UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------- FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended November 30, 2000 [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. From the transition period to ----------- ------------ --------------- Commission File Number 0-15587 EA ENGINEERING, SCIENCE, AND TECHNOLOGY, INC. --------------------------------------------- (Exact Name of Registrant as Specified in its Charter) Delaware 52-0991911 ----------------- ---------------------- (State or Other Jurisdiction I.R.S. Employer ID Number of Incorporation or Organization) 11019 McCormick Road, Hunt Valley, Maryland 21031 ----------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, Including Area Code (410) 584-7000 --------------- 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 [_] APPLICABLE ONLY TO CORPORATE ISSUERS: The number of shares of the Registrant's Common Stock, $.01 par value, outstanding on January 10, 2001, was 5,998,283. --------- EA ENGINEERING, SCIENCE, AND TECHNOLOGY, INC. & SUBSIDIARIES INDEX Page ---- PART I FINANCIAL INFORMATION........................................................3 ITEM 1 Financial Statements.........................................................3 Consolidated Balance Sheets - Assets.....................................4 Consolidated Balance Sheets - Liabilities and Stockholders' Equity.......5 Consolidated Statements of Income........................................6 Consolidated Statements of Cash Flows....................................7 Notes to Consolidated Financial Statements...............................8 ITEM 2 Management's Discussion and Analysis of Financial Condition and Results of Operations..................................................9 PART II OTHER INFORMATION..........................................................10 ITEM 6 Exhibits and Reports on Form 8-K...........................................11 (a) Exhibits..............................................................11 (b) Reports on Form 8-K...................................................11

2 EA ENGINEERING, SCIENCE, AND TECHNOLOGY, INC. & SUBSIDIARIES PART I - FINANCIAL INFORMATION ITEM 1. Financial Statements The consolidated financial statements included herein for EA Engineering, Science, and Technology, Inc. and its subsidiaries (the "Company") have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. In management's opinion, the interim financial data presented include all adjustments considered necessary for a fair presentation. Certain information and footnote disclosures, normally included in the consolidated financial statements prepared in accordance with generally accepted accounting principles, have been condensed or omitted pursuant to such rules and regulations. Operating results and cash flows for the interim period are not necessarily indicative of the results that may be expected for the full fiscal year. Accordingly, these consolidated financial statements should be read in conjunction with the Company's August 31, 2000 consolidated financial statements and notes thereto included in the Company's 2000 Annual Report on Form 10-K filed on November 15, 2000. 3 EA ENGINEERING, SCIENCE, AND TECHNOLOGY, INC. & SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS November 30, August 31, 2000 2000 ------------- --------------- CURRENT ASSETS: Cash and cash equivalents $ 1,523,000 $ 1,663,700 Accounts receivable, net 9,567,800 10,829,200 Costs and estimated earnings in excess of billings on uncompleted contracts 6,851,500 6,027,700 Prepaid expenses and other 434,200 377,200 Deferred income taxes 311,900 311,900 ------------ ------------ Total Current Assets 18,688,400 19,209,700 ------------ ------------ PROPERTY AND EQUIPMENT, at cost: Furniture, fixtures and equipment 9,983,500 9,816,500 Leasehold improvements 1,039,100 1,039,100 ------------ ------------ Total property and equipment 11,022,600 10,855,600 Accumulated depreciation and amortization (9,461,000) (9,344,000) ------------ ------------ Net Property and Equipment 1,561,600 1,511,600 ------------ ------------ OTHER ASSETS: Deferred income taxes 3,586,500 3,586,500 Other assets 1,226,300 1,207,900 ------------ ------------ Total Other Assets: 4,812,800 4,794,400 ------------ ------------ Total Assets $ 25,062,800 $ 25,515,700 ============ ============

