Selected Consolidated Financial DataOperating data:<strong>2010</strong>2009Year ended July 31,2008 2007 2006(In thousands, except share and per share amounts)Revenues $ 144,875 $ 146,887 $ 110,533 $ 102,496 $ 97,080Income from operations 9,893 9,445 5,593 5,310 5,833Income from continuing operations beforeincome taxes 10,459 9,450 5,554 5,720 5,968Net income attributable to <strong>Ecology</strong> and<strong>Environment</strong>, Inc. $ 4,258 $ 5,221 $ 1,834 $ 3,074 $ 2,583Net income per common share: basic and diluted $ 1.02 $ 1.27 $ 0.43 $ 0.72 $ 0.61Cash dividends declared per common share:basic and diluted$ 0.42 $ 0.39$0.36$0.34 $ 0.33Weighted average common shares outstanding:basic and diluted 4,160,816 4,115,921 4,259,663 4,281,431 4,264,105Balance sheet data:<strong>2010</strong>2009Year ended July 31,2008 2007 2006(In thousands, except per share amounts)Working capital $ 38,950 $ 36,142 $ 36,871 $ 34,313 $ 28,306Total assets 79,959 77,808 75,602 71,206 69,152Long-term debt 767 404482385 342<strong>Ecology</strong> and <strong>Environment</strong>, Inc. Shareholders' equity 44,864 41,051 39,254 40,913 37,627Book value per share: basic and diluted $ 10.79 $ 9.97 $ 9.22 $ 9.56 $ 8.82To help clients meet sustainable goals worldwide, E & E uses innovativetechniques to delineate wetland locations, determine project impacts on wetlands,and provide recommendations for protecting this valuable natural resource.14 <strong>Ecology</strong> and <strong>Environment</strong>, Inc.
Management’s Discussion and Analysis ofFinancial Condition and Results of OperationsLiquidity and Capital ResourcesOperating activities provided $2.4 million of cash duringfiscal year <strong>2010</strong>. This was mainly attributable to thereported $6.6 million in net income, a $1.1 millionincrease in income taxes payable, and a $.8 milliondecrease in income tax receivable. Offsetting these was anincrease in contract receivables and a decrease in accountspayables. Contract receivables increased $5.7 millionduring fiscal year <strong>2010</strong> due to the increased work volumeat <strong>Ecology</strong> and <strong>Environment</strong>, Inc. (Parent Company) duringthe fourth quarter with energy and international marketcustomers. The Company believes these will be collected ina timely manner. Accounts payable decreased $3.1 millionduring fiscal year <strong>2010</strong> primarily due to the decreasedsubcontracted work in the fourth quarter.Investment activities consumed $2.3 million of cash duringfiscal year <strong>2010</strong> mainly attributable to the purchase ofadditional noncontrolling interest in Walsh <strong>Environment</strong>al(Walsh) by the Parent Company and the purchases ofproperty, building and equipment of $2.0 million duringfiscal year <strong>2010</strong>. During the second quarter of fiscal year<strong>2010</strong>, the Company purchased an additionalnoncontrolling interest in Walsh for $3,000,000 to increaseits ownership to 76%. One third of the purchase price waspaid in cash, one third was paid with E&E stock, and theremainder was issued as loans to be repaid over a two-yearperiod. Offsetting this was the sale of 16.5 acres of land bythe Company at its Walden Avenue facility in Lancaster,New York for the sum of approximately $959,000.Financing activities consumed $2.6 million of cash duringfiscal year <strong>2010</strong>. The Company paid dividends in theamount of $1.7 million or $.41 per share. Net cashoutflow on long-term debt and capital lease obligations was$.3 million due mainly to the repayment of loans andcapital leases at two of the Parent Company’s majorityowned subsidiaries, E&E do Brasil and Walsh. Distributionsto noncontrolling interests during fiscal year <strong>2010</strong> wereapproximately $.8 million.The Company maintains an unsecured line of creditavailable for working capital and letters of credit of $20.2million at interest rates ranging from 3% to 5% at July, 31,<strong>2010</strong>. Other credit lines are available solely for letters ofcredit in the amount of $13.5 million. The Companyguarantees the line of credit of Walsh. Its lenders havereaffirmed the Company’s lines of credit within the pasttwelve months. At July 31, <strong>2010</strong> and July 31, 2009 theCompany had letters of credit outstanding totalingapproximately $4.9 million and $.6 million, respectively.After letters of credit and loans, there was $28.9 million ofavailability under the lines of credit at July 31, <strong>2010</strong>. TheCompany believes that cash flows from operations andborrowings against the lines of credit will be sufficient tocover all working capital requirements for at least the nexttwelve months and the foreseeable future.Results of OperationsRevenueFiscal Year <strong>2010</strong> vs 2009Revenue for fiscal year <strong>2010</strong> was $144.9 million, adecrease of $2.0 million from the $146.9 million reportedfor fiscal year 2009 mainly attributable to decreases at theParent Company and Walsh. Revenue at the ParentCompany was $84.2 million for fiscal year <strong>2010</strong>, adecrease of $3.8 million or 4% from the $88.0 millionreported in the prior year. This decrease was attributable towork performed on contracts in the Company’s federalgovernment and state sectors offset by increases in work inthe energy and international sectors. Revenues from theParent Company’s federal government sector were $27.2million for fiscal year <strong>2010</strong>, a decrease of $6.2 million fromthe $33.4 million reported in the prior year mainlyattributable to decreased activity in contracts with the UnitedStates Department of Defense (DOD). Revenues from theParent Company’s state sector were $20.5 million for fiscalyear <strong>2010</strong>, down $4.1 million from the $24.6 millionreported in fiscal year 2009. The decrease in staterevenues was mainly attributable to decreased activity inWashington, New York and Florida due to the statebudgetary constraints. Revenues from the ParentCompany’s commercial sector were $32.0 million for fiscalyear <strong>2010</strong>, up $2.0 million from the $30.0 million reportedin fiscal year 2009 attributable to increased activity in thedomestic energy market. Revenues from the ParentCompany’s international sector increased $4.5 million overthe prior year mainly attributable to increased activity in theMiddle East, Africa and China. Walsh reported revenues of$42.1 million for fiscal year <strong>2010</strong>, a decrease of $3.5Celebrating 40 Years of Green Solutions15
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