roads, soil cover, fill sequences, liners
and monitoring devices may be required because contours of a disposal facility
change as additional waste is deposited. EMCON also monitors statutory and
regulatory developments, and assists operators in implementing required design
or operating changes and preparing additional permit applications and
environmental reports.

Disposal sites, once considered marginal lands following closure, are
increasingly being put to recreational, commercial and industrial uses. EMCON
designs closure and post-closure plans to minimize the risk of contamination to
the surrounding environment and to optimize end-use of the site.

ASSESSMENT AND REMEDIATION SERVICES

EMCON's environmental expertise incorporates analytical and
risk-assessment capabilities enabling remediation specialists to design
site-specific solutions to environmental compliance and contamination problems.
The Company is often called upon to design and monitor remediation plans when
corrective action is required at solid or hazardous waste storage or disposal
facilities, industrial plant sites and facilities with underground storage
tanks. Problems which may require remediation include leaching of hazardous
chemicals or wastes into groundwater, ground instability or erosion, flooding
and migration of landfill gas. Work generally entails site reconnaissance,
drilling exploratory borings, soil and groundwater sampling, and laboratory
testing as part of the assessment program. Using data collected in the
assessment phase of a project, EMCON then defines the nature and extent of the
problem, develops a remediation program and monitors its implementation.

The Company generally approaches such projects by consulting with the
client on the nature and scope of the problem. Historical information about the
site, if available, is reviewed to determine the most likely sources and
locations of contamination. Information about the local geology and hydrogeology
is also reviewed to determine potential migration pathways. A detailed work plan
is then prepared that describes the field investigation program to be conducted,
including the number and location of samples to be collected and the specific
chemical analyses to be performed. Trained Company personnel then conduct the
field investigation program, which may include drilling soil borings, installing
groundwater monitoring wells, and collecting samples of soil, groundwater,
surface water and/or industrial discharges.

Following laboratory analysis of the various samples collected, the
results are evaluated by Company engineers and scientists to determine the
nature and extent of contamination at the site. Depending on the complexity of
the site, this may require more than one round of sampling. Site cleanup levels
are then determined based on the media that have been impacted, the contaminants
of concern, the intended use of the property, and state and federal regulations.
In consultation with the client, various remediation alternatives are then
identified and evaluated for implementability, effectiveness, permanence and
cost. Remedial alternatives at a site may include the excavation and removal of
the sources of contamination and contaminated soil, the removal and treatment of
groundwater using physical and chemical treatment systems, or the installation
of surface caps and vertical hydraulic barriers. EMCON also applies in-situ
technologies, such as vapor extraction or bioremediation as appropriate, to
remediate contaminated soils and ground-water as a means to reduce cost and
minimize disturbance. To assure continued compliance during and after
remediation, EMCON designs and provides operations and maintenance (O&M)
programs for affected facilities.

EMCON also offers responsive assistance to the regulated community in the
areas of air quality regulatory compliance through provision of air quality
assessment and engineering services. Company personnel have direct experience in
air quality permitting under the New Source Review (NSR), Prevention of
Significant Deterioration (PSD) and added requirements under the Clean Air Act
Amendments of 1990, preparing emission inventories (for criteria and toxic air
pollutants), performing risk assessment to evaluate potential human and
ecological risk, evaluating emission control technologies (BACT/RACT/LAER/MACT),
dispersion modeling, ambient air quality and meteorological measurements,
pollution prevention and waste minimization, indoor air, litigation support and
expert testimony, and compliance audits. EMCON's air quality staff are fully
integrated with staff in other environmental disciplines to provide cost
effective evaluations and compliance solutions to situations which involve
multiple media contamination.

CONSTRUCTION AND OPERATION SERVICES

During 1995, the Company formed a new operating division, EOC Corporation
("EOC"), to pursue construction, field services, operations and maintenance, and
technology development. EOC combined, under common management, many of the
nontraditional services that had been performed in various places throughout the
Company. Targeted markets include construction, operations and maintenance of
solid and hazardous waste, disposal and transfer facilities, including
construction of landfill cells, landfill remediation and collection systems and
the capping, closure, and long term operation and maintenance of old landfills.
EOC is complimented by ET Environmental Corporation ("ET), a 50/50 joint venture
between EMCON and The Turner Construction Company ("Turner"). ET's charter is to
provide environmental, remedial and construction services on a national basis,
utilizing the regional resources of EMCON and Turner. Target markets include the
design and construction of environmental facilities such as solid waste transfer
stations, recycling facilities, and materials recovery facilities; the planning
and implementation of facility/plant decommissioning; remediation of soil and
groundwater contamination; and lead-based paint and asbestos abatement.

APPLIED SCIENCE SERVICES

EMCON employs specially trained staff in the following disciplines to
provide applied science expertise to projects: marine and terrestrial
biologists, plant ecologists, geologists and hydrogeologists, as well as
regulatory specialists. Typical projects performed by these highly skilled
individuals include oil spill damage assessments incorporating field
investigations of surface and submarine oil distribution; marine fate-and-effect
studies; monitoring cleanup effectiveness and impacts; and fishery studies to
determine the level of contamination of commercially caught fish and shellfish.
In addition, EMCON provides OSHA required environmental health and safety
training to its clients and other EMCON subsidiaries. The Company also provides
services related to clean-up decisions and legal settlements under Superfund's
Natural Resource Damage Assessment ("NRDA") provisions.

ANALYTICAL LABORATORY SERVICES

Columbia Analytical Services, Inc. (CAS) is EMCON's wholly-owned
laboratory subsidiary, providing a broad spectrum of analytical services for its
clients in industry and government. Industrial accounts include aerospace,
defense, electronics, petroleum, pulp and paper, and waste disposal. CAS is
comprised of a network of analytical laboratories headquartered in Kelso,
Washington, with branches in Anchorage, Alaska; Phoenix, Arizona; Canoga Park
and San Jose, California; Jacksonville, Florida; and Bothell, Washington. CAS
also operates a number of mobile laboratories. With a highly qualified staff, a
rigorous quality assurance program, and state-of-the-art analytical testing
equipment, CAS implements a rigorous quality assurance program, which with its
state-of-the-art equipment, permits the provision of timely cost-effective
services tailored to the individual needs of its clients. Approximately 25% of
CAS revenues are internally generated from within EMCON's consulting operations.

In addition to participation in the US EPA Water Pollution and Water
Supply programs, CAS performs work for the Department of Defense under programs
sponsored by the U.S. Army Corps of Engineers and the U.S. Navy. CAS currently
holds or has pending certifications/accreditations in a number of states
including Alaska, Arizona, California, Florida, Idaho, Massachusetts, New York,
Oregon, Utah and Washington. Other accreditations include the American
Association of Laboratory Accreditations (A2LA) and the American Industrial
Hygiene Associations (AIHA).

CLIENTS AND MARKETING

EMCON's principal clients are industrial concerns, predominantly in the
waste disposal, petroleum, wood products, chemicals and manufacturing
industries. The Company also provides services to utilities, non-regulatory
government entities, and financial institutions. No single client accounts for
10% or more of the Company's net revenue. The Company often enters into master
contracts with major clients, which set forth the general terms and conditions
under which EMCON will perform services and which facilitate repeated use of the
Company's services.

The Company receives most of its revenue from repeat and referral
business. Accordingly, EMCON focuses significant efforts on providing high
quality services in a timely manner and developing long-term relationships with
its clients. EMCON assigns an experienced project manager to each project to
coordinate work undertaken by the numerous professionals from different
disciplines within the Company. This approach reduces the time and cost required
to complete a project and relieves the client of the responsibility of
coordinating the efforts of independent consultants. Because the Company
provides a broad range of services, work performed for a client in one technical
area often leads to work in other technical areas.

In the last several years, an increasing amount of work has been done on
a competitive bid basis in response to client requests for proposals. This has
required the dedication of significantly greater resources to proposal writing
and general business development, and the implementation of a more formal
marketing program to share leads and coordinate resources nationwide.

To further promote its services, the Company takes an active role in
industry trade associations to enhance its national reputation for technical
expertise. Similarly, EMCON provides services to a wide variety of local, state
and federal government agencies and contractors. Participation in such contracts
allows EMCON to remain on the leading edge of new technological developments and
to publicize its expertise.

REGULATION

Public concern over health, safety and preservation of the environment
has resulted in the enactment of an increasing number and wider range of
environmental laws and regulations by local, State and Federal lawmakers and
agencies. These laws and the implementing regulations affect nearly every
industry, as well as the agencies of federal, state and local governments
charged with their enforcement. Recently, the level of enforcement has waned
given governmental budgeting constraints and a number of environmental laws set
for renewal have been allowed to lapse. Nonetheless, those laws and regulations
still in force will continue to stimulate demand for the kinds of services
offered by EMCON. They also subject the Company to stringent regulation in the
conduct of its operations.

POTENTIAL LIABILITY AND INSURANCE

The Company's work involves advising clients on the handling, storage and
disposal of hazardous materials, toxic wastes and other pollutants and the
remediation of existing contamination. The Company therefore is exposed to a
significant risk of professional liability for environmental damage and personal
injury.