The accompanying notes are an integral part of these balance sheets. 4 EA ENGINEERING, SCIENCE, AND TECHNOLOGY, INC. & SUBSIDIARIES CONSOLIDATED BALANCE SHEETS LIABILITIES AND STOCKHOLDERS' EQUITY November 30, August 31, 2000 2000 ------------ ------------ CURRENT LIABILITIES: Accounts payable $ 5,437,000 $ 5,673,200 Accrued expenses 392,200 459,800 Accrued salaries, wages and benefits 2,733,300 2,320,800 Current portion of capital lease obligation 51,400 44,700 Billings in excess of costs and estimated earnings on uncompleted contracts 1,194,600 1,872,500 ------------ ------------ Total Current Liabilities 9,808,500 10,371,000 ------------ ------------ LONG-TERM DEBT Capital lease obligation, net of current portion 305,200 187,300 Long-term debt, net of current portion 3,417,400 3,486,100 ------------ ------------ Total Long-Term Debt 3,722,600 3,673,400 ------------ ------------ ------------ ------------ Total Liabilities 13,531,100 14,044,400 ------------ ------------ COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Common stock, $.01 par value; voting; 10,000,000 shares authorized; 6,386,397 and 6,378,800 shares issued and outstanding 63,900 63,800 Preferred stock, $.01 par value; 8,000,000 shares authorized; none issued -- -- Capital in excess of par value 11,158,900 11,149,700 Retained earnings 852,300 749,100 Treasury Stock, 514,600 and 463,600 shares, at cost (543,400) (491,300) ------------ ------------ Total Stockholders' Equity 11,531,700 11,471,300 ------------ ------------ Total Liabilities and Stockholders' Equity $ 25,062,800 $ 25,515,700 ============ ============

The accompanying notes are an integral part of these balance sheets. 5 EA ENGINEERING, SCIENCE, AND TECHNOLOGY, INC. & SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME Three Months Ended November 30, ---------------------------- 2000 1999 ------------ ------------ Total revenue $ 14,713,600 $ 14,808,600 Less - Subcontractor costs (4,742,000) (4,581,500) Less - Other direct project costs (1,478,500) (1,525,000) ------------ ------------ Net revenue 8,493,100 8,702,100 ------------ ------------ Operating costs and expenses: Direct salaries and other operating 6,686,100 6,635,200 Sales, general and administrative 1,545,800 1,639,000 ------------ ------------ Total operating expenses 8,231,900 8,274,200 ------------ ------------ Income from operations 261,200 427,900 ------------ ------------ Interest expense (108,600) (73,100) Interest income 19,700 26,300 ------------ ------------ Income before income taxes 172,300 381,100 Provision for income taxes 69,000 152,800 ------------ ------------ Net Income $ 103,300 $ 228,300 ============ ============ Net Income Per Share - Basic $ 0.02 $ 0.04 ============ ============ Diluted $ 0.02 $ 0.04 ============ ============ Weighted average shares outstanding 5,900,100 6,322,400 Effect of dilutive stock options 1,800 -- ------------ ------------ Diluted weighted average shares outstanding 5,901,900 6,322,400 ============ ============

The accompanying notes are an integral part of these statements. 6 EA ENGINEERING, SCIENCE, AND TECHNOLOGY, INC. & SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended November 30, ----------------------------- 2000 1999 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 103,300 $ 228,300 Noncash expenses included in net income- Depreciation and amortization 121,600 86,100 Gain on sale of assets (5,300) -- Provision for doubtful accounts 48,600 -- Changes in operating assets and liabilities - Decrease in accounts receivable 1,212,800 104,200 (Increase) in costs and estimated earnings in excess of billings on uncompleted contracts (823,800) (2,381,800) (Increase) decrease in prepaid expenses and other assets (75,400) 131,000 Increase in accounts payable and accrued expenses 108,700 1,062,100 (Decrease) increase in billings in excess of of costs and estimated earnings on uncompleted contracts (677,900) 981,800 ----------- ----------- Net cash flows from operating activities 12,600 211,700 ----------- ----------- CASH FLOWS USED FOR INVESTING ACTIVITIES: Purchase of equipment (30,300) (179,000) Proceeds from sale of equipment 6,000 -- ----------- ----------- Net cash flows used for investing activities (24,300) (179,000) ----------- ----------- CASH FLOWS FROM USED FOR FINANCING ACTIVITIES: Net (repayments) borrowings on revolving line of credit (68,700) 12,800 Proceeds from issuance of common stock 9,300 11,300 Reduction of long-term debt -- (87,500) Purchase of treasury stock (52,100) (62,600) Repayment of capital lease obligations (17,500) -- ----------- ----------- Net cash flows used for financing activities (129,000) (126,000) ----------- ----------- NET DECREASE IN CASH AND CASH EQUIVALENTS (140,700) (93,300) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,663,700 1,963,000 ----------- ----------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,523,000 $ 1,869,700 =========== =========== NON-CASH INVESTING AND FINANCING ACTIVITIES: Equipment acquired under capital leases $ 142,000 $ -- =========== ===========

The accompanying notes are an integral part of these statements. 7 EA ENGINEERING, SCIENCE, AND TECHNOLOGY, INC. & SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED NOVEMBER 30, 2000 AND 1999 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Basis of Presentation - The accompanying consolidated financial statements present the accounts of EA Engineering, Science, and Technology, Inc. (EA); its wholly-owned subsidiaries, EA International, Inc. and EA Financial, Inc. (EA Financial); and the wholly-owned subsidiaries of EA Financial, EA Global, Inc. and EA de Mexico, S.A. de C.V. The entities are collectively referred to herein as the "Company." All significant intercompany transactions have been eliminated in consolidation. Reclassifications - Certain prior year balances have been reclassified to conform to current year presentation. Note 2. EMPLOYEE STOCK PURCHASE PLAN: The Company maintains an Employee Stock Purchase Plan to provide eligible employees with the opportunity to purchase shares of the Company's Common Stock through voluntary payroll deductions. Under the Purchase Plan, eligible employees may purchase shares through monthly payroll deductions at 90% of current market value at the time of purchase. The Company pays all administrative expenses related to employee purchases. During the quarter ended November 30, 2000, 11,143 shares were purchased under this Plan. A total of 15,202 shares remain authorized for distribution under the Purchase Plan as of November 30, 2000. Note 3. STOCK PURCHASE: On November 2, 1999, the Company announced that its Board of Directors authorized management to purchase up to 500,000 shares of its common stock. During the quarter ended November 30, 2000, the Company purchased 51,000 shares of common stock under this plan. In total, 444,200 shares have been purchased under this plan as of November 30, 2000. The Company purchased these shares, at cost, and has reflected them as Treasury Stock in the consolidated balance sheet. There is no assurance as to the actual number of shares that will be purchased under the program and, in fact, the program can be suspended by the Board at any time. 8 EA ENGINEERING, SCIENCE, AND TECHNOLOGY, INC. & SUBSIDIARIES ITEM 2. Management's Discussion and Analysis of Financial Condition And Results of Operations GENERAL The Company's results of operations are significantly affected by the timing of the award of contracts, the timing of performance of contracts, and the extent to which the Company's employees are performing billable tasks as opposed to engaging in preparing contract proposals and other required non-billable activities. Results of operations may also be affected to the extent that the Company chooses not to reduce its professional staff during a period of reduced demand for its services. Due to these factors, quarterly results of operations are not necessarily indicative of the results of operations for longer periods. The Company, in the course of providing its services, routinely subcontracts such services as drilling, certain laboratory analyses, and other specialized services. In addition, the use of teaming partners for the performance of services similar to those of the Company, is included in subcontracts. In accordance with industry practice and contract terms that generally provide for the recovery of overhead costs, these costs are passed directly through to clients and are included in total revenue. Because subcontractor costs and direct charges can change significantly from project to project, the change in total revenue is not necessarily a true indication of business trends. Accordingly, the Company considers net revenue, which is total revenue less subcontractor and other direct project costs, as its primary measure of revenue. On September 18, 2000, the Company announced that it's Board of Directors had retained investment bankers Legg Mason Wood Walker, Inc. and TechKNOWLEDGEy Strategic Group to explore strategic alternatives that may be available to the Company to maximize shareholder value, including but not limited to, the sale of the Company or business combination with another company. The Company continues to explore its strategic alternatives. RESULTS OF OPERATIONS Three Months Ended November 30, 2000 Net revenue for the three months ended November 30, 2000 was $8,493,100, a decrease of 2.4%, compared to $8,702,100 for the same period in the prior fiscal year. This slight decrease in net revenue is directly attributable to higher subcontractor costs, partially offset by a reduction in other direct project costs for the quarter. Direct salaries and other operating costs increased 0.8% to $6,686,100 or 78.7% of net revenue from $6,635,200 or 76.2% for the three-month period ended November 30, 2000. This increase is primarily due to higher regional costs for overhead, sales, and bid and proposals. The Company's continued investment in these areas contributed to the Company receiving $15.5 million in contract awards, a 20% increase over the prior year period. In addition to these contract awards, the Company received notification from the U.S. Army Corps of Engineers, Kansas City District that it has been selected for award of two contracts, each valued at approximately $25 million, for the performance of Long Term Remedial Action at NPL sites in EPA Region II and Long Term Operations and Maintenance services at Department of Defense facilities in EPA Region