EMCON maintains health and safety and quality assurance/quality control
programs to reduce the risk of potential damage to persons and property and
associated potential liability. In addition, EMCON currently maintains
professional liability insurance (covering damages resulting from negligent
acts, errors, mistakes or omissions in rendering or failing to render its
professional services) as well as commercial general liability insurance
(covering bodily injury and property damage).

EMCON endeavors contractually to limit its potential liability to the
amount and terms of its insurance policies, and to be indemnified by its clients
from potential liability to third parties. However, the Company is not always
able to obtain such limitations on liability or indemnification, and such
provisions, when obtained, may not adequately shelter the Company from
liability. Consequently, a partially or completely uninsured claim, if
successful and of sufficient magnitude, could have a material adverse effect on
the Company and its financial condition and results of operations.

Although the liabilities arising out of environmental laws are more
directly applicable to the Company's clients, such laws could, under certain
factual circumstances, apply to some of the activities pursued by the Company in
the course of business, including failure to properly design a cleanup, removal
or remedial action plan or failure to achieve required cleanup standards in
compliance with such laws and standards. Such liabilities can be joint and
several where other parties are involved. Because much of the Company's business
is generated either directly or indirectly as a result of federal and state
governmental programs and regulations, changes in governmental policies
affecting such programs, or regulations or administrative actions affecting the
funding or sponsorship of such programs, could have a material adverse effect on
the Company's business. See Item 3 - Legal Proceedings.

COMPETITION

EMCON competes directly with a wide variety of national and local
consulting, laboratory and construction companies which offer services similar
to those provided by the Company. However, many of these competitors are only
engaged in certain segments of the industry and do not provide the broad range
of environmental engineering consulting, laboratory and construction services
provided by the Company. In addition, the Company competes indirectly with
remediation companies which offer environmental consulting and engineering
services, as well as transportation, storage or disposal capabilities generally
not provided by EMCON. The Company believes that the principal competitive
factors in its industry are reputation, technical proficiency, management
experience and breadth of services offered. In addition, the recent trend has
been towards greater competition on the basis of price, with a corresponding
pressure on margins. The industry has also experienced a significant amount of
consolidation activity. Management anticipates that these trends will continue
for the foreseeable future.

EMPLOYEES

As of December 31, 1995, the Company had a total of 1,136 employees,
including: 735 professionals; 191 technical personnel; and 210 administrative
and support personnel. The Company's professional staff includes chemical,
civil, geotechnical, mechanical, electrical and environmental engineers; marine
and terrestrial biologists; oceanographers; plant ecologists; chemists;
geologists; hydrogeologists; hydrologists and toxicologists. The Company's
ability to attract and retain qualified engineers, scientists and other
professionals is an important factor in determining its future success. EMCON's
employees have never been represented by a union, and the Company believes its
relations with its employees are excellent.

BACKLOG

The Company estimates that at December 31, 1995, the backlog of future
net revenue from contracts in existence and orders believed to be firm was in
excess of $55 million, all of which is expected to be received within the next
twelve months, compared to $50 million at December 31, 1994. However, there can
be no assurance that this work will not be postponed or canceled. Furthermore, a
substantial portion of the Company's work is performed pursuant to agreements by
which the Company is compensated for time and expenses devoted to projects with
indefinite lives. It is difficult to estimate the final dollar value of such
contracts to the Company.

ITEM 2. PROPERTIES

The Company's corporate office, located in San Mateo, California,
occupies approximately 5,820 square feet and is leased through July 31, 1996.
The Company's accounting center, located in Sacramento, California, occupies
approximately 4,000 square feet and is leased through December 31, 1997. The
Company also leases approximately 45,000 square feet of office space, analytical
laboratories and warehouse space in San Jose, California. The premises are
leased through December 31, 2002, from an unrelated third party that acquired
the property during 1995, from the Archer Business Complex Partnership, a
California general partnership (the "ABC Partnership"). The ABC partnership was
comprised of eighteen current and former employees and directors of the Company.
In 1995, prior to the sale of the property, the Company paid the ABC Partnership
$410,000 in rent and paid $54,000 in taxes and other expenses for these
premises.

The Company also leases 9,500 square feet of office and warehouse space
in Kelso, Washington. The premises are leased through November, 1996 from the
Royal Partnership, a Washington general partnership comprised of thirteen
employees and former employees of the Company (the "Royal Partnership"). In
1995, the Company paid the Royal Partnership $63,000 in rent and paid $12,000 in
taxes and other expenses for these premises.

The Company, through its subsidiary Columbia Analytical Services, Inc.,
owns a 25,000 square-foot building in Kelso, Washington. The facility includes
office and warehouse space and currently houses the CAS corporate operations.

As a result of the acquisition of Wehran, the Company acquired a 70,000
square-foot building in Tuxedo, New York. The facility includes laboratory and
warehouse space. The Company sold this facility in 1995 at a price approximating
book value.

The Company leases office, warehouse and laboratory space in a total of
50 facilities located in Alaska, Arizona, California, Connecticut, Florida,
Georgia, Illinois, Iowa, Massachusetts, Michigan, Nevada, New York, Ohio,
Oregon, Pennsylvania, Puerto Rico, Texas, Vermont, Virginia and Washington under
leases expiring at various times through December 2002. These facilities have a
combined area of approximately 430,000 square feet.

ITEM 3. LEGAL PROCEEDINGS

As a professional services firm engaged in environmental-related matters,
the Company encounters potential liability, including claims for significant
environmental damage, in the normal course of business. The Company is party to
lawsuits and is aware of potential exposure related to certain claims, but in
the opinion of management the resolution of these matters will not have a
material adverse affect on the Company's financial position and results of
operations or cash flows.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters submitted to a vote of the security holders during
the fourth quarter of the fiscal year ended December 31, 1995.

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS

The Company's common stock is traded on the NASDAQ National Market
System under the symbol MCON. The following table sets forth the quarterly range
of high and low bid quotations per quarter for 1995 and 1994:
- -------------------------------------------------------------------------------
High Low
- -------------------------------------------------------------------------------
January 1 - March 31, 1994 $9.50 $6.50
April 1 - June 30, 1994 7.75 6.25
July 1 - September 30, 1994 7.75 4.63
October 1 - December 31, 1994 5.88 3.50

January 1 - March 31, 1995 4.50 3.00
April 1 - June 30, 1995 5.13 3.75
July 1 - September 30, 1995 6.50 4.00
October 1 - December 31, 1995 5.00 3.38
- -------------------------------------------------------------------------------

On February 29, 1996, there were 665 shareholders of record of the Company's
common stock.

The Company did not pay cash dividends in 1995 or 1994 and does not plan to pay
cash dividends to its shareholders in the near future. Furthermore, the payment
of cash dividends is restricted by the Company's bank line of credit
arrangement. The Company presently intends to retain earnings for further
development of its business.

ITEM 6. SELECTED FINANCIAL DATA

FIVE YEAR FINANCIAL HIGHLIGHTS

- -------------------------------------------------------------------------------------------------------------------------
Year Ended December 31,
-----------------------------------------------------------------
(In thousands, except per share amounts) 1995 1994 1993 1992 1991
- -------------------------------------------------------------------------------------------------------------------------

OPERATIONS STATEMENT DATA (a)
Gross revenue ...................................... $ 122,542 $ 115,638 $ 98,612 $ 93,438 $ 80,101
Net revenue ........................................ 103,409 95,926 83,062 79,636 68,704
Direct expenses .................................... 39,473 37,307 32,201 29,411 24,759
Indirect expenses .................................. 61,498 59,302 47,528 46,676 35,660
Restructuring/other charges ........................ (17) 1,958 -- -- --
Income (loss) from operations ...................... 2,455 (2,641) 3,333 3,549 8,285
Interest income .................................... 369 348 313 588 565
Interest expense ................................... 181 66 57 40 55
Equity in loss of affiliates ....................... (74) (58) -- -- --
Income (loss) before provision (benefit) for
income taxes .................................... 2,569 (2,417) 3,589 4,097 8,795
Provision (benefit) for income taxes ............... 783 (500) 1,165 1,098 2,646
Net income (loss) .................................. 1,786 (1,917) 2,424 2,999 6,149
- -------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA (a)
Income (loss) per share ............................ $ 0.22 $ (0.24) $ 0.33 $ 0.40 $ 0.84
Shares used in computing income (loss) per
share.............................................. 8,961 7,919 7,720 7,506 7,356
- -------------------------------------------------------------------------------------------------------------------------
BALANCE SHEET DATA (a)
Total assets ....................................... $ 78,636 $ 80,989 $ 68,852 $ 66,247 $ 57,917
Working capital .................................... 36,313 32,582 36,200 35,491 34,777
Noncurrent obligations and deferred income
taxes ........................................... 1,700 1,348 882 1,773 1,424
Shareholders' equity ............................... 65,306 63,059 58,997 56,591 51,383
- -------------------------------------------------------------------------------------------------------------------------

(a) The Company was involved in several acquisitions and mergers during the
five-year period presented. See Note 3 to the Company's consolidated
financial statements.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

The following table sets forth (i) certain items in the Company's
Consolidated Statements of Operations as a percentage of net revenue and (ii)
the percentage increase (decrease) in the dollar amount of those items for the
period indicated. Net revenue is determined by subtracting the costs of outside
subcontractor services, largely drilling contractors and specialized consultant
services, from gross revenue. Since EMCON's use of subcontractors can vary from
period to period and the costs of these services are passed directly to the
Company's clients, the Company believes that net revenue is a more accurate
measure of the value of its services.

- --------------------------------------------- --------------------------------------------------------------
Percentage of Percentage
Net Revenue Increase (Decrease)
--------------------------------- ---------------------------
Years Ended Years Ended
December 31 December 31
--------------------------------- ---------------------------
1995 1994
vs. vs.
1995 1994 1993 1994 1993
- ------------------------------------------------------------------------------- ---------------------------

Net Revenue .............................. 100.0% 100.0% 100.0% 7.8% 15.5%
Direct Expenses .......................... 38.2% 38.9% 38.8% 5.8% 15.9%
Indirect Expenses ........................ 59.4% 61.8% 57.2% 3.7% 24.8%
Restructuring/Other Charges .............. -- 2.0% -- -- --
Income (Loss) from Operations ............ 2.4% (2.7%) 4.0% -- (179.2%)
Interest Income, Net ..................... (0.2%) (0.3%) (0.3%) (33.3%) 11.2%
Equity in Loss of Affiliates ............. 0.1% 0.1% -- (27.6%) --
Income (Loss) before Provision
(Benefit) for Income Taxes ............. 2.5% (2.5%) 4.3% -- (167.3%
Provision (Benefit) for Income
Taxes .................................. 0.8% (0.5%) 1.4% -- (142.9%)
Net Income (Loss) ......................... 1.7% (2.0%) 2.9% -- (179.1%)
- -----------------------------------------------------------------------------------------------------------

NET REVENUE:

Net revenue increased by 7.8% in 1995 to $103,409,000, from $95,926,000 in 1994.
The increase was partly attributable to significant improvements in the
Company's consulting division in its West and Southeast areas. The increase in
net revenue was also due in part to the inclusion of Wehran Envirotech, Inc.
("Wehran") for all of 1995 as compared to all but the first quarter of 1994,
following its acquisition in April of 1994. Although Wehran contributed net
revenue of $5,472,000 in the quarter ended March 31, 1995, due to the
underperformance of their Northeast and Midwest operations, Wehran only
contributed an additional $3,730,000 in net revenue in 1995 over 1994. Net
revenue was also positively impacted by the expansion of the laboratory
division's operations in Florida and Southern California.

Net revenue for 1994 increased by 15.5% over net revenue of $83,062,000 in 1993.
The growth in 1994 was primarily attributable to the acquisition of Wehran which
contributed net revenues of approximately $17,188,000. Net revenue from the
remainder of the Company declined approximately 5% due to price discounts and
reduced demand for the Company's services in the West and Southeast areas,
offset in part by strong growth in demand for the Company's consulting services
in the smaller Alaska and Texas markets, as well as a modest increase in demand
for the Company's laboratory services.

DIRECT EXPENSES:

Direct expenses in 1995 were $39,473,000, a 5.8% increase over $37,307,000 in
direct expenses reported for 1994. The increase was due in part to higher
overall salary costs, increased utilization of technical and professional staff,
and the inclusion of Wehran for all of 1995 versus only the last three quarters
of 1994 (Wehran incurred direct expenses of $7,739,000 and $6,524,000 in 1995
and 1994, respectively). The ratio of direct expenses to net revenue in 1995
decreased to 38.2% from 38.9% in 1994. Direct expenses include compensation for
billable hours for technical and professional staff and other project related
expenses and direct labor and materials for laboratory testing.

Direct expenses in 1994 were up 15.9% over $32,201,000 in 1993. The increase was
due primarily to the addition of Wehran and, to a lesser extent, higher overall
salary costs for professional staff. The ratio of direct expense to net revenue
of 38.9% in 1994 remained relatively unchanged from 1993.

INDIRECT EXPENSES:

Indirect expenses totaled $61,498,000 in 1995, an increase of 3.7% over 1994
indirect expenses of $59,302,000. Indirect expenses include salary compensation
for nonbillable hours for professional and technical staff, and general and
administrative expenses, such as facility rent, bonuses, benefits, insurance,
depreciation, and legal expenses. The ratio of indirect expenses to net revenue
decreased from 61.8% in 1994 to 59.4% in 1995, due to improved utilization of
technical and professional staff as well as selective reductions in force and
other cost containment and restructuring measures put in place during the fourth
quarter of 1994 and throughout 1995.

Indirect expenses in 1994 increased by 24.8% over 1993 indirect expenses of
$47,528,000. The increase in indirect expenses in 1994 was due primarily to the
addition of Wehran and, to a lesser extent, to the settlement of certain
outstanding legal claims. In addition, revenue shortfalls in a number of
geographic regions created temporary staff imbalances in the fourth quarter. The
Company elected to maintain regional staffing at underutilized levels in these
regions in anticipation of revenue growth during the first quarter of 1995. The
ratio of indirect expenses to net revenue in 1994 increased to 61.8% from 57.2%
in 1993.

RESTRUCTURING/OTHER CHARGES:

In October 1994, the Board of Directors appointed Eugene M. Herson to serve as
the Company's new President and Chief Executive Officer. Under Mr. Herson's
direction, senior management undertook an extensive internal review of the
Company's operational and administrative functions for the purpose of improving
the Company's competitiveness and overall profitability. Based on senior
management's recommendations, the Company's Board of Directors approved a
restructuring plan in December 1994. Under the plan, the Company eliminated
substantially all of its regional consulting subsidiaries in favor of a
divisional structure. In addition, the Company consolidated and streamlined all
unnecessary and/or redundant administrative functions. As a result of the
actions taken, the Company recognized a pre-tax restructuring charge in the
fourth quarter of 1994 of $1,181,000. Of this amount, $611,000 related to the
write off of employment contracts for former employees no longer actively
participating in the Company's affairs, $287,000 related to employee severance,
and $263,000 related to costs associated with excess facilities and equipment.
The charge did not include salaries and wages paid to employees up to their

termination date, nor did it include any incentive bonuses payable to employees
to remain with the Company through their termination dates. Anticipated savings
from the restructuring plan were estimated to exceed $1,000,000 per year. At
December 31, 1995, $152,000 of accrued restructuring costs for write off of
employment contracts were included in accrued liabilities in the accompanying
consolidated balance sheet. All remaining actions are expected to be completed
by the first quarter of 1997 and will require the use of cash. To date,
$1,012,000 of restructuring costs have been incurred and an adjustment of
$17,000 was made to reduce the reserve to the required remaining balance.

During the fourth quarter of 1994, the Company also incurred nonrecurring
charges of $777,000 related to the writedown of the carrying value of certain of
the Company's landfill gas production rights and of certain related fixed assets
due to the reevaluation of future cash flows expected to be generated by its
landfill gas production projects. No such charges were needed for 1995.

INTEREST INCOME, NET:

The Company recorded interest income, net of interest expense, of $188,000 in
1995 compared to $282,000 in 1994 and $256,000 in 1993. In 1995, average cash
available increased slightly above 1994 as did interest income; however,
interest expense was higher, in part, due to an imposition of a one-time state
tax assessment with respect to prior years. Average cash available for
investment in 1994 decreased over 1993 due to expenditure of approximately
$6,100,000 to extinguish debt incurred upon the acquisition of Wehran and higher
than normal capital expenditures.

INCOME TAXES (BENEFIT):

The provision (benefit) for income taxes in 1995 was $783,000 compared to
($500,000) for 1994 and $1,165,000 for 1993. The effective tax rate for 1995 was
30.5% versus (20.7%) in 1994 and 32.5% for 1993. The Company did not earn any
new fuel tax credits in 1994 due to being in a loss position for tax purposes.
Consequently, the 1994 tax benefit was at a lower effective rate than the 1993
effective tax rate. The decrease in the effective tax rate in 1995 from 1993 was
primarily due to an increase in fuel tax credits.

SUBSEQUENT MATTERS

LIQUIDITY AND CAPITAL RESOURCES

WORKING CAPITAL:

Cash provided by operating activities for fiscal 1995, 1994 and 1993 was
$5,232,000, $4,875,000 and $6,850,000, respectively. The changes in cash
provided by operating activities in 1995, 1994 and 1993 were primarily
attributed to changes in the Company's net income (loss), accounts receivable
and accounts payable and in 1995 and 1994, depreciation and amortization. Cash,
cash equivalents, and marketable securities decreased to $9,952,000 in 1995 from
$7,588,000 in 1994.

In conjunction with the acquisition of OWT, the Company entered into a
$20,000,000 secured credit agreement with its existing commercial bank,
replacing its previous $10,000,000 unsecured line of credit. Under the new
agreement, the Company borrowed $10,000,000 on a term loan basis with an
interest rate not to exceed the prime rate. Principal is to be amortized over
seven years, but with any unpaid amount finally due and payable on June 30,
2001. The remaining $10,000,000 under the credit agreement is available for
working capital purposes (with up to $5,000,000 also being available for
non-working capital purposes). The line of credit component of the Credit
Agreement expires on May 31, 1997.