VII, respectively. The period of performance of each of these contracts is expected to begin in March 2001 and will continue for five years. Sales, general and administrative costs decreased by 5.7% to $1,545,800, or 18.2% of net revenue, from $1,639,000 or 18.8% of net revenue, for the three-month period ended November 30, 2000. The decrease is due to lower corporate general and administrative costs, primarily in the finance and information technology departments, which is mainly attributable to a planned lower headcount. The provision for income taxes was $69,000 for the three months ended November 30, 2000 compared to a provision for income taxes of $152,800 in the first quarter of fiscal 2000. This represents an effective tax rate of 40% respectively for both fiscal years. As a result of the above factors, the Company had net income of $103,300, or 1.2% of net revenue, for the three months ended November 30, 2000 compared to $228,300, or 2.6%, in the first quarter of fiscal 2000. 9 Liquidity and Capital Resources Cash and cash equivalents decreased by $140,700 for the three months ended November 30, 2000. The decrease was primarily due to the acquisition of equipment of $30,300, the purchase of treasury stock of $52,100, the net repayment of borrowings of $68,700 and the repayment of capital lease obligations of $17,500. The decreases were partially offset by net cash provided from operations of $12,600 and cash provided by the issuance of common stock of $9,300. The Company's capital expenditures, consisting primarily of purchases of equipment, were approximately $30,300 and $179,000 for the three months ended November 30, 2000 and 1999, respectively. The Company anticipates the level of total annual capital expenditures for fiscal year 2001 will remain fairly consistent with the level in fiscal year 2000 and will be financed by cash generated from operations. At November 30, 2000, the Company had outstanding long-term debt of $3,417,400. This represents a net decrease of $68,700 from the $3,486,100 balance at August 31, 2000. The Company's existing funds, cash from operations, and the available portion of its $7,000,000 revolving line and $1,500,000 equipment line of credit arrangements are expected to be sufficient to meet the Company's present and immediately foreseeable cash needs.* The Company also has access to certain capital equipment financing arrangements through various equipment suppliers. While the Company believes that there is sufficient market demand to absorb the additional contracting capacity resulting from its various indefinite delivery/indefinite quantity contracts, there can be no assurance that this demand will, in fact, materialize.* Although the Company has the ability to reduce its professional staff in periods of reduced demand, it may choose not to make full reductions in such periods, with resulting adverse effects on operations. Forward-Looking Statements The foregoing contains "forward-looking information" within the meaning of The Private Securities Litigation Reform Act of 1995. Such forward-looking statements may be identified by an asterisk (*) or by such forward-looking terminology as "may," "will," "believe," "anticipate," "expect," or similar words or variations thereof. Such forward-looking statements involve significant risks and uncertainties, including, among other things, risks associated with (1) substantial reliance on government contracts, public budgetary restrictions and uncertainties, discrepancies between awarded contract amounts and actual revenues, and cancellation of contracts at the option of the government, (2) timing and award of contracts, (3) timing and performance of contracts, and (4) successful bidding of government and non-government contracts in a very competitive environment. IN EACH CASE, ACTUAL RESULTS MAY DIFFER MATERIALLY FROM SUCH FORWARD-LOOKING STATEMENTS. Important assumptions and other important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to the accounting irregularities discussed in the explanatory Note 2 and their further impact, if any, on the Company's operations and/or the Company's future profitability. Other important factors that the Company believes may cause actual results to differ materially from such forward-looking statements are discussed throughout this Report and in the Company's other filings with the Securities and Exchange Commission. The Company does not undertake to publicly update or revise its forward-looking statements even if experience or future changes indicate that any such results or events (expressed or implied) will not be realized. 10 EA ENGINEERING, SCIENCE, AND TECHNOLOGY, INC. & SUBSIDIARIES PART II - OTHER INFORMATION ITEM 6. Exhibits and Reports on Form 8-K (a) Exhibits None (b) Reports on Form 8-K None 11 Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. EA Engineering, Science, and Technology, Inc. & Subsidiaries ------------------------------- (Registrant) January 12, 2001 By: /s/ Loren D. Jensen -------------------- ----------------------------------- (Signature) Loren D. Jensen ----------------------------------- Chairman of the Board, President and CEO ----------------------------------- (Title) January 12, 2001 By: /s/ Barbara L. Posner -------------------- ----------------------------------- (Signature) Barbara L. Posner ----------------------------------- Chief Financial Officer and Chief Operating Officer ----------------------------------- (Title)