CAPITAL EXPENDITURES:

The Company invested $4,082,000 in 1995 in additions to property and equipment;
mainly computers and laboratory equipment. Apart from the acquisition of OWT,
the Company has no material future commitments relating to capital expenditures
in the foreseeable future. The Company believes that its cash on hand and cash
generated from operations, together with its available bank financing will be
sufficient to meet the Company's capital needs for at least the next twelve
months.

In 1993, the Company announced a program to repurchase, under certain
circumstances, up to one million shares of its common stock. There was no
activity under this program in 1995. In 1994, the Company repurchased 133,000
shares under the program for a total purchase price of $812,000. In 1993, the
Company repurchased a total of 108,000 shares for $846,000.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Page
----
Consolidated Statements of Operations for each of
the three years ended December 31, 1995, 1994, and 1993 .............. 19

Consolidated Balance Sheets as of December 31,
1995 and 1994 ........................................................ 20

Consolidated Statements of Shareholders' Equity
for each of the three years in the period ended
December 31, 1995, 1994, and 1993 ................................... 21

Consolidated Statements of Cash Flows for each of
the three years ended December 31, 1995, 1994, and 1993 .............. 22

Notes to Consolidated Financial Statements ................................ 23

Report of Ernst & Young LLP, Independent Auditors ......................... 34

EMCON
CONSOLIDATED STATEMENTS OF OPERATIONS

------------------------------------------------------------------------------
Years Ended December 31,
---------------------------
(In thousands, except per share amounts) 1995 1994 1993
------------------------------------------------------------------------------

Gross revenue ........................... $ 122,542 $ 115,638 $ 98,612
Outside services, at cost ............... 19,133 19,712 15,550
--------- --------- ---------

Net revenue ...................... 103,409 95,926 83,062

Costs and expenses:
Direct expenses ....................... 39,473 37,307 32,201
Indirect expenses ..................... 61,498 59,302 47,528
Restructuring/other charges ........... (17) 1,958 --
---------- --------- --------

Income (loss) from operations ...... 2,455 (2,641) 3,333

Interest income ......................... 369 348 313
Interest expense ........................ (181) (66) (57)
Equity in loss of affiliate ............. (74) (58) --
---------- --------- --------

Income (loss) before provision
(benefit) for income taxes............ 2,569 (2,417) 3,589
Provision (benefit) for income taxes .... 783 (500) 1,165
---------- --------- --------

Net income (loss)........................ $ 1,786 $ (1,917) $ 2,424
========== ========= ========

Income (loss) per share.................. $ 0.22 $ (0.24) $ 0.33
========== ========= ========

Shares used in computing income
(loss) per share..................... 8,961 7,919 7,720
========== ========= ========

See accompanying notes.

CONSOLIDATED BALANCE SHEETS

- -------------------------------------------------------------------------------
December 31,
-------------------------
(In thousands, except share amounts) 1995 1994
------------------------------------------------------------------------------

ASSETS
Current Assets:
Cash and cash equivalents .......................... $ 9,451 $ 5,152
Marketable securities .............................. 501 2,436
Accounts receivable, net of allowance for
doubtful accounts of $1,052 and $975 at
December 31, 1995 and 1994, respectively ......... 34,925 38,323
Prepaid expenses and other current assets .......... 3,066 3,253
-------- --------

Total Current Assets ............................... 47,943 49,164

Net property and equipment, at cost ................ 16,690 18,651

Other assets ....................................... 3,579 1,913
Deferred tax assets ................................ 1,677 2,059
Intangible assets, net of amortization ............. 8,747 9,202
-------- --------

Total Assets ................................... $ 78,636 $ 80,989
======== ========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable ................................... $ 4,174 $ 8,846
Accrued payroll and related benefits ............... 4,975 5,580
Other accrued liabilities .......................... 2,109 1,908
Noncurrent obligations due within one year ......... 372 248
-------- --------

Total Current Liabilities ................. 11,630 16,582

Noncurrent obligations ............................. 1,700 1,348
Commitments and contingencies ...................... -- --

Shareholders' Equity:
Preferred stock, no par value, 5,000,000
shares authorized; no shares issued or
outstanding ...................................... -- --
Common stock, no par value, 15,000,000 shares
authorized; 8,329,343 and 8,186,279 shares
issued and outstanding at December 31, 1995
and 1994, respectively ........................... 41,401 40,958
Retained earnings .................................. 23,918 22,132
Unrealized losses on marketable securities ......... (13) (31)
-------- --------

Total Shareholders' Equity .................... 65,306 63,059
-------- --------

Total Liabilities and Shareholders' Equity .... $ 78,636 $ 80,989
======== ========

See accompanying notes.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

-------------------------------------------------- -------------------------------------------------------------------------------
Unrealized
Gain (Loss)
on Total
Common Stock Retained Marketable Shareholders'
(In thousands) Amount Shares Earnings Securities Equity
- ----------------------------------------------------------------------------------------------------------------------------------

BALANCE AT DECEMBER 31, 1992 ........................... 7,252 $ 34,966 $ 21,625 $ 56,591
Issuance of common stock upon exercise
of options .......................................... 65 305 -- 305
Income tax benefits of employee stock
option exercises ..................................... -- 95 -- 95
Issuance of common stock under
purchase of Chattahoochee Geotechnical
Consultants, Inc..................................... 25 281 -- 281
Issuance of common stock under the
Employee Stock Purchase Plan ........................ 87 596 -- 596
Issuance of restricted stock,
net of cancellation ................................. 1 8 -- 8
Repurchase of common stock ............................. (151) (1,303) -- (1,303)
Net income ............................................. -- -- 2,424 2,424
------------------------------------------------------------------------

BALANCE AT DECEMBER 31, 1993 ........................... 7,279 34,948 24,049 58,997
Issuance of common stock upon exercise
of options, net of redemptions ...................... 55 243 -- 243
Income tax benefits of employee stock
option exercises ..................................... -- 103 -- 103
Issuance of common stock under purchase of
Wehran Envirotech, Inc. .............................. 915 6,029 -- 6,029
Issuance of common stock under the
Employee Stock Purchase Plan ........................ 69 439 -- 439
Issuance of restricted stock,
net of cancellation ................................. 1 8 -- 8
Repurchase of common stock ............................. (133) (812) -- (812)
Unrealized losses on marketable securities ............. -- -- -- (31) (31)
Net loss ............................................... (1,917) (1,917)
------------------------------------------------------------------------

BALANCE AT DECEMBER 31, 1994 ........................... 8,186 40,958 22,132 (31) 63,059
Issuance of common stock upon exercise
of options, net of redemptions ...................... 30 35 -- 35
Income tax benefits of employee stock
option exercises ..................................... -- 50 -- 50
Issuance of common stock under the
Employee Stock Purchase Plan ........................ 114 369 -- 369
Issuance of restricted stock,
net of cancellation ................................. (1) (11) -- (11)
Net change in unrealized losses on
marketable securies.................................. -- -- -- 18 18
Net income ............................................. -- -- 1,786 1,786
------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1995 ........................... 8,329 $ 41,401 $ 23,918 $ (13) $ 65,306
------------------------------------------------------------------------

See accompanying notes.

EMCON
CONSOLIDATED STATEMENTS OF CASH FLOWS
- -----------------------------------------------------------------------------------------------------------------------------------
Years Ended December 31,
Increase (decrease) in cash and cash equivalents (in thousands) 1995 1994 1993
- -----------------------------------------------------------------------------------------------------------------------------------

Cash flow from operating activities:
Net income (loss) ........................................................... $ 1,786 $ (1,917) $ 2,424
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Depreciation and amortization ............................................. 5,100 4,364 3,212
Loss on sale/disposal of property and equipment ........................... 129 416 71
Write down of gas production rights ....................................... -- 655 --
Increase in salary continuation plan ...................................... 62 93 116
Changes in operating assets and liabilities:
Accounts receivable .................................................... 3,398 (1,290) 1,990
Prepaid expenses and other current assets .............................. 187 1,056 640
Other assets ........................................................... (786) 642 (1,168)
Deferred tax assets .................................................... 382 (1,469) 590
Accounts payable ....................................................... (4,672) 2,300 (1,102)
Accrued payroll and related benefits ................................... (605) 1,173 83
Other accrued liabilities .............................................. 251 (1,148) (6)
- -----------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities .......................... 5,232 4,875 6,850
- -----------------------------------------------------------------------------------------------------------------------------------
Cash flow from investing activities:
Additions to property and equipment ...................................... (4,082) (7,050) (2,682)
Purchase of available for sale securities ................................ -- (5,967) (6,911)
Maturities of available for sale securities .............................. 1,953 8,800 7,611
Acquisitions, net of cash acquired ....................................... -- 258 (10)
Proceeds from sale of property and equipment ............................. 327 442 244
- -----------------------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities ............................. (1,802) (3,517) (1,748)
- -----------------------------------------------------------------------------------------------------------------------------------
Cash flow from financing activities:
Proceeds (payment) of current and noncurrent obligations .................. 476 (6,662) (573)
Issuance of common stock for cash ......................................... 393 690 909
Repurchase of common stock ................................................ -- (812) (846)
- -----------------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used for) financing activities ............... 869 (6,784) (510)
- -----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents ............................ 4,299 (5,426) 4,592
Cash and cash equivalents, beginning of year ................................ 5,152 10,578 5,986
- -----------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of year ...................................... $ 9,451 $ 5,152 $ 10,578
- -----------------------------------------------------------------------------------------------------------------------------------

See accompanying notes.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION:

The accompanying consolidated financial statements include the accounts
of the Company and its wholly owned subsidiaries after elimination of all
significant intercompany accounts and transactions.