EA ENGINEERING, SCIENCE, AND TECHNOLOGY, INC. & SUBSIDIARIES INDEX Page ---- PART I FINANCIAL INFORMATION...........................................................3 ITEM 1 Financial Statements...........................................................3 Consolidated Balance Sheets - Assets.......................................4 Consolidated Balance Sheets - Liabilities and Stockholders' Equity.........5 Consolidated Statements of Income..........................................6 Consolidated Statements of Cash Flows......................................7 Notes to Consolidated Financial Statements.................................8 ITEM 2 Management's Discussion and Analysis of Financial Condition and Results of Operations.................................................11 PART II OTHER INFORMATION.............................................................14 ITEM 6 Exhibits and Reports on Form 8-K..............................................14 (a) Exhibits............................................................ 14 27 Financial Data Schedule........................................14 (b) Reports on Form 8-K .................................................14

EA ENGINEERING, SCIENCE, AND TECHNOLOGY, INC. & SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS May 31, August 31, 2000 1999 (As Restated) ------------ ------------ CURRENT ASSETS: Cash and cash equivalents ..................... $ 1,628,700 $ 1,963,000 Accounts receivable, net ...................... 11,082,700 8,679,600 Costs and estimated earnings in excess of billings on uncompleted contracts ........ 7,476,800 5,176,000 Prepaid expenses and other .................... 842,300 636,700 Deferred income taxes ......................... 599,200 597,800 ------------ ------------ Total Current Assets ..................... 21,629,700 17,053,100 ------------ ------------ PROPERTY AND EQUIPMENT, at cost: Furniture, fixtures and equipment ............. 9,436,200 8,920,600 Leasehold improvements ........................ 1,031,700 1,031,700 ------------ ------------ Total property and equipment, at cost ......... 10,467,900 9,952,300 Less--Accumulated depreciation and amortization (9,401,600) (9,102,900) ------------ ------------ Net Property and Equipment .................. 1,066,300 849,400 ------------ ------------ OTHER ASSETS: Deferred income taxes ......................... 3,233,500 3,451,000 Other assets .................................. 1,283,200 1,310,500 ------------ ------------ Total Other Assets: ...................... 4,516,700 4,761,500 ------------ ------------ Total Assets ................................. $ 27,212,700 $ 22,664,000 ============ ============