In 1994, the Company converted to a fifty-two/fifty-three week fiscal
year, resulting in fifty-two week years in 1994 and 1995. The Company's year end
falls on the Friday closest to the last day of the calendar quarter. The Company
also follows a five-four-four week quarterly cycle. While the actual period end
for the fiscal years 1994 and 1995 was January 1, 1995 and December 29, 1995,
respectively. For convenience, the date shown on accompanying financial
statements is December 31, the last day of the calendar periods.

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS:

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 disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results inevitably will differ from those estimates and such differences may be
material to the financial statements.

REVENUE RECOGNITION AND EXPENSES:

Revenue from engineering service contracts is recognized as services are
provided. The Company routinely subcontracts for outside services, such as
drilling and specialized laboratory services. These costs are generally passed
through to the Company's customers. The Company believes net revenue is a more
accurate measure of the value of its services than gross revenue. Direct costs
include compensation for billable hours for professional and technical staff and
other project expenses reimbursed by clients. Indirect costs include
compensation for non-billable professional and technical staff hours, all
employee fringe benefits, marketing, and general and administrative expenses,
such as rent, insurance and depreciation.

CASH AND CASH EQUIVALENTS AND MARKETABLE SECURITIES:

The Company considers all investment instruments and marketable securities with
an original maturity date of 90 days or less at the date of purchase to be cash
equivalents. Management determines the appropriate classifications of debt
securities at the time of purchase and reevaluates such designation as of each
balance sheet date. Investments consisting primarily of high grade U.S.
government and corporate marketable debt securities are classified as
available-for-sale, and are carried at fair value, based on quoted market
prices, with the unrealized gains and losses, net of tax, reported in a separate
component of shareholders' equity. The cost of debt securities is adjusted for
amortization of premiums and accretion of discounts to maturity, which is
included in interest income. Realized gains and losses and declines in value
judged to be other-than-temporary, as well as any interest on these securities,
are included in interest income. The cost of securities sold is based on the

specific identification method. The Company has not experienced any significant
losses related to these investments.

The following is a summary of available-for-sale securities as of December 31,
1995:
- -------------------------------------------------------------------------------
Gross Gross Estimated
Unrealized Unrealized Fair
(In thousands) Cost Gains Losses Value
- -------------------------------------------------------------------------------
U.S. Treasury
Bills/Notes $514,000 $ - $13,000 $501,000
- -------------------------------------------------------------------------------
All marketable securities held by the Company as of December 31, 1995, are
available for the Company's current working capital requirements and will mature
in less than one year. Accordingly, all such amounts are classified as current
assets in the accompanying consolidated balance sheets.

SUPPLEMENTAL CASH FLOW INFORMATION:

Cash paid for income taxes was approximately $58,000, $469,000 and $937,000 for
the years ended December 31, 1995, 1994 and 1993, respectively. Cash paid for
interest was approximately $181,000, $66,000 and $57,000 for the years ended
December 31, 1995, 1994 and 1993, respectively.

In 1995, the Company sold certain land and buildings in exchange for $1,100,000
in marketable trade credits which will be used to reduce cash payments of future
recurring corporate expenses. No significant gain or loss was incurred on the
transaction. Trade credits expire in eight years, and the Company expects to
utilize such credits prior to expiration. Trade credits totaled $1,100,000 at
December 31, 1995 and the amount is included in other assets in the accompanying
balance sheet.

PROPERTY AND EQUIPMENT:

Property and equipment consists of:
- -------------------------------------------------------------------------------
December 31,
--------------------------
(In thousands) 1995 1994
- -------------------------------------------------------------------------------
Land and buildings $ 2,723 $ 3,792
Machinery and equipment 23,723 21,950
Furniture and fixtures 5,915 5,629
Vehicles 3,638 3,480
Leasehold improvements 2,324 2,180
- -------------------------------------------------------------------------------
Total 38,323 37,031
Less accumulated depreciation
and amortization 21,633 18,380
- -------------------------------------------------------------------------------
Net property and equipment $16,690 $18,651
- -------------------------------------------------------------------------------
Depreciation and amortization are provided on the straight-line basis over the
lesser of the estimated useful lives of the assets or the term of the lease
(lives range from 3-31 years). Amortization of property and equipment acquired
under capital leases is included with depreciation expense. Approximately
$2,790,000 of fixed assets net of accumulated depreciation of $1,302,000 were
sold or disposed of in 1995.

In 1995, the Financial Accounting Standards Board released the Statement of
Financial Accounting Standards No. 121 (SFAS 121), "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of."
SFAS 121 requires recognition of impairment of long-lived assets in the event
the net book value of such assets exceeds the future undiscounted cash flows
attributable to such assets. SFAS 121 is effective for fiscal years beginning
after December 15, 1995. Adoption of SFAS 121 is not expected to have a material
impact on the Company's financial position or results of operations.

INTANGIBLE ASSETS:

The purchase price of an acquired business is allocated to the tangible and
specifically identifiable intangible assets acquired, based on their fair value
at the date of acquisition, with any excess being designated as goodwill.
Intangible assets are amortized over their estimated useful lives. The carrying
value of goodwill is reviewed if the facts and circumstances suggest that it may
be impaired. If this review indicates that the intangible asset will not be
recoverable, as determined based on the discounted cash flows of the acquired
business over the remaining amortization period, the Company's carrying value is
reduced to net realizable value. There were no changes to goodwill in 1994 or
1993.

In 1995, the Company paid $188,000 as additional consideration to the
shareholders of Performance Analytical, Inc. ("PAI") upon the achievement of
certain earnout provisions specified in the original purchase agreement (See
note 3). The Company has recorded this payment as an adjustment to the original
purchase price in accordance with Emerging Issues Task Force release 95-8 (EITF
95-8), "Accounting for Contingent Consideration Paid to the Shareholders of an
Acquired Enterprise in a Purchase Business Combination". In 1995, the Company
recorded a decrease of $40,000 in goodwill for the Wehran Envirotech, Inc.
("Wehran") for an asset not previously valued.

Intangible assets also include $2,476,000 at December 31, 1995 and 1994,
representing gross costs incurred to obtain landfill gas production rights.
Amortization of these gas production rights is recognized as the greater of
either the straight-line or units-of-production method over a term not exceeding
the period of the gas production leases. The expected amortization periods range
between 3 and 14 years. The related accumulated amortization was approximately
$1,338,000 and $1,154,000 at December 31, 1995 and 1994, respectively.

INCOME (LOSS) PER SHARE:

Income per share in 1995 and 1993 is based on the weighted average number of
common and dilutive common equivalent shares outstanding using the modified
treasury stock method. Common equivalent shares are comprised of shares issuable
under the Company's stock option plans. Primary and fully diluted earnings per
share are substantially the same. Loss per share in 1994 is based on the
weighted average number of common shares outstanding.

BUSINESS SEGMENT AND CONCENTRATION OF CREDIT RISK:

The Company operates within one business segment, which provides comprehensive
environmental engineering, consulting and laboratory services to industrial
concerns, predominantly in the waste disposal, petroleum, wood products,
chemical and manufacturing industries; as well as to utilities, non-regulatory
government entities, financial institutions and real estate developers. There
are no significant operations or revenues generated from non United States
locations. Ongoing credit evaluations of its customers' financial condition are
performed by the Company, generally requiring no collateral.

STOCK-BASED COMPENSATION:

The Company accounts for stock-based compensation in accordance with the
intrinsic value method prescribed by APB Opinion No. 25, "Accounting for Stock
Issued to Employees" ("APB No. 25"). Under the intrinsic value based method,
compensation cost is the excess, if any, of the quoted market price or fair
value of the stock at the grant date or other measurement date over the amount
an employee must pay to acquire the stock.

In October 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS No. 123"), which is effective for the Company in 1996. SFAS
No. 123 allows companies the option of measuring and recognizing compensation
cost under the provisions of APB No. 25, or alternatively, by measuring and
recognizing stock-based compensation using a fair value based methodology. Under
the fair value based method, compensation cost is measured at the grant date
based on the value of the award and is recognized over the service period, which
is usually the vesting period. The Company anticipates that it will continue the
use of the intrinsic value method for accounting for stock-based compensation,
and accordingly, the adoption of SFAS No. 123 is not expected to have a
significant effect on the Company's financial condition or results of
operations.

RECLASSIFICATION:

Certain amounts in the Company's 1994 consolidated financial statements have
been reclassified to conform with the presentation of the Company's 1995
consolidated financial statements.