EA ENGINEERING, SCIENCE, AND TECHNOLOGY, INC. & SUBSIDIARIES CONSOLIDATED BALANCE SHEETS LIABILITIES AND STOCKHOLDERS' EQUITY May 31, August 31, 2000 1999 (As restated) ------------ ------------ CURRENT LIABILITIES: Accounts payable ............................. $ 4,623,000 $ 3,555,300 Accrued expenses ............................. 873,800 1,443,200 Accrued salaries, wages and benefits ......... 2,665,800 2,228,400 Current portion of long-term debt ............ -- 87,500 Billings in excess of costs and estimated earnings on uncompleted contracts .......... 2,797,500 407,800 ------------ ------------ Total Current Liabilities .................. 10,960,100 7,722,200 ------------ ------------ LONG-TERM DEBT, net of current portion ....... 4,579,700 3,326,200 ------------ ------------ Total Liabilities ............................ 15,539,800 11,048,400 ------------ ------------ COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Common stock, $.01 par value; voting; 10,000,000 shares authorized; 6,335,000 and 6,285,000 shares issued and outstanding 63,700 63,400 Preferred stock, $.01 par value; 8,000,000 shares authorized; none issued ............. -- -- Treasury stock, net cost; 267,600 and 0 shares (298,700) -- Capital in excess of par value ............... 11,140,300 11,108,300 Notes receivable from stockholders ........... (78,000) (78,000) Retained earnings ............................ 845,600 521,900 ------------ ------------ Total Stockholders' Equity ................... 11,672,900 11,615,600 ------------ ------------ Total Liabilities and Stockholders' Equity $ 27,212,700 $ 22,664,000 ============ ============

EA ENGINEERING, SCIENCE, AND TECHNOLOGY, INC. & SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME Three Months Ended Nine Months Ended May 31, May 31, 2000 1999 2000 1999 (As Restated) (As Restated) ------------ ------------ ------------ ------------ Total revenue .............................................. $ 14,349,700 $ 12,307,000 $ 42,988,500 $ 34,931,400 Less - Subcontractor costs ................................. (3,817,900) (2,043,300) (12,199,700) (6,051,700) Less - Other direct project costs .......................... (1,493,100) (1,118,300) (4,269,100) (4,038,500) ------------ ------------ ------------ ------------ Net revenue ................................................ 9,038,700 9,145,400 26,519,700 24,841,200 Operating expenses: Direct salaries and other operating ...................... 7,122,800 6,746,400 20,575,600 19,307,900 Sales, general and administrative ........................ 1,786,400 1,941,900 5,237,400 6,136,300 Restructuring ............................................ -- -- -- 2,132,600 ------------ ------------ ------------ ------------ Total operating expenses ................................... 8,909,200 8,688,300 25,813,000 27,576,800 Income from operations ..................................... 129,500 457,100 706,700 (2,735,600) Interest expense, net ...................................... (66,600) (64,400) (167,000) (139,600) Income (loss) from continuing operations before income taxes 62,900 392,700 539,700 (2,875,200) Provision for (benefit from) income taxes .................. 25,000 165,000 216,000 (1,150,100) ------------ ------------ ------------ ------------ Net income (loss) from continuing operations ............... 37,900 227,700 323,700 (1,725,100) Discontinued operations Income (loss) from operations of discontinued segment (net of tax) ............................................. -- -- -- (119,000) Gain on disposal of discontinued segment,including operating losses during phase-out period (net of tax) ... -- 35,300 -- 35,300 ------------ ------------ ------------ ------------ Net income (loss) from discontinued operations: ............ -- 35,300 -- (83,700) Net income (loss) .......................................... $ 37,900 $ 263,000 $ 323,700 $ (1,808,800) ============ ============ ============ ============ Earnings per share - basic Continuing operations .................................... 0.01 0.04 0.05 (0.27) Discontinued operations .................................. -- -- -- (0.02) Gain on disposal of segment .............................. -- -- -- -- ------------ ------------ ------------ ------------ Net income ................................................. 0.01 0.04 0.05 (0.29) Earnings per share - diluted Continuing operations .................................... 0.01 0.04 0.05 (0.27) Discontinued operations .................................. -- -- -- (0.02) Gain on disposal of segment .............................. -- -- -- -- ------------ ------------ ------------ ------------ Net income ................................................. 0.01 0.04 0.05 (0.29) Weighted average shares outstanding ........................ 6,093,431 6,319,000 6,192,543 6,305,900 Effect of dilutive stock options ........................... 180 600 1,660 700 ------------ ------------ ------------ ------------ Diluted weighted average shares outstanding ................ 6,093,611 6,319,600 6,194,203 6,306,600

EA ENGINEERING, SCIENCE, AND TECHNOLOGY, INC. & SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Nine Months Ended May 31, 2000 1999 (As Restated) ----------- ----------- CASH FLOWS FROM (USED FOR) OPERATING ACTIVITIES Net income (loss) ............................................ $ 323,700 $(1,808,800) Noncash expenses included in net income - Provision for restructuring ................................. -- 2,132,600 Gain on disposal of discontinued segment .................... -- (35,300) Loss from discontinued operations ........................... -- 119,000 Provision for doubtful accounts ............................. 145,800 198,000 Gain on sale of assets ...................................... (7,300) -- Deferred income tax ......................................... 216,100 -- Depreciation and amortization ............................... 324,400 298,000 Changes in operating assets and liabilities - Increase in accounts receivable ............................. (2,548,900) (684,500) Increase in costs and estimated earnings in excess of billings on uncompleted contracts ............... (2,300,800) (1,703,400) Increase in billings in excess of costs and estimated earnings on uncompleted contracts ........... 2,389,700 117,300 Increase in prepaid expenses and other assets ............... (178,300) (1,293,800) Increase (decrease) in accounts payable and accrued expenses 935,700 (1,515,800) Decrease in refundable income taxes ......................... -- 327,600 ----------- ----------- Net cash flows used in operating activities ............... (699,900) (3,849,100) ----------- ----------- CASH FLOWS FROM (USED FOR) INVESTING ACTIVITIES Proceeds from sale of discontinued segment .................. -- 1,908,500 Proceeds from sale of equipment ............................. 7,300 -- Purchase of equipment, net .................................. (541,300) (348,200) ----------- ----------- Net cash flows (used in) provided from investing activities (534,000) 1,560,300 ----------- ----------- CASH FLOWS FROM (USED FOR) FINANCING ACTIVITIES Net borrowings from revolving line of credit ................ 1,253,500 2,195,500 Proceeds from issuance of common stock ...................... 32,300 46,600 Reduction in long-term debt and short-term borrowings ....... (87,500) (245,400) Purchase of treasury stock .................................. (298,700) -- ----------- ----------- Net cash flows provided from financing activities ......... 899,600 1,996,700 ----------- ----------- CASH PROVIDED BY DISCONTINUED OPERATIONS ..................... -- 372,400 ----------- ----------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ......... (334,300) 80,300 ----------- ----------- CASH AND CASH EQUIVALENTS, beginning of period ............... 1,963,000 1,850,200 ----------- ----------- CASH AND CASH EQUIVALENTS, ending of period .................. $ 1,628,700 $ 1,930,500 =========== ===========

Balance Sheet at August 31, 1999 -------------------------------------------------- As Previously Accounting As Reported* Irregularities Restated ------------ -------------- ----------- Total Assets 23,565,700 (901,700) 22,664,000 ---------- -------- ---------- Total Liabilities 11,048,400 -- 11,048,400 ---------- -------- ---------- Shareholder' Equity 12,517,300 (901,700) 11,615,600 ---------- -------- ----------

Nine Months ended May 31, 1999 ----------------------------------------------------- As Previously Accounting As Reported Irregularities Restated ---------- ------- ---------- Net revenue ......................... 24,873,500 (32,300) 24,841,200 Total expenses ...................... 27,576,800 -- 27,576,800 ---------- ------- ---------- Income from operations .............. (2,703,300) (32,300) (2,735,600) Interest expense, net ............... (139,600) -- (139,600) Benefit for income taxes ............ (1,137,600) (12,500) (1,150,100) ---------- ------- ---------- Net loss from continuing operations . (1,705,300) (19,800) (1,725,100) Loss from discontinued segment .......................... (119,000) -- (119,000) Gain on sale of discontinued Segment, net of taxes ..................... 35,300 -- 35,300 ---------- ------- ---------- Net Income (loss) ................... (1,789,000) (19,800) (1,808,800) Loss per Share, Basic Continuing Operations ............ (0.27) -- (0.27) Discontinued Operations .......... (0.02) -- (0.02) ---------- ------- ---------- Net income ....................... (0.29) -- (0.29) Loss per Share, Diluted Continuing Operations ............ (0.27) -- (0.27) Discontinued Operations .......... (0.02) -- (0.02) ---------- ------- ---------- Net income ....................... (0.29) -- (0.29)

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