2. RESTRUCTURING/OTHER CHARGES

In December 1994, as a result of changes in senior management, the
Company's Board of Directors approved a corporate restructuring plan which
included the write off of employment contracts with no current or future value,
termination of personnel, and the elimination or abandonment of excess and
underperforming assets and facilities. Execution of the restructuring plan
resulted in a charge in the fourth quarter of approximately $1,181,000. Of this
amount, $611,000 related to the write off of employment contracts for former
employees no longer actively participating in the Company's affairs. In
addition, $263,000 related to costs associated with excess facilities and
equipment which were being closed or abandoned. Operating expenses relating to
such facilities and equipment up to the time of closure or abandonment were not
included in the restructuring charge. The restructuring charge also included
$287,000 for severance costs for employees who had been or were to be terminated
within one year. The charge did not include salaries and wages paid to such
employees up to their termination date, nor did it include any incentive bonuses

for employees to remain with the Company until their termination date. At
December 31, 1995, $152,000 of accrued restructuring costs for write off of
employment contracts were included in accrued liabilities in the accompanying
consolidated balance sheet. All remaining actions are expected to be completed
by the first quarter of 1997 and will require the use of cash. To date,
$1,012,000 of restructuring costs have been incurred and an adjustment of
$17,000 was made to reduce the reserve to the required remaining balance.

3. ACQUISITIONS

On February 29, 1996, EMCON acquired all the outstanding capital stock of
Organic Waste Technologies, Inc. ("OWT"), a Cleveland based construction,
equipment and operations and maintenance company with significant expertise in
solid waste management. The Company purchased OWT for $13,754,351 in cash plus
the issuance of convertible notes held by certain senior OWT management in the
principal amount of $1,824,649. The notes draw interest at the rate of 8% per
annum with all principal due and payable in full on March 1, 2001. The notes may
be converted into shares of OWT common stock upon an underwritten public
offering of OWT's common stock in an amount in excess of $10,000,000. In the
event the notes have not been converted into OWT shares, they may instead be
converted into shares of EMCON common stock for a period of ninety days after
November 30, 2001 at a conversion price of $6.50 per share.

Effective April 1, 1994, the Company acquired all of the capital stock of
Wehran Envirotech, Inc. ("Wehran"), an environmental consulting company
headquartered in Middletown, New York, in exchange for 410,000 shares of the
Company's common stock valued at $2,818,000 and $439,000 in direct acquisition
costs. The transaction was accounted for as a purchase. An additional 80,000
shares, valued at $290,000, were issued to Wehran shareholders in December, 1994
as a result of their attaining certain predetermined operating performance
goals. Specifically identifiable intangible assets and goodwill of approximately
$1,896,000, resulting from this acquisition, are included in intangible assets
and are being amortized over twenty years using the straight line method.
Accumulated amortization as of December 31, 1995, was approximately $158,000.
Subsequent to the purchase of Wehran, the Company issued an additional 425,000
shares of its common stock to retire approximately $5,000,000 of Wehran's
convertible subordinated notes. In addition, the Company also paid approximately
$6,100,000 in cash to satisfy amounts borrowed against Wehran's revolving credit
line ($5,000,000) and obligations due to settlement of certain litigation
($1,100,000).

The following summarizes the unaudited pro forma net revenue, net income
(loss), and income (loss) per share of the combined company for the twelve
months ended December 31, 1994 compared to audited twelve months ended December
31, 1995.
Twelve months ended
December 31,
- -------------------------------------------------------------------------------
Pro Forma
1995 1994
(In thousands) (audited) (unaudited)
- -------------------------------------------------------------------------------
Net revenue $103,409 $100,694
Net income (loss) 1,786 (3,072)
Income (loss) per share $ 0.22 $ (0.37)
- --------------------------------------------------------------------------------
The above pro forma results of operations do not purport to reflect the actual
results of operations had the Company actually acquired Wehran as of the
beginning of 1994.

Effective July 1, 1994, the Company acquired all the common stock of
Performance Analytical, Inc. ("PAI"), an air toxics and analytical chemistry
laboratory located in Canoga Park, California, for $1,057,000 and $188,000 paid
in cash in 1994 and 1995, respectively. The transaction was accounted for as a
purchase. Specifically identifiable intangible assets and goodwill of
approximately $596,000 resulting from this acquisition are included in
intangible assets and are being amortized over twenty years using the straight
line method. Accumulated amortization as of December 31, 1995, was approximately
$31,000. Additional consideration may be paid for the purchase of PAI subject to
the achievement of certain earnout provisions over the next two years. This
acquisition would not have had a material effect on net revenue, net income
(loss) or income (loss) per share, had it been effected at January 1, 1994.

Acquisitions made by the Company from 1990 through 1993 have resulted in
goodwill of approximately $6,603,000 which is included with intangible assets
and is being amortized over a period of twenty to twenty-five years using the
straight-line method. Related accumulated amortization was approximately
$1,296,000 and $984,000 at December 31, 1995 and 1994, respectively.

4. CREDIT AGREEMENT

In conjunction with the acquisition of OWT, the Company entered into a
$20,000,000 secured credit agreement with its existing commercial bank,
replacing its previous $10,000,000 unsecured line of credit. Under the new
agreement, the Company borrowed $10,000,000 on a term loan basis with interest
at a managed rate not to exceed the prime rate. Principal is to be amortized
over seven years, but with any unpaid amount finally due and payable on June 30,
2001. The remaining $10,000,000 under the credit agreement is available on a
line of credit basis for working capital purposes (with up to $5,000,000 also
being available for non-working capital purposes). The line of credit component
of the credit agreement expires on May 31, 1997.

5. NON CURRENT OBLIGATIONS

Certain employees participate in a salary continuation plan which will
provide the employees with a 10-year benefit from the Company. Monthly benefits
range from $600 to $3,000, and the employees vest in varying amounts from the
fifth to the tenth anniversary date of their contracts. Such amounts will be
paid in addition to those payments due specifically as consideration for the
employees meeting the non-competition provisions of their contracts. (See note
7.)
Included in non current obligations are the Company's liabilities under
salary continuation agreements and capital leases. Liabilities under salary
continuation agreements were $802,000 and $671,000 at December 31, 1995 and
1994, respectively. Capital lease obligations are collateralized by equipment
included in property and equipment with a cost and accumulated depreciation of
$1,020,000 and $863,000, and $1,168,000 and $822,000 at December 31, 1995 and
1994, respectively.

6. RETIREMENT PLAN

The Company sponsors a qualified retirement plan, available to all
employees, which is based on Section 401(k) of the Internal Revenue. Employees
may elect to contribute up to 15% of their annual compensation to the plan up to
the Internal Revenue Service annual contribution limit ($9,240 for 1995). The
Company will then match the employee's contribution to a maximum of 3% of annual
compensation. The Company's contributions to the retirement plan were
$1,177,000, $674,000 and $760,000 for the years ended December 31, 1995, 1994
and 1993, respectively.

7. COMMITMENTS

The Company leases its office facilities, as well as office and computer
equipment, under operating leases in various locations. Certain office
facilities were leased from partnerships in which certain officers and
shareholders of the Company had controlling interests. Lease arrangements with
the partnerships were terminated in 1995. The annual rents under leases from
partnerships were approximately $473,000, $516,000 and $540,000 for 1995, 1994
and 1993, respectively. The Company's minimum annual lease commitments under all
operating leases are approximately (in thousands):

- -------------------------------------------------------------------------------
Years Ending December 31,
- -------------------------------------------------------------------------------
1996 $3,499
1997 2,546
1998 1,075
1999 352
2000 and thereafter 145
- -------------------------------------------------------------------------------

Rent expense was approximately $4,429,000, $3,964,000 and $3,603,000 for the
years ended December 31, 1995, 1994 and 1993, respectively.

Certain employees have signed non-competition agreements which will
provide them with monthly payments from $400 to $2,000 for a period of up to ten
years, commencing on the tenth anniversary date of the agreements.
(See note 5.)

8. LITIGATION

As a professional services firm engaged in environmental-related matters,
the Company encounters potential liability, including claims for significant
environmental damage, in the normal course of business. The Company is party to
lawsuits and is aware of potential exposure related to certain claims, but in
the opinion of management the resolution of these matters will not have a
material adverse effect on the Company's financial position, results of
operations or cash flows.

9. SHAREHOLDERS' EQUITY

The Board of Directors of the Company has the authority to determine the
rights, preferences, privileges and restrictions of the authorized preferred
stock.

The Company has issued options to purchase shares of common stock
pursuant to its 1986 Incentive Stock Option Plan and its 1988 Stock Option Plan
(the "Plans"). These options are granted at prices which are equal to 100% or
110% of fair market value on the date of grant, and expire over a maximum term
of ten years. Options generally vest ratably over a four-year period. A summary
of activity of the Plans follows:

- -----------------------------------------------------------------------------------------------------------------------------------
Options Outstanding
---------------------------------------------------
Available Number Price Aggregate
for Grant of Shares Per Share Value
- -----------------------------------------------------------------------------------------------------------------------------------

Balance at
December 31, 1992 ...................................... 599,822 1,834,654 $ 1.15 - $10.00 $ 14,885,349
Options granted .......................................... (377,275) 377,275 $ 6.50 - $11.25 2,964,938
Options canceled ......................................... 160,935 (160,935) $ 7.67 - $10.50 (1,511,301)
Options exercised ........................................ -- (65,249) $ 1.15 - $10.00 (304,646)
- -----------------------------------------------------------------------------------------------------------------------------------
Balance at
December 31, 1993 ....................................... 383,482 1,985,745 $ 1.15 - $11.25 16,034,340
Options authorized ........................................ 750,000 -- -- --
Options granted ........................................... (448,900) 448,900 $ 5.00 - $ 8.37 2,984,999
Options canceled .......................................... 153,702 (153,702) $ 3.33 - $11.25 (1,322,592)
Options exercised ......................................... -- (54,606) $ 1.15 - $ 7.67 (250,724)
- -----------------------------------------------------------------------------------------------------------------------------------
Balance at
December 31, 1994 ....................................... 838,284 2,226,337 $ 1.15 - $11.25 17,446,023
Options granted ........................................... (386,650) 386,650 $ 3.50 - $ 4.88 1,545,537
Options canceled .......................................... 72,629 (72,629) $ 3.33 - $10.00 (591,701)
Options exercised ......................................... -- (30,000) $ 1.15 - $ 1.15 (34,666)
- -----------------------------------------------------------------------------------------------------------------------------------
Balance at
December 31, 1995 ....................................... 524,263 2,510,358 $ 1.15 - $11.25 $ 18,365,193
- -----------------------------------------------------------------------------------------------------------------------------------

Options for 1,562,833 shares are exercisable at December 31, 1995 at an average
exercise price of $8.10 per share.

The Company's Restricted Stock Plan was approved by its shareholders in
May, 1991. A total of 225,000 shares of the Company's Common Stock were reserved
for issuance under the Restricted Stock Plan. At December 31, 1995, 188,875
shares were available for issuance.

The Employee Stock Purchase Plan provides that substantially all
employees may purchase the Company's common stock at a price equal to 85% of its
fair value on certain specified dates via a payroll deduction plan.
At December 31, 1995, 336,674 shares were available for issuance.

10. INCOME TAXES

The provision (benefit) for income taxes consists of the following (in
thousands):
- -------------------------------------------------------------------------------
Years Ended December 31,
----------------------------
1995 1994 1993
- -------------------------------------------------------------------------------
Federal:
Current $ 438 $(112) $1,053
Deferred 61 (378) (170)
- -------------------------------------------------------------------------------
Total Federal 499 (490) 883
- -------------------------------------------------------------------------------
State:
Current 78 200 367
Deferred 206 (210) (85)
- -------------------------------------------------------------------------------
Total State 284 (10) 282
- -------------------------------------------------------------------------------
Total Federal and State $ 783 $(500) $1,165
- -------------------------------------------------------------------------------

A reconciliation between the Company's effective tax rate and the U.S. statutory
rate (35% in 1995 and 1994; 34% in 1993) is as follows (in thousands):
- -------------------------------------------------------------------------------
Years Ended December 31,
----------------------------
1995 1994 1993
- -------------------------------------------------------------------------------
Tax at U.S. statutory rate $ 899 $(846) $1,220
State taxes, net of federal benefit 149 (7) 186
Tax exempt income -- (38) (65)
Fuel tax credits (515) -- (326)
Goodwill amortization 150 135 105
Meals and entertainment 105 101 --
Other individually immaterial items (5) 155 45
- -------------------------------------------------------------------------------
Total Federal and State $ 783 $(500) $1,165
- -------------------------------------------------------------------------------
As of December 31, 1995, the Company has federal alternative minimum tax credit
carryforwards of approximately $1,744,000, which have no expiration date.

Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. Significant
components of the Company's deferred tax assets and liabilities consisted of the
following at:
- --------------------------------------------------------------------------------
December 31,
------------------
(In thousands) 1995 1994
- --------------------------------------------------------------------------------
Deferred tax assets:
Alternative minimum tax credit carryforwards $1,744 $1,423
Deferred compensation 306 282
Allowance for doubtful accounts 421 390
Vacation accruals 595 544
Restructuring accruals -- 510
Unrecognized loss on property -- 972
Other individually immaterial items 454 253
- -------------------------------------------------------------------------------
Total deferred tax assets $3,520 $4,374
- -------------------------------------------------------------------------------
Deferred tax liabilities:
Tax over book depreciation $ 352 $ 862
Tax accounting method changes 102 258
Payment liabilities deducted 116 37
Supplies 110 110
- -------------------------------------------------------------------------------
Total deferred tax liabilities $ 680 $1,267
- -------------------------------------------------------------------------------
Total net deferred tax assets $2,840 $3,107
- -------------------------------------------------------------------------------

11. QUARTERLY DATA (UNAUDITED)

-----------------------------------------------------------------------------------------------------------------------
(In thousands First Second Third Fourth
except per share amounts) Quarter Quarter Quarter Quarter
----------------------------------------------------------------------------------------------------------------------

1994(1)
Gross revenue ................................... $ 21,712 $ 30,028 $ 30,987 $ 32,911
Net revenue ..................................... 18,742 25,418 26,477 25,289
Income (loss) from operations ................... 149 429 906 (4,125)(2)
Net income (loss) ............................... 188 370 695 (3,170)(2)
Income (loss) per share ......................... $ 0.03 $ 0.05 $ 0.09 $ (0.39)
- ------------------------------------------------------------------------------------------------------------------------
1995
Gross revenue ................................... $ 30,369 $ 31,116 $ 32,106 $ 28,951
Net revenue ..................................... 26,276 26,453 26,636 24,044
Income from operations .......................... 528 985 816 126
Net income ...................................... 397 711 650 28
Income per share ................................ $ 0.05 $ 0.09 $ 0.08 $ 0.01
- ------------------------------------------------------------------------------------------------------------------------

(1) Includes the operating results of Wehran Envirotech, Inc., acquired
effective April 1, 1994.

(2) Includes $1,958,000 of restructuring/other charges.

The Company's net revenue is adversely affected in the first quarter of each
year, primarily as a result of restricted field work due to weather conditions.

The Board Of Directors And Shareholders
EMCON

We have audited the accompanying consolidated balance sheets of EMCON as of
December 31, 1995 and 1994, and the related consolidated statements of
operations, shareholders' equity, and cash flows for each of the three years in
the period ended December 31, 1995. Our audits also included the financial
statement schedule listed in the Index at Item 14(a). These financial statements
and schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of EMCON at December
31, 1995 and 1994, and the consolidated results of its operations and its cash
flows for each of the three years in the period ended December 31, 1995, in
conformity with generally accepted accounting principles. Also, in our opinion,
the related financial statement schedule, when considered in relation to the
basic financial statements taken as a whole, present fairly in all material
respects the information set forth therein.

Ernst & Young LLP

San Jose, California
February 14, 1996,
except for Note 4 and the
first paragraph of Note 3, as to
which the date is February 29, 1996.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

Not applicable.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required under this Item is incorporated by reference
from the Registrant's definitive proxy statement for the Registrant's 1996
Annual Meeting of Shareholders to be filed with the Commission within 120 days
of the end of Registrant's fiscal year ended December 31, 1995.

ITEM 11. EXECUTIVE COMPENSATION

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES, AND REPORTS ON FORM 8-K

Page
-----

(a)(1) Financial Statements 18

(a)(2) Schedule II - Valuation and Qualifying Accounts 38

(b) Reports on Form 8-K

No reports on Form 8-K were filed during the
quarter ended December 31, 1995.

Exhibits filed herewith and attached hereto under
separate cover or incorporated by reference herein
will be furnished to security holders of the
Registrant upon written request and payment of a fee
of $.30 per page which fee covers only the
Registrant's reasonable expenses in furnishing such
exhibits.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

EMCON

Dated: March 27, 1996 By /s/ Eugene M. Herson
-------------------- --------------------
Eugene M. Herson
President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant in the capacities and on the dates indicated.

Signature Title Date
--------- ----- ----

/s/ Douglas P. Crane Chairman of the Board and Director March 27, 1996
- --------------------------
Douglas P. Crane
President, Chief Executive Officer
and Director (Principal Executive
/s/ Eugene M. Herson Officer) March 27, 1996
- --------------------------
Eugene M. Herson

Chief Financial Officer and
Vice President - Legal
(Principal Financial and Accounting
/s/ R. Michael Momboisse Officer) March 27, 1996
- --------------------------
R. Michael Momboisse

Vice President - Consulting
/s/ H. Lee Fortier Operations and Director March 27, 1996
- --------------------------
H. Lee Fortier

Vice President - Laboratory Operations,
President of Columbia Analytical
/s/ Stephen W. Vincent Services, Inc. and Director March 27, 1996
- --------------------------
Stephen W. Vincent

/s/ Donald A. Andres Vice President and Director March 27, 1996
- --------------------------
Donald A. Andres

Director March __, 1996
- --------------------------
Donald R. Kerstetter

/s/ Jack M. Marzluft Director March 27, 1996
- --------------------------
Jack M. Marzluft

Director March __, 1996
- --------------------------
Peter Vardy

SCHEDULE II

EMCON
VALUATION AND QUALIFYING ACCOUNTS

(In Thousands)

Additions
Balance Charged to Balance
at Beginning Costs and at End
of Period Expenses Writeoffs of Period
------------ ---------- --------- ---------

Allowance for
Doubtful Accounts:

Year Ended
December 31, 1993 $ 612 $ 801 $ (933) $ 480

Year Ended
December 31, 1994 $ 480 $ 2,889 $ (2,394) $ 975

Year Ended
December 31, 1995 $ 975 $ 765 $ (688) $ 1,052

INDEX TO EXHIBITS
Sequentially
Exhibit Numbered
Number Page
- -------------- ------------

2.1 Agreement and Plan of Reorganization dated effective *
April 1, 1994, among Wehran Envirotech, Inc.,
Registrant and certain other related parties,
incorporated by reference from Exhibit 2.1 of the
Current Report on Form 8-K dated May 26, 1994

2.2 Certificate of Ownership reflecting the merger of *
Registrant's wholly-owned subsidiary, Wehran/Emcon
Northeast, Inc., into Registrant effective December
20,1994, incorporated by reference from Exhibit 2.2 of
the Annual Report on Form 10-K for the fiscal year
ended December 31, 1994 (the "1994 10-K")

2.3 Certificate of Ownership reflecting the merger of *
Registrant's wholly-owned subsidiary, Wehran
Engineering Corporation, into Registrant effective
December 23, 1994, incorporated by reference from
Exhibit 2.3 of the 1994 10-K

2.4 Certificate of Ownership reflecting the merger of *
Registrant's wholly-owned subsidiary, EA Associates,
into Registrant effective December 31, 1994,
incorporated by reference from Exhibit 2.4 of the 1994
10-K

2.5 Certificate of Ownership reflecting the merger of *
Registrant's wholly-owned subsidiaries, EMCON
Northwest, Inc., EMCON Southeast, Inc., EMCON
Baker-Shiflett, Inc., and Eldredge Engineering
Associates, Inc., into Registrant effective December
31, 1994, incorporated by reference from Exhibit 2.5 of
the 1994 10-K

2.6 Stock Purchase Agreement dated January 30, 1996, among *
Organic Waste * Technologies, Inc. ("OWT"), Registrant
and the selling shareholders and optionholders of OWT,
incorporated by reference from Exhibit 2.1 of the
Current Report on Form 8-K dated March 14, 1996, (the
"March 1996 8-K")

3.1 Articles of Incorporation, as amended, incorporated by *
reference from Exhibit 3.1 of the Registrant's
Registration Statement on Form S-1 (File No. 33-16337)
effective September 16, 1987 (the "Form S-1
Registration Statement")

3.2 Certificate of Amendment of Restated Articles of *
Incorporation as filed on May 24, 1988, incorporated by
reference from Exhibit 3.2 of the Annual Report on Form
10-K for the fiscal year ended December 31, 1988 (the
"1988 10-K")

3.3 Certificate of Amendment of Restated Articles of *
Incorporation as filed on June 4, 1991, incorporated by
reference from Exhibit 4.1 of the Quarterly Reporton
Form 10-Q for the fiscal quarter ended June 30, 1991
(the "June 1991 10-Q")

3.4 Bylaws, as amended, incorporated by reference from *
Exhibit 4.2 of the June 1991 10-Q

10.1 Standard Commercial Lease dated August 1, 1985, between *
Archer Business Complex and Registrant (the "ABC
Lease"), incorporated by reference from Exhibit 10.5 of
the Form S-1 Registration Statement

10.2 Amendment to the ABC Lease between Archer Business *
Complex and Registrant dated September 30, 1992,
incorporated by reference from Exhibit 10.10 of the
Annual Report on Form 10-K for the fiscal year ended
December 31, 1992 (the "1992 10-K")

Sequentially
Exhibit Numbered
Number INDEX TO EXHIBITS (Continued) Page
- -------------- -------------

10.3 Second and Third Amendment to the ABC Lease between *
Archer Business Complex and Registrant dated October 4,
1993 and January 1, 1994, respectively, incorporated by
referenced from Exhibit 10.2 of the Annual Report on
Form 10-K for the fiscal year ended December 31, 1993
(the "1993 10-K").

10.4 Standard Commercial Lease dated August 1, 1986, between *
the Royal Partnership and Sweet-Edwards & Associates,
Inc. (since merged into the Registrant) incorporated by
reference from Exhibit 10.9 of the Form S-1
Registration Statement.

10.5 EMCON 1986 Incentive Stock Option Plan and Amendment, *(1)
incorporated by reference from Exhibit 10.15 of the
Form S-1 Registration Statement.

10.6 Form of Agreement pursuant to Salary Continuation Plan, *(1)
incorporated by reference from Exhibit 10.17 of the
Form S-1 Registration Statement.

10.7 Schedule identifying Agreements pursuant to Salary 43(1)
Continuation Plan between Registrant and certain
employees.

10.8 Form of Indemnity Agreement between the Registrant and *
each of the Registrant's officers and directors,
incorporated by reference from Exhibit 10.20 of the
Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1988 (the "1988 10-K").

10.9 EMCON 1988 Stock Option Plan, amended by shareholder *(1)
approval on May 25,1994, including form of Nonqualified
Stock Option Agreement (Outside Directors),
incorporated by reference from Exhibit 10.9 of
Registrant's Quarterly Report on Form 10-Q for the
fiscal quarter ended June 30, 1994 (the "June 30, 1994
10-Q").

10.10 EMCON Employee Stock Purchase Plan incorporated by *(1)
reference from Exhibit 10.10 of the Registrant's
Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 1995.

10.11 EMCON Restricted Stock Plan incorporated by reference *(1)
from Exhibit 10.15 of the Annual Report on Form 10-K
for the fiscal year ended December 31, 1990.

10.12 EMCON Deferred Compensation Plan effective January 1, *(1)
1994, incorporated by eference from Exhibit 10.12 of
the 1993 10-K.

10.13 Trust Agreement for the EMCON Deferred Compensation *(1)
Plan and Salary Continuation Plan Trust dated February
19, 1994, between Registrant and Wells Fargo Bank, N.A.
incorporated by reference from Exhibit 10.13 of the
1993 10-K.

10.14 Credit Agreement between The Bank of California, N.A. *
and Registrant dated September 20, 1991 with Amendment
dated May 31, 1992, incorporated by reference from
Exhibits 10.11 and 10.12 of the 1992 10-K.

10.15 Second Amendment to Credit Agreement between The Bank *
of California, N.A. and Registrant dated effective May
31, 1993, incorporated by reference from Exhibit 10.13
of Registrant's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1993.

Sequentially
Exhibit Numbered
Number INDEX TO EXHIBITS (Continued) Page
- -------------- -------------

10.16 Third Amendment to Credit Agreement between The Bank of *
California, N.A. and Registrant dated effective June 2,
1994, incorporated by reference from Exhibit 10.16 of
Registrant's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1993.

10.17 Fourth Amendment to Credit Agreement between the Bank *
of California, N.A. and Registrant dated effective May
31, 1995, incorporated by reference from Exhibit 10.17
of the June 30, 1995 10-Q.

10.18 Letter Agreement between H. Lee Fortier and Registrant *(1)
dated March 14, 1994, incorporated by reference from
Exhibit 10.21 of the September 30, 1994 Form 10-Q.

10.19 Letter Agreement between Thorley D. Briggs and *(1)
Registrant dated July 19, 1994, incorporated by
reference from Exhibit 10.20 of the 1994 10-K.

10.20 Letter Agreement between James M. Felker and Registrant *(1)
dated October 31, 1994, incorporated by reference from
Exhibit 10.21 of the 1994 10-K.

10.21 Agreement between Eugene M. Herson and Registrant dated 43(1)
November 30, 1995.

10.22 Agreement between R. Michael Momboisse and Registrant 48(1)
dated November 10, 1995.

10.23 Credit Agreement between The Bank of California, N.A. *
and Registrant dated February 29, 1996, incorporated by
reference from Exhibit 10.2 of the March 1996 8-K.

10.24 Security Agreement between The Bank of California, N.A. *
and Registrant dated February 29, 1996, incorporated by
reference from Exhibit 10.3 of the March 1996 8-K.

10.25 Pledge Agreement between The Bank of California, N.A. *
and Registrant dated February 29, 1996, incorporated by
reference from Exhibit 10.4 of the March 1996 8-K.

10.26 Eurodollar Rate Option Agreement between The Bank of *
California, N.A. and Registrant dated February 29,
1996, incorporated by reference from Exhibit 10.5 of
the March 1996 8-K.

10.27 Fixed Rate Amortization Option Agreement between The *
Bank of California, N.A. and Registrant dated February
29, 1996, incorporated by reference from Exhibit 10.6
of the March 1996 8-K.

10.28 Note Agreement among the Registrant, OWT, Mark H. *
Shipps, and certain employees * of OWT , incorporated
by reference from Exhibit 10.1 of the March 1996 8-K.

11.1 Computation of Income (Loss) Per Share. 55

21.1 Significant Subsidiaries of Registrant. 56

23.1 Consent of Ernst & Young, LLP, Independent Auditors. 57

27 Financial Data Schedule, included herein. 58

* Incorporated by reference
(1) Management contract or compensatory plan or arrangement required to be filed
as an exhibit to this form pursuant to Item 14(c) of the instructions to
Form 10-K.